The Growth Outlook for Accounting Firms

Accounting firms looking to evolve need a healthy bottom line, the energy and resources to scale, and the ability to expand their business without compromising quality.

At Inovautus, we know that good data is the cornerstone of strategy.

When we developed the Growth Outlook Survey in 2020, we did so with the intention of learning what the profession was doing in the face of crisis and their outlook for an uncertain year. Now, the survey has become a mainstay for accounting firms looking to benchmark themselves in 3 key categories:

Operations

Marketing

Business Development

In collaboration with the Association for Accounting Marketing, the Inovautus Consulting Growth Outlook Survey takes an annual pulse check on the state of marketing and growth across the accounting firm profession. Participant firms, representing a diverse cross-section of revenue and geographic identity, help us uncover trends, shifts, and intentions. The insightful results of the survey inform and educate decision makers, movers and shakers, and the just-plain curious.

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Click Here to Reveal The Growth Outlook for Accounting Firms in 2021 Summary

CPA profession thinking positive on growth, continues to adapt to challenges of COVID-19

Now that the world has lived through over nine months of a global pandemic, industries and professions are starting to get a stronger handle on what growth looks like through the remainder of this crisis and beyond. Inovautus Consulting, in collaboration with the Association for Accounting Marketing, conducted a survey to learn more about the growth outlook for the CPA firm profession under the new normal.

We received responses from 57 total firms and 54 unique respondents.

The survey covered a mix of different size CPA firms including firms with less than $1 million in revenue, firms with $1 to 2 million in revenue, $2 to 5 million, $5 to 10 million, $10 to 30 million, and firms over $30 million in revenue.

Overall results by job title

Roles represented in the respondents included managing partners, partners, principles, marketing professionals, and business development professionals. Two primary groups were established for our analysis when comparing results: Partners and principles fell into the shareholder group, and the remaining roles were added to the marketing group.

Firm size, job title of the respondent, firm services, and the marketing/business development budget were all considered in our analysis for their impact on growth outlook going into 2021. Relevant correlations between these demographics will be reported within the findings. Below you will find our summary of key findings. This information is also on our blog.

Summary of Findings

The summary of findings in this survey centered around three main areas:

Growth outlook
Service lines
Commitment to marketing/business development activities

Growth outlook is improving

With more time living with the pandemic and better understanding of client, employee, and firm needs, respondents of the survey had a better outlook on growth going into 2021. In an earlier survey done in the spring of 2020, growth outlook was significantly shaken, with many firms anticipating a negative outlook on growth. However, tides are turning, and CPA firms are more likely to anticipate no impact to revenue or some increase in revenue due to new service opportunities. Potential opportunities and barriers to growth exist, and firms are anticipating revenue from projects like the Paycheck to Protection Program (PPP) to continue, while client retention and staffing issues could be hinderances. Overall, there was optimism among the participants on the future of the firms, and over two thirds of respondents expect to meet their growth goals in 2021.

Services continue to evolve and pivot

The PPP essentially forced CPA firms to expand their service offerings in 2020, and with the extension of the program and another round of funding, it is likely firms will continue to offer these services well into 2021. How does this impact firms when the dust settles on PPP? Firms are already reporting and increase in their client accounting services/cash flow planning, and many are anticipating repackaging or introducing other new services in 2021.

Investments in technology, virtual communication likely to pay off

Firms found themselves communicating with clients in greater rates than ever before thanks to the pandemic and related legislation. This increased their client exposure and opened them up for greater cross-sell opportunities. For some firms, this meant greater investment into marketing technology and virtual communication tools, given the nature of the pandemic, than what they’d done before. It also forced some firms to establish a content creation program if they did not previously have one in place, giving them a solid entry point into consistent client communication.

However, despite this uptick, firms reported they are expecting some cuts to their marketing/business development budget to continue into 2021 as events are cancelled and discretionary spending is cut back. Firms that ride the waves of the momentum they’ve gained in digital marketing will come out ahead when things return to normal (or a new normal).

Overall, CPA firms have quickly adapted to the turbulent energies of 2020 and are riding that into 2021. They’ve come to terms with what the state of the marketplace is now, and they likely know their clients, and their firms, better than ever, giving them a more positive outlook on growth. The knowledge gained of clients’ needs during this time can be translated into repackaged and enhanced service offerings, and the investments in energy toward content marketing will continue to pay off long after this crisis has passed.

Each of these key findings are summarized in greater detail with supporting data analysis of the survey results in articles through the blog articles below.

