In today’s tough competitive climate, CPA firms must evolve beyond a compliance mentality. With automation and intense competition pushing old-school audit and tax shops to the verge of extinction, only the fittest CPA firms will survive.
How do you know if your firm is on the endangered species list? Here are a few warning signs:
1: Your growth trajectory is flattening.
Accounting firms are like sharks in that their survival depends on continuous forward momentum. Given the margin compression that firms are experiencing in audit and tax service lines, any firm that relies on revenue from compliance services is likely one that is experiencing a plateau or even reduction in top-line revenue and profit margin.
Offering consulting services tends to be a very profitable way to grow the top line while also improving the bottom line. For one thing, there tends to be far less competition and pricing pressure for consulting services. Another reason is that providing additional services to existing clients involves far less upfront cost than does attracting a new client. This combination of factors means that consulting services—if they are delivered appropriately and embraced by the firm—provide a solid platform for profitable growth.
2: Your best clients look elsewhere for solutions to their biggest problems.
When your clients are looking for a cyber-security firm, do they think of your firm first? Or do they go elsewhere for these services? Perhaps your firm has hired information security specialists and transitioned financial auditors over to perform SOC audits and other information assurance services. So why is your firm still known to your clients as “our tax guys” or “our auditors”?
There can be many factors at play here, but clear and consistent messaging is likely one of them. Consulting services can provide a compelling story, allowing you to build deeper relationships with existing clients and attract new ones, but only if that story is clearly articulated and consistently conveyed. Inconsistent messaging can confuse the market and negate the firm’s marketing and branding efforts. Consulting line leaders must be very clear about the service line’s value proposition, and they must often repeat that value proposition frequently within the firm and externally.
3: You’re not attracting and engaging the best talent.
When was the last time you heard a college recruit say, “I want to be an auditor”? Young professionals today seek opportunities to roll up their sleeves and tap into their creativity to help solve clients’ biggest business challenges. Compliance services typically are not perceived as a pathway to delivering that level of value.
For years, CPA firms have been worried about how to engage top talent and retain them long term. This is the way you do it: Tap into the passions of your people, no matter their age or experience level. Unleash them from the predefined box of compliance services. By allowing them to bring all their talents to the table, you will make them much more “sticky” to the firm.
The Power to Evolve
If one or more of these warning signs hit a little too close to home, don’t despair. The good news is that it is not too late to evolve. As long as you and your fellow CPA firm leaders have a desire to move beyond the compliance mentality, you have the ability to do so. In a future post, we will discuss the necessary mindset, tool set and skill sets required to make the shift.
Click here to receive our white paper, “How to Beat the Robots: The Accounting Industry’s Big Shift from Compliance to Consulting.” Also, check out our 2017 panel discussion on the growth of consulting services in the CPA profession.