Business confidence in professional practices reaches all-time high

Richard Green, Managing Partner, South Coast office, Smith & Williamson

Confidence in the South’s business outlook has reached its highest point in the 21-year history of a well-regarded professional practices’ survey.

Conducted by Smith & Williamson, the accountancy, investment management and tax group, 99% of respondent firms cited a positive outlook for the year ahead.

The figure was up from 96% in 2014 and exceeds the previous high of 98% in pre-recession 2006.

Firms from Southampton, Bournemouth, Poole and Christchurch were among those canvassed.

Richard Green, managing partner at the firm’s South Coast office in Southampton, is part of the firm’s professional practices group.

He said: “The survey shows that professional service firms are enjoying an unprecedented level of confidence. This is a genuine signal that activity is now exceeding the levels seen before the financial crisis. Political certainty, economic resurgence and corporate actions are driving optimism.”

Optimism is also demonstrated by the 86% of respondents, who believe the outlook for their business has strengthened since the May general election.

Additionally, the survey revealed that 60% of respondent firms, excluding London, feel competitive pressures have increased in the last year.

According to Smith & Williamson, this reflects widespread changes in the professional services market, driven largely by new entrants to the sector, with new ways of working making life very competitive.

Mr Green said: “Professional firms are being squeezed on all sides by the arrival of new business models and new entrants to the market. In particular, all firms face a massive threat from new uses of technology to gain and interact with clients.

“Firms need to develop a ‘clear differentiator’ to stand out from the crowd, thereby demonstrating the value they deliver and to help them resist downward pressure from clients on fees.”

At the same time, almost three quarters of the region’s respondents are seeking to increase lateral hires in the coming year.

As a result Mr Green believes that higher levels of team ‘poaching’ are almost inevitable in the current climate.

The survey also reveals that just over half of firms are planning to increase the range of services they offer in the next 12 months and more than a quarter plan to increase office space.

Similarly, 68% are proposing to grow their marketing spend in the next year, while 95% of firms plan to raise the amount they put into IT.

However, Mr Green struck a note of caution.

“While the majority are trying to up their game, any firm lacking an appetite for change or without strategic vision and drive to differentiate themselves in today’s fast-changing market could suffer the consequences.

“With the economy currently relatively benign, now is the time to face any tough strategic decisions and to invest appropriately to build the business.”

Ninety-five professional firms took part in the survey during July and August, 2015; the survey has been tracking developments, trends and attitudes annually in the sector for 21 years.

Respondents included primarily law firms with patent agents and businesses from the property sector.

Business structure for the total group: 75% limited liability partnership, 16% partnership, 9% company.