The state of the Professional Services industry – as told by our research

As the south-west’s largest chartered accountancy and business advisory firm, at Monahans we pride ourselves on providing our clients with the best possible service. To continue to do so, it is integral that our team members have an up to date and comprehensive understanding of the sectors in which they operate and the challenges that individual businesses may be facing.

To ensure that our services are fulfilling the needs of our clients, we are always eager to find new ways to measure market sentiment. As part of these efforts, we decided to survey more than 300 micro, small, medium and medium/large-scale enterprises throughout the south-west, to gauge how they’ve been faring over the last year and what challenges they are anticipating in the coming months.

Our research spans multiple sectors, including businesses operating in the professional services industry. Not only do these organisations account for a significant portion of our client base, but they are also crucial to the economy. According to the Department for Business Trade, the professional and business services (PBS) sector accounts for 12% of the UK’s gross value added (GVA). There are an estimated 588,000 registered PBS enterprises, employing 5.03 million people and generating a collective turnover of £277 billion.

The UK is also the second largest exporter of business services in the world. It is home to five of the top 15 global law firms and three of the ‘Big 4’ global accountancy and consultancy firms.

We speak with Fiona Westwood, Partner, about the findings, the challenges that professional service firms are anticipating to face in the coming months, and how the Monahans team can help.

What position are organisations in?
Businesses in the professional services sector have felt somewhat deflated during the last 12 months. The pandemic added a significant amount of pressure to this sector and the repercussions are still present. 44% of organisations report being in a worse position than they were last year and 39% reported a decrease in turnover – the highest of all sectors surveyed. Respondents also gave the buoyancy of the market an average score of 6.5 out of 10 (1 being the lowest and 10 the highest) the second lowest of all sectors and slightly below the average of 7 across all sectors.

Our research also revealed that over the last 12 months, businesses operating in the professional services sector in the south-west saw generating new business as the biggest challenge faced in the last 12 months (37%) followed by inflation/rising operational costs (32%) and cashflow (29%). These are anticipated to continue to be top three key issues for the next six months, along with energy prices and political events. Challenges in generating new business can lead to potentially unstable income streams which can make achieving optimal cashflow difficult, so this is an area where we will be providing extra support to clients in the coming months.

Not all doom and gloom
Despite a tough year however, there are undoubtably positives to be found. 29% of professional services respondents reported that their business was in a better position than it was 12 months ago, with 13% reporting being in a much better position. Whilst over a third (32%) reported an increase of turnover in the last financial year

In recruitment and retention too, these firms seem to be faring relatively well. 21% reported an increase in headcount and averaging an increase of 33%. Only 8% made redundancies in the last 12 months – the lowest of all sectors.

Looking ahead, we hope to see economic stability encouraging businesses to prioritise new innovations to remain competitive and bring vibrancy to the market. In the meantime, we will always be on hand to support our clients and help them stay operational through effective financial planning.

How can Monahans help?
Whilst unpredictability is inevitable, as accountants we work to ensure that businesses and organisations can get out ahead of whatever is coming their way, take command of their finances and, most importantly, enable them to continue to deliver invaluable services.

We use this time to ensure that you are in control of your organisation’s cashflow and operations, and that every process is watertight. You may already have a solid grasp of the inner workings of your business, but there is no harm in reassessing this. Being over prepared is only going to fill you with a greater sense of reassurance and an improved ability to weather adversity.

It’s also worth remembering that there are tools and technologies designed to help. No one is expecting you to be an expert of all things, so make use of the resources at your disposal, whether that be reading online guides, speaking to other business leaders or chatting through your options with a business advisor.

And don’t forget, you’re not alone. We have helped hundreds of businesses facing the same challenges as you and will work hard not only to provide practical advice but also to empower you with the tools and knowledge needed to take the reins yourself. Get in touch today.

To download the full report, visit the Monahans website: https://www.monahans.co.uk/publications/swresearch-july24

Fiona Westwood