Structure of a Small Accounting Practice

Question 1

What business structures are best for a small accounting practice?

Answer 1

• Entrepreneurial
• Departmental

Question 2

What are the benefits of a entrepreneurial business structure?

Answer 2

• Flat organisational structure (entrepreneur to employees)
• Faster decision making
• Quicker response to market changes
• Owner has more control over the business
• Closer relationship with employees

Question 3

What are the benefits of a departmental business structure?

Answer 3

• Flat organisational structure (owner - manager - employees)
• Increase in production - economies of scale
• Standardization
• More career opportunities
• Specialists will be more comfortable

Question 4

Which business structures are not best for a small accounting practice?

Answer 4

• Divisional - Product
• Divisional - Geographical
• Matrix

Question 5

What are the disadvantages of a divisional (product) business structure?

Answer 5

• Several divisions - not enough employees to fulfil divisions - leading to unnecessary costs and inefficient use of resources
• Complex to manage
• Poor communication - missed opportunities and strategic inefficiencies
• Competition amongst the several divisions rather than a unified effort

Question 6

What are the disadvantages of a divisional (geographical) business structure?

Answer 6

• Operate in one location only
• Unnecessary costs and duplication of resources
• Harder to achieve economies of scale
• Confusion amongst employees and hinder communication and coordination
• Hypothetical locations made - redundancies

Question 7

What are the disadvantages of a matrix business structure?

Answer 7

• Not enough staff members
• Conflict amongst projects
• Time wasting meetings - 2 meetings about the same thing
• Slower decision-making process
• Increase in costs - multiple managers oversee projects, teams increase overhead costs