The accounting landscape continues to change at a rapid rate…and on all fronts—including technology, staffing, and ever-evolving client needs. Because change is constant, it’s important to stop and assess what’s occurring, how we got to where we are today, and how firms can benefit from these changes.
In this webinar, Bob Lewis, President, and Doug Lewis, Director at The Visionary Group offer a clear lens into the state of the accounting profession as a whole. They also provide sound advice on what firm leaders can do to measure their risk, assess opportunities, and begin planning to take advantage of those opportunities.
Prepare to walk away with a sound roadmap for identifying and implementing change moving forward—from evaluating the current state of your business to building the enterprise value of your firm for the long term.
Evaluate where you are today
Key drivers of the profession’s evolution are no surprise. Aging accountants and CPAs (Boomers continue to retire), a shortage of incoming qualified candidates, offshoring, technology (think AI specifically), changing client needs, and remote work all play a part in an ever-changing profession.
The main question to be answered is: Where is your firm today?
An honest evaluation of your practice can help you better understand your next move—or what Doug Lewis refers to as your “decision point.” Is it an internal succession? Merge upward or sell? Look for outside investors? Become the acquirer? Or simply do nothing?
As you assess your firm, look for one or multiple key issues. Is your leadership bench thin? Are you understaffed? Where is your advisory practice…or is it simply non-existent?
The signs present in your firm will help determine how you move forward. And whether that’s implementing a complete succession plan, developing a strategy for capacity expansion, or expanding advisory services, the tips offered here can help you along your chosen path.
Firm challenges can dictate your decision point.
For firms considering succession, it’s important to analyze your firm at a more granular level. Succession is not simply reliant on current financials and the number of staff but, rather, on the ability to grow and sustain the business long-term.
Doug Lewis explains a few obvious issues firms are facing when it comes to succession planning as well as some key passive signals to be aware of. The obvious issues are, well, obvious—including having no plan at all and no apparent leadership succession options.
At a more granular level, firms must also consider the passive signals:
The team cannot bring in new work: Has your team been trained to network or sell? Do they know how to offer and support higher-value advisory services? Do they know how to grow a business over the long term?
The buy-in process is unclear: Many firm leaders don’t understand how a buy-in structure works. Additionally, a lot of closed-compensation models are still in play.
The value of the firm is in question: Potential successors question if the firm has true worth. For example, if they see that there is no movement toward building an advisory practice.
An overall feeling that the firm is stagnant: The team feels that the firm has reached a level of stagnancy that it cannot come back from. Team members don’t see creativity in the business model—that is, the firm is staying put and trying to do the same thing it’s always done.
“We’re seeing a lot of younger professionals who may be very sharp and partner material for firms who are thinking: ‘You know what, I don’t think this firm is worth what you think it is.’ These types of issues are really fueling a lot of succession challenges,” said Doug Lewis.
Bob Lewis understands how firms can close the gap on these issues:
Show income potential of partnership: Be transparent about partner compensation and show potential leaders how they can get to this level. “Staff often have no idea of the income potential of owning a firm,” said Bob Lewis.
Clarify the path to partnership: Help qualified candidates visualize a path to partnership by educating them on what they need to do to get there.
Continue to upscale services: The move to higher-value advisory services is critical here. Equally important is shedding lower-end, lower-revenue clients (e.g., annual tax).
Train on pricing and selling skills: Help future leaders understand how to keep the business growing with sustainable pricing and strong sales initiatives. “Partners need to be able to bring in new work,” said Bob Lewis. “It’s part of the deal.”
Mastering Capacity Expansion
Business growth requires that firms do more with fewer resources. Building a scalable practice is core to long-term sustainability, which is why mastering capacity expansion is a key driver in a firm’s evolution.
Bob Lewis is clear that firm capacity extends far beyond staffing. As such, firm leaders must get out of the mindset that constant recruiting is the answer. “We’re all fighting over the same people and, unfortunately, there’s only so many people to go around. So you have to figure out how to focus on more than just recruiting.”
Here are few ways to do that:
Offshoring and insourcing: Identify work that can go offshore or be insourced to a US-based company.
Redirection: Build expert teams to focus on certain work (e.g., SALT) and let them continue as you work to build other higher-value, recurring sources of revenue (e.g., advisory services).
Client culling/upscaling: This is the consistent process of evaluating your client base. What clients need to be shed? What clients need to be upscaled to advisory services? Where do you need to adjust fees?
Value pricing: Firms need to move to a value-based model once and for all. This requires firms to understand what clients will pay for the value of the service and support provided.