Growth Outlook Improving for Accounting Firms Following Pandemic

Accounting Firms Continue to Evolve Services to Meet Demands Amid Pandemic

Survey Blog 3_ Investment in Growth Budget

Accounting Firms that Invest in Technology and Virtual Communication Likely to Come Out Ahead

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Explore Previous Survey Results

The Growth Outlook for Accounting Firms Amid COVID-19 Summary

CPA Profession Is Shaken but Poised for Opportunity Despite COVID-19

Most organizations, including accounting firms, are facing a new business environment. The world looks very different than it did earlier this year when many firms were planning their 2020 projects and budgets. Inovautus Consulting, in collaboration with the Association for Accounting Marketing, conducted a survey to learn more about the marketing and growth outlook for the CPA firm profession.

We received responses from 109 firms and 95 unique respondents.

Overall Results by Firm Size

The survey covered a mix of different size CPA firms ranging from less than 1 million in revenue and greater than 30 million in revenue.

Overall Results by Job Title

*_{Source: Inovautus Consulting Growth Outlook Amid COVID-19 Survey}*

The respondents represented a range of roles, including Managing Partners, Partners, Principles, Marketing Director, Marketing professionals, and Business Development professionals. While the survey asked for various titles, we grouped respondents into two primary categories for the majority of our analysis. All Partners and Principles fell into the Shareholder group while everyone else fell into the Marketing group.

Overall Survey Results by Percentage of Advisory Services

Finally, we asked firms to indicate what percentage of their revenue came from various service lines, including tax, audit, advisory/consulting, wealth management, and other. The goal was to identify if their outlook or anticipated impact on growth changes as a result of how much advisory work they do. These numbers were self-reported and not substantiated. For our analysis, we further grouped the advisory/consulting and wealth management categories with others aligned with advisory to conduct a more meaningful analysis. We grouped all respondents into five major categories based on natural trends in responses and where we see breaks nationally.

Throughout our analysis, we consistently assessed the impact of firm size on outlook, job title, and percent of advisory services compared to responses around growth. When relevant, we report on these findings.

In the coming days, we will be sharing the results of the survey on our blog. Our summary of key findings is outlined below.

Summary of findings

The summary of findings in this survey centered around three main areas:

Growth outlook is shaken

Firms of every size face the same conundrum as a result of COVID-19 ramifications: Their outlook on growth does not look the same today as it did in January of 2020. While it’s clear there is an expected decline in the initial growth percentage goals for 2020, that doesn’t mean firms will not see growth this year. It will just look different than what was planned. Differences in firm size impacted the outlook related to growth, whether positive or negative, and philosophies on business development and marketing had an impact on outlook positivity. Overall, firms are optimistic about continuity, even if growth goals aren’t met this year.

Commitment to marketing is still present

While marketing is usually the first area cut in times of economic stress such as 2008, the crisis created by the pandemic has presented a different mindset around a commitment to marketing. Overall, many firms are taking a wait-and-see mentality. Firms are using cautious optimism and realigning dollars in response to the now-virtual business climate. Savings can be made in in-person events/trips and partner spending, and dollars can be reallocated to digital marketing efforts. Sponsorships can sometimes be a large portion of a firm’s marketing budget, and the profession overall is showing a commitment to sticking with those initiatives and supporting their communities.

Advisory services key to longevity

Firms have long been focused on making the transition from compliance to advisory services, and while the challenges presented by COVID-19 and related legislative opportunities have altered focus, a commitment to advisory services is still proving the catalyst to firm growth. While a subset of firms is launching new services (mostly related to PPP) or enhancing existing services, some are taking a wait-and-see mentality here as well. The critical task for firms looking to grow is how to pivot from PPP and other compliance work toward more long-term advisory services. Important to note is that clients who feel they didn’t receive adequate support during the crisis will be looking elsewhere for advisory eventually.

Overall, the events of 2020 have undoubtedly shaken CPA firms and their perceptions on what the year would look like for growth, but that doesn’t mean opportunity does not exist. Some firms may find themselves thriving as 2020 draws to a close, while others will be focused on surviving. Outlook, philosophy, and optimism will be driving factors in which way the pendulum swings for CPAs.

To learn more about the 2020 survey, click to read the related blogs below.

CPA Firms’ Growth Outlook Amid COVID-19

CPA Firms Focused on Advisory More Likely to Come out of COVID-19 Ahead

Accounting Firms Show Commitment to Marketing Amid Crisis

Inovautus helps Accounting Firms Grow Faster and in the Right Direction

We can help your firm build the roadmap to achieve desired growth objectives. Our practical approach creates not only short-term value by delivering a plan to spur your growth, but also helps build your success long term. Our consultants, trainers, and coaches have extensive experience working specifically with accounting firms, which helps us understand your firm’s culture and ultimate goals.