The Challenges of Running a CPA Firm
There’s no doubt that the pressures of running a CPA Firm are greater today than they have ever been. There will never be less regulations, less tax changes or less FASB pronouncements.
This is why many CPA Firms find themselves in the difficult position of wanting to be more strategic in their growth and succession planning, but finding that the pressures of running the Firm day-to-day are simply too much.
If you were to look at why you are even in this business, we’d bet that one or more of your answers would be:
- You enjoy helping your clients grow and solve their tax and auditing issues
- You and your staff want to develop technically and continue your professional skills
- You want to continue to build your “book of business” which is a comfort knowing that you have a steady flow of income throughout the year.
These reasons are not the only ones, to be sure, but, they are certainly valid for many Partners and founders of Firms.
The question now becomes, are these the very reasons why your Firm will have difficulty growing? Let’s look at this a little closer.
- You didn’t get into this business to have to deal with personnel, cultural, technological or operational issues. In fact, we’d bet that you find these issues a distraction from serving your clients and a source of major frustration.
- Management of your staff is pretty much an intangible. It is difficult to measure the benefits of good management when looking at the profitability of a CPA firm. Partners like to look at productivity as the source of profits…Billable hours. Therefore, you may not be willing to allocate hours that are not related to production. Without the recognition and financial incentive of Practice and staff development, management becomes less attractive as a role in the firm. Partners often let the practice run them rather than them running the Practice. Client demands, never ending deadlines and employee issues often receive the immediate attention, distracting management from performing the tasks that provide for long-term growth and profitability.
- CPAs have spent their entire careers obtaining clients and building a book of business that provides for your source of income and wealth. It’s your security blanket and, in a lot of firms, it determines your compensation in the firm. Time spent dealing with management issues is time not available to grow the book of business.
So, What Can You Do to Grow?
CPA firms need to recognize that they are a business. You consult with businesses and help them run more like businesses, but do you take your own advice?
Firms that want to grow and succeed need to implement the following suggestions:
- Create a strong culture that defines what the firm stands for and lives by.
- Understand the need to position the firm as a place where both current staff and future recruits can fulfill their career objectives. This involves providing management and leadership training. Your staff does not know how to manage by default. They must be professionally trained to understand the nuances of how people behave, and how to get the most of their direct reports, while also developing them technically.
- Create long-term value by creating new services that positions the firm as a provider of choice to the business community. This can only be done by looking forward to client challenges and coming up with solutions that can generate new revenue.
The firms that are going to continue to grow profitably in the future are those who manage their companies well.
Leaders who try and drive change in their firm will encounter resistance, but this can be overcome by communicating often with the other partners. Do this, and you’ll find the path to Firm growth smoother and more enjoyable than you ever imagined.
