By Jon Hubbard.
The CPA firm leaders I speak to daily face similar challenges: struggling to attract talent, trying to serve too many clients for too low fees and being unable to keep talented supervisors and managers on the partner track.
All these challenges relate to a firm’s business model.
Issues such as starting salaries, demanding billable hours requirements, and the slow pace of advancement are turning potential talent away. If firms can make the business model more appealing, they could significantly alleviate many of these challenges.
How to evolve the CPA firm business model
In most firms, the business model has remained essentially the same for decades, so changing things up can be intimidating. However, we’ve identified five key ingredients to make the necessary changes and start reaping benefits.
1. Adaptive mindset
Leaders must possess an adaptive mindset.
The path that brought your firm the success you enjoy today isn’t necessarily the right path to take you forward into the future.
High-growth firms are already demonstrating that business models are not static; they are evolving entities. As automation and technology reshape the landscape, services like Client Advisory Services (CAS) emerge as potential core offerings, signaling a shift from traditional audit and tax services.
Leaders must be willing to question everything from partner compensation to operational methodologies to stay relevant.
2. Human-centric culture
Despite technological advancements and the rise of outsourcing, the essence of the accounting profession remains human-centric. Firm leaders must align each individual’s role with their highest and best use, and prioritize client relationships.
Disconnection between an individual’s role and their perception of its value leads to disengagement and employee turnover. Fostering a culture where every team member sees the value in their work and its impact on clients is essential for retention and the employee experience.
3. A framework for accountability
A common thread in discussions with firm leaders is that the struggle with taking on non-fit clients persists. Firms invest a lot of resources into identifying their ideal client, but partners continue to accept clients well outside that mold.
However, when I ask what happens when a partner brings in non-fit clients, the answer is usually ‘nothing.’ In fact, those partners still receive financial compensation for bringing in clients the firm has decided it doesn’t want to serve!
These firms could benefit from having more accountability within their business model. Instituting a framework that rewards the right behaviors, such as turning away non-fit clients, can help with accountability. Implement Key Behavioral Indicators (KBIs) to incentivize actions that align with the firm’s strategic goals.
4. Prioritizing the value proposition
There’s often a disconnect between a firm’s internal perception of its value proposition and how it’s communicated in the marketplace. For example, firms may position themselves as advisors but then dilute this positioning with content that doesn’t align, such as blog posts and newsletters with generic tax code updates.
It’s crucial to ensure consistency in how people communicate the firm’s value internally and externally. When everything is in alignment, from marketing communications to conversations with prospects, you can build a strong, coherent brand that resonates with your audience.
5. Facilitating the evolution
The technological landscape is evolving rapidly. Scalability no longer requires hefty enterprise-level investments.
When selecting new technologies, prioritize solutions that support consistency across departments and offices. This can enhance efficiency, the employee experience, and the client experience.
Assembling cross-functional teams to select and implement new technologies helps ensure you identify solutions that work across the firm. Embracing these technologies can streamline operations and position the firm as a forward-thinking, innovative player in the market.
The evolution of your firm’s business model isn’t just inevitable; it’s imperative. By embracing these strategies and addressing the underlying challenges within your business model, you can transform your firm into one more attractive to potential employees and clients. When you do that, the potential for growth and success promises a profitable and fulfilling future.
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Jon Hubbard is a shareholder and consultant with Boomer Consulting, Inc.
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Tags: Firm Management
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