(Note: This is the first in a series about how accounting firms can successfully reassess and reimagine their business models.)
In the past three years, accounting firm partners and staff spent days, nights, and weekends helping clients keep their businesses alive during the worst pandemic in a century.
Pandemic pressures have worn the workforce thin, and the economy is in the thick of rapid, radical change. It's time for firm leaders to ensure their businesses are on course to not just survive but thrive.
"It's important to acknowledge the effects of the past few years," said Lisa Simpson, CPA, CGMA, vice president–Firm Services and head of the Private Companies Practice Section (PCPS) at AICPA & CIMA, together as the Association of International Certified Professional Accountants.
Many practitioners in public accounting are feeling burned out. They have been in crisis mode instead of being strategic about where they are going, Simpson said. This was necessary to help clients get through the pandemic, but now firms need to recognize how changes caused by COVID-19 — most notably the technology-fueled explosion of remote work and a talent shortage in many firms — have transformed the workforce and firm-client interactions.
"Everything's different," Simpson said. "It gives firms an opportunity to think differently about how they operate."
What to assess before you transform your business model
Much like smart ship captains assess their ship's seaworthiness and direction after riding out a hurricane, accounting firm leaders would be wise to review their operations and reassess their business models.
What's the best way to do that? AICPA & CIMA have launched Transform Your Business Model, an initiative that is developing tools, articles, podcasts, case studies, and other resources to help accounting firms reimagine their business and develop a plan to turn that vision into reality.
Here are five areas firms should assess as they evaluate to succeed in a changed business landscape:
1. Review your operations and business strategy
To determine where you want to go, you need to understand where you are. Start by analyzing your current business model and by making sure your firm has a clearly defined and current strategic plan.
A strategic plan offers a road map that guides operational decisions and ensures your efforts are aligned with broader goals and objectives. It provides structure that allows you to track progress toward goals and identify ways to improve.
To assess your situation, address key questions about your business operations and strategy. Consider areas such as your firm's niche in the market. What differentiates you from your competitors? If you designed your business around your ideal client, what would that look like? How does that compare to what you have now? Are your growth targets clear, measurable, and achievable? Are your vision, mission, and purpose clear? Do your structure and strategy support those objectives?
When your whole team understands the firm's strategic vision, everybody can work cohesively toward achieving goals and objectives.
2. Reassess your relationship with talent
Creating a culture in which employees feel valued for their various backgrounds and viewpoints matters more than ever. Encouraging flexibility about when, where, and how your talent works can create a positive work environment and in turn a better work/life balance. Firms that recognize the need to keep diversity, equity, and inclusion (DEI) top of mind position themselves for greater success in the current professional environment.
To assess policies and attitudes regarding talent, here are some questions firms should consider:
- Are our salaries and benefit packages competitive, not just with other firms but also with other career opportunities?
- Does our culture support work/life balance and wellness?
- Do we offer clear and varied paths for career growth and advancement?
- Do we have leadership support and the required technology to support remote working?
- Do we have robust internship and talent recruitment initiatives? Do they include DEI considerations?
- Are we pursuing options, such as outsourcing and automation, to increase firm capacity, allowing for growth while not overloading staff?
- Are we attracting and integrating nonaccounting professionals?
Answers to questions like these will guide you and your leadership team in discovering areas that could be improved upon to make your firm attractive to job candidates and supportive of current staff, which promises to lead to higher retention rates.
3. Reevaluate governance structures
Governance structures are a complex and vital part of any business. They determine how the business is organized and how decisions get made. Having a regularly reviewed partner or owner agreement is a key practice management action. Take that a step further.
In a rapidly changing and complex environment, evaluate whether your firm's leadership and operational structure support timely, strategic decision-making focused on the long-term success of the firm. Does a model of building partner consensus delay or hinder decision-making? Is there a need for a corporate governance structure that allows an owner or a team to focus on running the business? Consider the pros and cons of how decisions get made and how your firm's ownership structures can adapt to keep pace with changing times.
4. Reconsider your client service offerings and billing model
What services does your firm offer? Is your business based on traditional tax and/or audit? Have you branched into growth areas such as client accounting and advisory services? Do clients pay for your time or your expertise? Do your clients see you as a trusted adviser or a necessary evil?
Those are just some of the questions to consider when assessing the types of clients your firm has and how you bill them for the services you provide.
When you review what you offer clients, note where you are strong and where you'd like to improve. As you review your pricing structure, look for ways to move from hourly billing to value pricing. Consider options ranging from flat rates and subscription pricing to monthly retainers paid through automatic bank drafts. Look for ways to move from providing compliance services to serving as a trusted partner, providing key advice that helps your clients better run and grow their businesses.
5. Rethink how you leverage technology
Technological advancements, including robotic process automation and artificial intelligence, is enhancing standard accounting processes, leading to new opportunities for CPAs.
Three challenges — budget constraints, lack of leadership buy-in, and the need to strengthen staff technological knowledge and ability — have kept some firms from adopting new technologies. But know that you can make incremental progress, which makes it easier to manage costs, ensure buy-in, and train teams.
Simply stated, the road to digital transformation consists of a few steps:
- Assessing the firm's current processes and articulating where you'd like to go;
- Collaborating with staff, clients, and vendors; and
- Implementing the agreed-upon approach.
New and emerging technologies can strengthen your business model as you implement your company's strategic goals. And tapping into tools designed to make accounting functions highly efficient can increase productivity and make your firm more competitive.
An opportunity to evolve
Seismic shifts in technology, demographics, and global business conditions have shaken the foundation on which accounting firms and the profession are built. These trends, accelerated by the pandemic, inevitably will continue to shift the business landscape, creating challenges but also opening up opportunities.
"It's an exciting time for our profession," said Erin Hartman, CPA, a PCPS manager at AICPA & CIMA and one of the leaders of the Transform Your Business Model initiative. "It's not just time to transform our firm business models but to transform the profession." Making changes, many of which are long overdue, will help position accounting firms and the profession for future success, she said.
"With the right support in place and all of us working together," Hartman said, "firms and the CPA profession as a whole face a bright future full of possibilities."
— Miti Ampoma is a senior content writer for AICPA & CIMA, together as the Association of International Certified Professional Accountants. To comment on this article or to suggest an idea for another article, contact Courtney Vien at Courtney.Vien@aicpa-cima.com.
