Harwood Hutton picks up the Latin vibes as it considers expanding into new territories, explains managing director John Brace
WHAT SMALL BUSINESSES LACK for in terms of heavyweight resources, they make up for in flexibility and speed.
For Harwood Hutton, the 11-director (‘principal’) firm based in Beaconsfield, it can certainly lay claim to grasping an opportunity.
Managing director and former ACCA president John Brace explains that the firm has a long history of providing services to US and European subsidiary clients in the UK. But with the rise of the emerging markets, namely the ‘BRICs’, Harwood Hutton decided to take advantage of some of its unique skillsets to expand its reach.
‘One of our partners, David Jones, is Brazilian. We have another who has worked in south America. So we’ve tried to identify possibilities and routes to market,” says Brace.
The firm has contacted the Brazilian Chamber of Commerce, and its efforts have already been recognised by government quango UK Trade & Investment. The firm’s staff are networking to build connections – and it even has a Twitter account (@harwoodhutton1) focusing on its south American leanings.
Brace says the firm is relaxed about building up a client base in a new area – even with the risks that can entail.
‘There’s no formal risk management, it’s done on a case-by-case basis,” says Brace. As part of mitigating the cost and risk of finding work, the firm is leveraging a Florida-based consultancy it has relations with for their south American clients.
The UK receives plenty of stick about its position as a hub, with infrastructure and tax concerns often flagged up. Brace disagrees.
As countries come out of recession, they will look for a “bridgehead” into Europe. Brace believes the Americans, for example, would rather come to the UK. “They are comfortable with our business environment, our [lower] bureaucracy compared to Germany and France.”
But do the companies make a profit here and take it with them in the proverbial suitcase? Recent press coverage on Amazon’s tax strategy could be construed as indicative of such a policy.
But for Brace, there comes a point when companies’ satellite UK operations provide real value within the UK, particularly through employing local people.
While Harwood Hutton is a ‘local’ firm, it certainly isn’t modest in its ambitions or efforts.
The firm is looking to target young entrepreneurs through providing free advice to business owners. It also provides lots of community-based resource – through speaking at local events and hosting seminars.
The firm is also a member of Goldsmiths Corporate Finance – a grouping of practices offering corporate finance services to smaller firms unable to service their clients.
While it’s still early days on this front, Brace says his firm is “beginning to get a flow of enquiries through”.
“We haven’t generated an invoice yet – but it’s when rather than if.”
With the threshold for requiring an audit moving inexorably upwards, plus attempts to ease tax accounting and reporting burdens, there have been questions about of how much use accountants will be to small businesses.
Such changes won’t make a huge difference to SMEs’ need for an accountant. Instead, firms need to take advantage of automating basic compliance tasks and provide more value-added services to clients.
Secondly, the harsher penalty regime for incorrect tax filings will even encourage more people to seek professional help, he adds.
So will a firm such as Harwood Hutton, which presents itself as busy and proactive, looking to recruit lawyers and move to a multi-disciplinary approach? Unlikely, says Brace.
The major issue for many firms will be conflicts of interest. Cross referrals would dry up for his firm, for example.
Harwood Hutton has resisted moving to an LLP model. The limited company structure is one that Brace believes is more “sustainable” going forward. The firm operates more as a corporate would, he says.
“It’s about divorcing ownership and management,” says Brace.
“Younger people don’t want to be partners. They understand relationships in a corporate structure.”
Presumably understanding Spanish is not yet a pre-requisite for new staff joining the firm, but the ‘prospects of international travel’ could soon form a part of the firm’s recruitment advertising, if things go to plan.
Practice: Harwood Hutton
Fee income: N/A. Fees per director are estimated at ‘£500,000+’
Specialist sectors: International clients. Tax. Corporate finance. Forensic. Professional practices
Source: Accountancy Age and Harwood Hutton