Question

What would a SWOT and PESTLE Analysis look like for an accounting firm?

Answer 1

SWOT Analysis of Accounting Firm

Strengths

The major significance of owning and operating an accounting firm is that it is generally immune from negative changes in the economy. In any economic climate, people, especially small business owners and real estate investor, are going to continue to need advice and preparation of their taxes and financial statements. As such, these are only services that a properly licensed CPA can provide to the general public. Additionally, the licensure requirements set forth by the states will continue to ensure that only the people that have met stringent educational and experience requirements will be able to practice in this field. One of the other strengths of this type of business is that there are many forms of revenue that can be generated on a monthly, quarterly, and yearly basis. These revenue streams include ongoing bookkeeping coupled with quarterly/yearly tax filings.

Weaknesses

As it relates to the weaknesses of an accounting firm, there are substantial competitive threats. The costs of starting a new accounting firm are low. However, by differentiating a company as a CPA firm, the business can avoid some issues pertaining to firms that only have enrolled agents as their primary practitioners.  

Opportunities

The opportunities for an accounting firm are tremendous. Most importantly, many CPA firms are able to implement programs that generate highly recurring streams of revenue from their services. This, again, includes bookkeeping services. One of the other common ways that accounting firms are able to generate predicable revenue (among licensed CPAs and enrolled agents) is through the sale of "audit insurance." These programs insure that a potential client that may be audited is protected against substantial fees for managing this process. Additionally, CPA, enrolled agent, and general accounting practices are frequently sold when an individual practitioner decides to retire or relocate. As such, many accounting firms can be acquired relatively inexpensively if an accounting firm owner is seeking to expand via acquisition.  

Threats

The threats faced by an accounting firm are somewhat minimal. This is due to the fact that, given the complexity of tax law, the demand for companies that can properly filed income tax returns (for both individuals and businesses) is tremendous. The regulatory environment is unlikely to change in complexity. The primary threat faced by accounting firms is other companies that operate in an identical capacity. Any individual who has met the appropriate requirements may acquire a certified public accountant or enrolled agent license. However, these requirements have become more stringent over the past 10 years. As such, this is really the only ongoing threat faced by an accounting firm.

PESTLE Analysis of Accounting firm

	Factor	Opportunity	Threat
Political	· The most significant point is to analyze the rules and regulations of the government. · The second factor is to conclude about the government stability · The political factor in the context is the external factors of the business, which cannot be controlled by the firm. Action of the government and political condition in the country affects the business in different manners. It must be a positive impact or a negative impact.	· It will help to spot business opportunities and personal opportunity · It will help to avoid starting new projects which will bring negative impacts towards the firm · It will bring different business opportunities to the economy.	· Sudden change in the government plans and procedures · Change in the rules and regulations of the accounting structure and schedule · Business can fall in downstream in the overall activities of the commerce.
Economic	· Inflation can be defined as the sustain rate of increase in the price of the general goods and services. It hampers the entire circular flow of income in the economy. · Deflation is the fall in the price of the goods and services in an economy due to the fall in the demand. It also hampers the circular flow of income as it experiences in lowering of the price in an economy. · Employment Rate is defined as the measure to extend labor resources in the economy, it is calculated based on the working age population. The rate of unemployment dramatically hampers business. It decreases the efficiency of the business in the organization	· The firm will get benefited if the government maintains a steady rate in the interest structure as it will provide opportunities of loan	· Change in the interest rate structure will demoralize the form to go for credit, as is the ultimate option for expansion
Socio-Cultural	· The income distribution of the system of the government · Change in customers choice and trends · Business does not exist in a vacuum environment. Social and cultural factors are the two integrated factors of the business, which brings both positive impact as well as negative impact in the business firm.	· If the economy maintains a strong and sustain level it will bring a positive impact in the income level of the people	· Major threat in the socio cultural factor of the PEST Analysis is population demographics
Technological	· Technological advancement is moving at a rapid pace · Technological factor will allow the organization to minimize the cost of the firm in daily operations · A proper technological advancement will allow the firm to increase the overall efficiency.	· The financial firm will get benefited in certain ways and will help to increase the overall efficiency, productivity and profitability	· Sudden change in the technological advancement will bring different kinds of obsolesce