A fascinating article in the Financial Review on 30th Jan 2016 raises the matter of digital disruption reaching the Real Estate industry. Titled “Extreme Makeover for Real Estate“, the article reflects on the introduction of digital disruptor, buyMyplace.com.au, into the real estate auction market. The article follows the story of a married couple from Sydney that utilised the web site to sell their property through an online auction. This is the second property they have sold through this method over a 3 year period and they have not only successfully sold their property at a price above reserve, but also managed to save a huge amount of commission.
A visit to the web site presents what this saving can be with the sale of an $865,000 property providing a total cost of only $625, as compared to normal commissions for real estate agents exceeding $28,113. This saving alone is astounding, let alone the effectiveness of the sale in itself. What is interesting is that beside this article is another one relating to the listing of the well known McGrath Ltd real estate agency group which reflects on the stated affect that digital interruption is likely to have on the real estate industry. There is no doubt that digital disruption to comfortable, historically strong businesses is to become more and more prominent – what is interesting about digital disruption is how it puts the power of control back into the hands of the individual – it is removing the ‘middle man’ and in some cases creating whole new businesses and new ways to do business. This is in fact an opportunity for small business – not its demise.
Online auctions are not new, the secondhand motor vehicle industry has been doing this for years, as well as many secondhand goods web pages. Simply, your ability to buy and sell properties, secondhand goods, etc…., allows for budding entrepreneurs to establish their own businesses in these areas, buying and selling property and goods without the need of using an agent, which massively increases costs and removes profit. Uber is itself an example of the future of small business opportunities – entering the taxi industry was cost prohibitive and controlled by large business – Uber allows anyone with a car to start up their own taxi business. Digital disruption can be a revelation, not a disaster, however individuals and businesses alike must position themselves to be ready for this change and Accountants must be ready to assist and advise clients accordingly.
The Accounting Industry is not immune to disruption, however, as is stated in the McGrath article, the need for people to people interaction will remain the industries saving grace. But Accounting businesses need to be wary of the introduction of online, just in time, contractors. It is here that disruption will create problems, not so much for individual accountants, but for the accounting businesses themselves, especially at the small business end of the market where SME’s are looking to reduce costs.
The Big Four accounting firms have already introduced digital disruption activities by allowing some of their staff to ‘moonlight’ after hours in various other services and businesses and are splitting the profits from these activities with their staff. It is imperative as a professional business adviser, that accountants don’t hide from the digital tide, but investigate, test and push to discover it.