Offering CPAs the best practical advice requires our team to keep an eye on what’s happening inside and outside the profession. In our constant endeavor to identify the trends that will influence growth for accounting firms, we’re looking at everything from staffing to management, technology to client service, and of course, marketing and business development. In 2018, CPAs faced historic tax changes; they also found themselves at the precipice of the Transformation Economy. The world of accounting is evolving at a fevered pace. Knowing the trends that are shaping growth for the accounting firm of tomorrow will help you move up the value chain. Here are 5 trends that should be on your radar for 2019.
Diversification of Services
As firms begin to add non-traditional compliance-based services or retool their current services, they are getting a taste of what it’s like to do higher profit work. Existing services might undergo a facelift, like transitioning a write-up practice to Client Accounting Services, or firms may expand an existing specialty – for example, consulting around cybersecurity or artificial intelligence for agricultural clients. In the past year, we have witnessed numerous accounting find significant growth just by diversifying their services. Many firms are working toward bringing new services to market, and most firms recognize the potential. The point is, now is not the time to be falling asleep behind the wheel; firms should be looking for ways to diversify their services.
Compensation & Staffing Pressure
The competition for talent is fierce, and it comes at a price.
- Compensations trends show that base pay is rising for most positions across the profession with tax coming in slightly higher than audit. This trend will continue to put pressure on firms as they watch their profit margin erode. Unfortunately, many firms still struggle significantly in this area. When it comes to fees, the choice to hold the line is simply unsustainable for most firms.
- Staffing challenges are forcing firms to rethink how to recruit the best job candidates. To get your message across, look to personalized marketing approaches, branding, continuous recruiting, and finding creative ways to break through the noise.
- Recent reports predict that by 2021, over 9.2 million Americans will be part of the gig economy workforce. The changing work landscape is forcing firms to embrace virtual workers and flexible work arrangements at a pace that is still a little uncomfortable for some. Navigating your way through this marketplace requires attention on new technology and a next-gen attitude.
Ideal Client Types
Accounting firms are a compliance-based business that traditionally includes relatively low margin work compared to other non-compliance-based services. Emerging trends, like the ones listed above, are causing many firms to question what their ideal client looks like. We believe this evaluation begins with two questions. 1) If I am going to keep lower margin work, how do I make it more profitable? 2) What type of clients should we not be serving? These aren’t easy questions to answer, but pruning your client base will help you become a more efficient firm.
Doing More with Less
At Inovautus, our big focus for 2019 is doing more with less. We have already begun to leverage more out of our existing technology and are now looking at ways of using Bots and Artificial Intelligence where it makes sense. CPA firms should be investigating what AI and automation can do for their firms and have a willingness to test and implement these concepts.
For accounting firms, the most accessible area of adoption is administrative tasks. For example, I rely heavily on the Rules feature in Outlook to file my emails. I also use an AI calendar assistant to help with simple booking requests. The service sends my clients a link to view real-time availability on my calendar.
Doing more with less requires complete data integration. From client service to real-time data and analytics, firms need to ensure their data is congruent. The most critical areas of focus are between practice management software, service-based software, and marketing software. For firms that don’t have the budget for bespoke software suites, the keys to unlocking your data potential are APIs.
Platforms (we all know the who the two big players are) that haven’t entered the ring may face pressure, specifically in the practice management software arena. Recently, we’ve seen a lot of tools emerge for law firms, and I believe options for accounting firms aren’t too far behind.
Millennials are now the largest generation in the workforce, and they have different expectations as employees and buyers. This generation has been shaping and influencing accounting firm culture in areas such as benefits and flexible work arrangements. They have redefined customer experiences in the B to C space, and now, we will begin to see them reshape expectations in the accounting firm and professional services space as they start stepping into key leadership roles. Here is some food for thought in 2019:
- Micro-influencers are changing the way businesses define and market testimonials. Networking and reviews on Google, Facebook, and LinkedIn are becoming increasingly important for firms looking to appeal to Millennial and GenX business owners. Building and nurturing a tribe of followers will change the way you engage with clients and prospects.
- Millennials have redefined how to build and nurture relationships, relying on multi-channel efforts from video conferencing (digital face-to-face) to social media, and occasionally phone and email. This generation of workers also builds their referral networks
- Client service expectations are shifting. Firms need to look at how they are delivering client service and identify the expectations of each generation. Responsiveness isn’t the definition of client service. Knowing your clients and meeting their needs requires a bit of insight. Don’t neglect to ask how you are doing and what you can be doing better.
As we work with firms to embrace new trends and forge new paths, we don’t discredit the merits of leaning into what currently works. If you need help seeking the right balance for your firm or want to discuss new ways of growing your business in 2019, contact one of our team members today at firstname.lastname@example.org.