Business News

Solicitors, architects, and surveyors could be victims of the down-turn

Many independent professional practices throughout the South West - including solicitors, architects, surveyors, and estate agents – could see their businesses struggle to survive in 2008.

This is the warning from Matthew Lee, managing partner at Bishop Fleming, the accountancy firm with the widest spread of offices throughout the South West.

A specialist in professional practices’ business management, Mr Lee predicts that many of the region’s small and medium sized professional firms are not equipped to manage their business through a downturn.

“Lawyers, architects, surveyors, and estate agents have enjoyed a golden decade, but must now adjust to a rough ride, especially with a downturn in the property market,” said Mr Lee.

“The downturn will throw entirely new challenges at those firms, many of which have never had to deal with running a business through tough times.”

Those challenges will include handling worsening cash-flow, at a time when banks are looking much more closely at their lending exposure to professional firms, many of which have to borrow money to pay salaries and overheads while waiting months until they can invoice their clients.

“We are already seeing evidence of banks becoming nervous about their exposure to professional firms which do not have effective systems to monitor their level of ‘work in progress’,” said Mr Lee. “There is a real danger of professional firms losing their bank funding, despite being very busy:  this will leave them with the stark choice of insolvency or trying to sell their business to someone else.”

The downturn will also force professional firms to look at their staffing levels, including under-performing partners and fee earners.

“For many informally managed professional firms, these issues are major problems.  All too often, these firms do not have systems in place to identify any disparity between their staff numbers and their fee income.

“These new tougher times will force some professional firms to consider selling their business to ensure survival.  But those tougher times also mean that it will be a ‘buyer’s market’, so only the business-savvy firms will command their true value,” said Mr Lee.

The large national and international professional firms have sophisticated management processes in place to withstand the rigours of downturn.

“We understand the challenges now facing independent professional firms in the South West.  Apart from all the professional practice clients that we now advise, we have had to manage our own business through both good times and bad – and create the systems that monitor professional practices’ performance and exposure,” said Mr Lee.

 

 

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Coventry, Croydon,