As clients experience financial difficulty, as receivables collections slow and as many private companies and non-profit organizations shop accounting and auditing fees, the effects of tough economic times are finding their way to CPA firms’ bottom lines! While some practitioners grumble and lament, others are busy shaping their future to increase profits. Here are some ways some CPA firms are increasing profits in tough times.
Planning For Change
Someone said during one of my recent webcasts, “The only constant in our profession today is change!” Change is everywhere; new accounting and auditing standards, new tax laws and penalties, globalization of everything, and even consideration of a new standards setting body for private companies. The only things not changing are some of us!
We are a conservative lot. In the main, we are a “if it ain’t broke don’t fix it” group of people. When someone tells us a flood is coming, we will usually wait to see how high the water will rise before we look for our boat! We will stick to our tried and true practices far beyond their useful lives to avoid the discomfort of change.
When I once offered an old friend an opportunity to create a new product to increase revenues, his reply was that he planned to milk his old cow (product) until it went dry. Unless we plan for the changing times, there will be a lot of dry cows just over the hill!
Change That Will Increase Profits
We must be able to do more with less. I’m not talking about burdening employees with unmanageable work loads. I am talking about making investments of time and money to improve engagement and operational efficiencies that produce increased profits year after year. Here are some ways to change:
• Get rid of your old computers and servers. Stop handing down equipment. If new equipment will increase the productivity of some personnel, it will for all!
• Invest in the latest software to support firm services. Auditing file container software, automated electronic auditing procedures, data extraction software and paperless engagements should be at the top of the list, even for smaller firms! We have to spend money to make more money, even in tough times!
• Formalize engagement policies and procedures, no matter how small your firm. Every policy or procedure that is documented eliminates management supervision time. Make adopting best practices your goal in every service area.
• Develop proprietary practice aids that serve the needs of firm engagements. Practice aids should satisfy the requirements of applicable accounting and auditing standards for firm engagements, not every situation or engagement possibility.
• Hand down what you know. Even if you are a sole practitioner with one assistant, you should be training that assistant to replace you. We must make a continual investment of on-the-job training time to maximize the effectiveness of staff personnel.
• Decide on your brand. Identify what you’re good at and market it. Transition out other products and services. Learn to use social media and other practice development activity to sell what you have.
• Fire every client that doesn’t contribute to your firm objectives. Don’t settle for less when new client relationships arise. Serving quality clients in your service area are opportunities for quality engagements and increased profits.
While this may sound like “motherhood and apple pie,” planned and managed change is the key to future success, particularly in tough times! It will take time and will cost money but it must begin now. For too long many of us have adopted a “we’ll wait and see attitude” in our practices. Because economic times are likely to worsen for a time, we must adjust our paradigms. The time to plan for tomorrow is today!
Post a comment below and share how your firm is reacting to troubled economic times.
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