Professional Services

Professional Services

According to the Australian Bureau of Statistics (ABS), the professional services industry has grown by 30% since 2010. The data shows that the professional, scientific and technical services sector employs over 1.1 million people. The market size has also grown substantially and is now worth over $179 billion with average industry growth of 2.1% between 2015-2020 (IBIS World’s Professional Services in Australia - Market Research Report, 2020).

Professional services is an umbrella term that encompasses a vast and diverse range of industries, professionals, services and skillsets. People in the professional services sector have expertise in a particular field or niche. As opposed to selling goods and products, people in this sector sell their knowledge and skills. They have usually undertaken tertiary education or training and are required to pursue continued professional development. Professional services comprise industries including:

• Legal 
• Accounting 
• Public relations
• The arts
• Environmental development 
• Business management 
• Science 
• Technology

Professional service providers may work as freelance consultants, start private practices or hire a small team in a firm. Some examples of professionals in the professional services sector include:

• Architects
• Engineers
• Lawyers
• Market researchers
• Advertising professionals 
• Writers 
• PR consultants
• HR consultants
• Scientists
• Photographers 
• Business and management consultants 

Some of our most common Q&A from those in the professional services sector include:

• How do I create a business plan?
• How do I find more clients?
• How do I establish a good professional network?
• How do I price my services?
• How do I compete with the rise of remote working tools?
• How do I find and retain good staff?
• How do I manage cash flow?
• How do I create a strong professional resume/portfolio?

As a leading platform for startups, entrepreneurs and small business owners, SavvySME has a large community of like-minded professionals that come together with a common vision of helping each other grow. It’s easy to connect with fellow professionals in your industry, or find solutions for both the practical side of running and business and for other challenges and issues you may be experiencing. This includes discovering the latest ideas, getting advice on regulatory compliance, engaging in peer discussions and finding suppliers to kit out your office.

Regardless of which professional services sector you come from, there are some key steps to take to start a business:

1. Legislations and industry standards/codes of conduct 
2. Licenses/permits
3. Insurance
4. Register for tax 
5. Hire employees
6. Workplace health and safety
7. Business finance and government funding opportunities 
8. Intellectual property 
9. Set your consulting fees

1. Legislation

All businesses in the professional services sector need to understand the following legislation:

• Competition and Consumer Act 2010
• Australian Consumer Law 
• Privacy Act 1988

You will also need to research the legislations that apply to your particular field, e.g. marketers and advertisers need to understand theSpam Act 2003 and accountants will need to know about theAustralian Accounting Standards.

Learn more about the legislation that applies to your industry onBusiness.gov.au.

2. Licenses and Permits 

Licenses and permits for the professional services industry are regulated by each state and allow you to operate or practice in a particular field. You can find out which licenses and permits you need by searching on the Australian Business License and Information Service(ABLIS) website. 

3. Insurance

As a professional service provider, your clients come to you for your knowledge and expertise. No matter how much training and experience you have, sometimes it takes one disgruntled client to make a claim and put you in a difficult situation. It’s important to take out the relevant policies to protect your business. This may include:

• Professional indemnity insurance
• Public liability insurance
• Management liability insurance
• Business insurance
• Cyber insurance 

4. Tax 

The ATO has specific tax requirements for professional services income (PSI), or income generated from your personal skills. PSI is only applicable to those who are operating through a business entity, i.e. as a sole trader, company, partnership or trust. Check out theATO’s website to learn more about PSI, how it works and how to calculate it.

You may also be entitled to small business tax concessions that can reduce the total amount of tax you’re liable to pay including:

• Income tax concessions
• Fringe benefits tax (GBT)
• Capital gains tax (CGT)
• Goods and services tax (GST)
• Pay as you go instalment (PAYG) concession 
• Superannuation concession

5. Hiring employees 

If you hire staff you need to ensure you follow the guidelines set by Australia’s national workplace laws for the professional services industry. This means understanding theaward rates specific to your sector, ensuring your office or workplace is OHS compliant, setting up payroll and developing a staff handbook/employee guidelines.

6. Health and safety

Every business must follow theoccupational health and safety regulations that apply to your specific industry, business type and where you operate from. As an employer it is your responsibility to ensure you provide and maintain a safe working environment for your employees. You can learn about the state and industry-specific WHS requirements that apply to your business with Work Safe Australia. 

7. Business finance 

There are many costs involved when starting a business, the most common being:

• Business registration fees
• Insurance
• Office space, furniture and supplies 
• Utilities 
• Equipment 
• Marketing

As well as the option to apply for business finance and loans from banks or seek investor funding, there are several grants available for businesses in the professional services industry. To find out if you’re eligible head over to theAustralian Research Council or business.gov.au.

8. Intellectual property

Professional servicesintellectual property (IP) broadly refers to the work that someone creates. For example, graphic designers, copywriters, IT professionals and architects regularly create IP. As a professional service provider, IP is an issue that you will have to face regularly in your work and you’ll need to take the relevant steps to determine ownership issues relating to IP.

9. Set fees

Setting your fees as a professional service provider can be tricky. This is because your clients may have a different perception of value than you, and there is no one-size-fits-all pricing model for project-based work. You don’t want to set the price too high and deter or lose clients, but you also don’t want to sell yourself short. 

The Barolsky Advisors have outlined a simple way to price your work which involves being completely clear on your objectives, identifying the factors that impact your decision and deciding on the price, price structure and pitch.

Source: Barolsky Advisors

Similarly to other industries, professional services are being impacted by issues of a much larger scale. Digital disruption and the rapid advancement in technology is changing the way businesses interact with each other. The information age and knowledge sharing may also change the way businesses view and engage with professional services. Artificial intelligence (AI) will also change, complement and even replace some professional services.

Globalisation and the rise of remote working platforms and tools mean the market is becoming increasingly competitive across all sectors. As the market becomes more saturated businesses are being pushed to restructure their business model and lower their prices to compete. Client demand and expectations have also changed, and clients are looking for more value for money service offerings.

In addition to some of the wider issues affecting the industry, many professional service providers experience issues such as:

• Scope creep (a term used in project management and refers to the continuous growth and changes to the scope of a project and its requirements)
• Building expertise in your field
• Cash flow management
• Unpredictable work schedule 
• Finding and retaining good employees
• Pressure to leverage the latest technology
• Delegation of work

If any of the above issues resonate with you, we would love for you to join the conversation with other industry professionals. In doing so, you will gain access to a wide range of resources and find tools to manage and grow your business. You can connect with experts in over 400 business solutions includingregulatory compliance,employment law,human resources,digital marketing andIT support.

If you operate from an office, you can also connect with professionals that specialise in setting up office spaces including office-related supplies and equipment. Whether you operate remotely or from an office, professional indemnity insurance is one of the most vital things to consider to protect businesses that provide professional advice and services to clients. Learn more about the service providers and professionals that can help you start and grow your business.