5 Ways to Drive Small Firm Growth
CPA firms across the country are thriving, according to the 2016 PCPS/CPA.com National Management of an Accounting Practice (MAP) Survey. This unique study is the largest and most comprehensive examination of firms’ financial health and practice management approaches and solutions. To enhance the survey’s usefulness, the results are broken down into seven defined CPA firm segments, from small practices with less than $200,000 in annual revenue to large firms with $10 million or more. The latest survey found that firms are indeed doing well, with many practices making the strategic decision to reinvest profits back into the firm to build an even stronger foundation for the future.
Small firms appeared to have a particularly bright future. Firms with less than $200,000 in revenues who completed the survey reported growth of almost 11%—up from 8% in 2014. What trends or decisions are powering small firm growth? Here are some key insights based on the survey findings:
- Client relationships/management. The core of any CPA firm’s success is the bond that practitioners create and build with their clients. Clients value their CPAs because they provide quality services, are responsive to client needs and have a proactive interest in the issues affecting them. These positive attributes allow firms to retain their current clients and obtain new ones. The resources in the Clients and Relationship Building section of the AICPA PCPS Firm inMotion e-Toolkit can help you enhance your own firm’s efforts.
- New approaches to billing. For many years, firms have been investigating the merits of moving away from hourly billing. It turns out that some smaller firms are in the vanguard when it comes to adopting different billing practices. The survey found that 85% of all firms still use hourly billing. However, at firms with under $500,000 in revenues, a median of 25% of their fees are based on another method, including fixed fees, value billing, a per-tax-form fee and client retainers. While implementing new billing methods won’t make a direct contribution to firm growth, they can change the way firms position what they have to offer clients and emphasize their value. Firms considering a switch can turn to information on transitioning to value pricing in the PCPS’s Trusted Client Advisor Toolbox.
- Flexibility. Smaller firms are in an excellent position to adopt new practices, given their relatively flat management structure. In addition to implementing new billing methods, small firms can become more competitive in the staffing marketplace by offering recruits or existing staff members schedules and assignments that best meet their needs and expectations. This can enable firms to minimize turnover costs and confidently rely on having staff with the necessary knowledge to meet client needs, each of which can help maximize firm success and profitability.
- Technology. CPA firms are increasingly investing in technology, according to the 2016 MAP Survey findings. In fact, there were double digit increases over the previous survey in firms’ use of tools such as cloud-based software, cloud-based backups and video conferencing services. For smaller firms, technology can help simplify and speed processes, minimize duplication of effort and enhance communication with clients. As a new generation begins to take over at client businesses, technological advancements can also demonstrate that the firm is prepared to meet their shifting needs.
- Specializations. Looking for a way to stand out in a crowded marketplace? Or do you wish you could streamline your processes to promote greater efficiency and productivity? Specializations may be the answer. Whether you focus on a specific industry, service or other segment, a niche practice can help you deepen your expertise and reputation in one area and may help mitigate standards overload, among other benefits. The possibilities of specialties you can build are seemingly endless, but you can begin by getting some inspiration from the available AICPA credentials.
What factors will power your firm’s growth? The PCPS/CPA.com National MAP Survey can help you spot trends and best practices that are driving success at firms in your size segment and across the profession. Check out the executive summary for more key findings from the survey research, and find out what insights the MAP Survey can offer your practice.
Carl Peterson, Vice President – Small Firm Interests, Firm Services & Global Alliances, AICPA
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