Advisory services: Moving to a recurring revenue model is critical for long-term growth, and the advisory model gets you there. Advisory services help your clients get to the next level of business success and growth—so it’s time to sell this! A few other year-round revenue generators include client accounting services and wealth management.
“Advisory services also remove the time compression factor,” said Bob Lewis. “These are services that occur year-round, and not within a compressed time frame, which puts pressure on the firm.”
Understanding the Advisory Spectrum
With advisory services, it’s important to consider all the pieces and parts required to be successful. This is what Bob Lewis describes as the “Advisory Spectrum.”
Essentially, the Advisory Spectrum represents the steps firms need to take to effectively launch or expand advisory services. These include:
Services: You must clearly define the services offered. These should be services you're both good at and want to offer. Think about the life cycle of the client to help you understand what services to provide (e.g., entity selection, HR, succession planning, etc.)
Delivery: Be sure to think through how you’ll deliver services. This includes the technology you’ll need to support clients efficiently and effectively.
Pricing: Pricing should reflect the value of your services…not the hours it takes to complete work. As you set pricing, be sure to also make clients aware of the value they’re receiving.
Training: Ensure that staff is trained thoroughly on how to support clients and provide a rich client experience.
Doug Lewis added that there are three key methods for expanding advisory services: “You can build it yourself, buy it or merge it, and partner with external parties.”
Getting to where you need to be
While the profession continues to face many common pain points—staffing shortages, the rapid pace of technology change, and the pressure to meet expanding client demands—the overall outlook is positive.
According to both Bob and Doug Lewis, with challenges and change comes great opportunity. For example, staffing shortages drive the need to do more with less. This opens the door to expanding into recurring-revenue-based services, such as advisory—while shedding clients and services that cause time-compression challenges. It also pushes firms to master capacity expansion by getting creative—including offshoring and insourcing, services redirection, and adopting a value-pricing model.
“The goal is to build enterprise value,” said Bob Lewis. “And understanding the opportunities that are out there is a great place to start.”
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About Bob Lewis
Bob is one of Accounting Today's Top 100 Most Influential People in Accounting. His focus is to build the Enterprise Value of CPA Firms using a process of mergers and acquisitions, succession planning, and refinement of a firm’s organic growth decisions. He has been exclusively supporting the CPA profession for 25 plus years and collaborates with firms of any size including a few of the largest firms in the country.
For firms looking to explore M&A, his team has a search process to identify tuck-ins or platform locations to build upon. Candidates can be CPA firms and non-accounting businesses such as tech companies, specialty management consultants, VARs, or other businesses. Bob and his team identify practices not up for sale or merger yet and manage the deal cycle from start through negotiations and closure.
Organic growth and firm succession are two areas Bob helps firm navigate. Organically, Bob acts as the Chief Growth or Advisory Officer for CPA firms. In these roles he collaborates with leadership to shape the firm’s vision to refine their future organic growth, expand advisory capabilities, and use M&A as a focused growth catalyst. He helps firms analyze underperforming clients and instills a focused growth process. From a succession perspective, many firms want to preserve their legacy. Bob designs partnership buy-ins, compensation structures, multi-layered incentive goals, and trains newer partners.
Bob is a frequent speaker nationally, at local events, and in individual firms. He was an accountant and has a Bachelor of Science in Finance and an MBA, both from DePaul University in Chicago, IL.
About Doug Lewis
Doug is a Director at The Visionary Group responsible for the overall success of Visionary’s Mergers & Acquisitions sector. He specializes in conducting M&A searches from inception, through onboarding and final closing of transactions. Doug leads our candidate firm profiling, development of targets, assessing the potential candidate fits, and deal structure & negotiations.
A major component of his role is to facilitate structured and fair opportunities for all parties involved in M&A transactions. He spends the majority of his time speaking with Managing Partners, CEOs, and other key leadership positions inside CPA firms and non-accounting organizations. His focus is to increase deal flow and overcome obstacles as they arise during the M&A process. Doug has a proven track record of successfully establishing relationships with industry leaders to think outside the box when conducting M&A related activities. The balance of his time is spent on building a strategic partnership network of trusted consultants and advisors.
Prior to joining The Visionary Group, Doug spent time in key client-facing roles in the professional sports and the startup technology industries. In these roles, he was responsible for leading several different sales, marketing, and account management campaigns catered towards Fortune 500 and 1000 companies. He holds a Bachelor of Science in Marketing from Illinois State University.
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