Accounting a Barbell Industry

After a busy couple of weeks I'm behind on my reading, so I just got to last week's Wall Street Journal article on the growth of small accounting and tax firms.  According to the article:

"Roughly three-quarters of the country's 44,000 accounting businesses are now one-person shops, according to the American Institute of Certified Public Accountants. And almost half of tax accountants work in companies with fewer than 10 employees."

The reasons given for the growing number of small tax shops include layoffs, lower technological barriers to entry and an increasingly complex tax code. 

I'm old enough to remember when there were 8 big accounting firms.  They were called the Big 8.  Due to consolidation and Enron, the industry is down to the Big 4. 

Like so many other industries we've looked at (the movie industry is the most recent, but our industry structure category has many examples), the accounting and tax industries are comprised of a few very large firms, a relatively small number of mid-sized firms and a large and growing number of small firms. 

Lower technological barriers is a key driver of this structure across almost all the industries we've studied.  But other factors - the need for global scale, increasing acquisitions by large corporations, industry consolidation and the growing availability of niche markets, etc. - also play a role.

Comments

[accounting software for small business]

That's good, making a system suited for barbell industry. This is great.

-kim