10 steps for getting practice growth right

CPAs offer insight into how they grew their smaller firms.
By Anita Dennis

Victor Amaya, CPA, of ClearPath Advisors in Littleton, Colo., says he wanted to enhance the contributions his staff could make to the firm by giving them a deeper understanding of small businesses’ needs.
Victor Amaya, CPA, of ClearPath Advisors in Littleton, Colo., says he wanted to enhance the contributions his staff could make to the firm by giving them a deeper understanding of small businesses’ needs. (Photo by Barry Gutierrez/AP Images)

When your firm is poised for growth, expansion can help attract new business, offer strong career paths, help you remain relevant to clients, and enhance the firm's value.

Managing growth isn't always easy, however, as you confront the challenge of scaling your ­practice effectively.

Below are tips from experienced CPAs on how to navigate periods of growth.

1. Decide if it's time to grow

Before you commit to change, Gale Crosley, CPA, CGMA, of Crosley+Company, who consults with accounting firms on creating high-growth cultures, advised taking a realistic look at what it will mean to you. In multipartner firms, that should include strategic planning with marketing, IT, and other key leaders. For sole practitioners with fewer robust resources, it could mean reaching out to trusted friends or business contacts for input and advice.

"Many say they want to grow, but they may not have thought through the pluses and minuses," she said. Strategic planning can clarify whether growth is a good step and set the groundwork for ­successful expansion.

2. Test ways to transform practice

Gabrielle Luoma, CPA, CGMA, has grown her practice by taking a series of transformative steps that have changed her firm from a solo shop started in 2004 in Tucson, Ariz., to a partner in a joint venture with another firm. At each stage, she has experimented with big leaps forward for her firm. Her first steps included shifting to value pricing and becoming a virtual practice. Then, three years ago, she began to test new ways to position her firm to grow, moving from transactional compliance work to more advisory roles, offering outsourced accounting services to existing and new clients.

By providing valuable business advice, she experienced greater demand for her new services immediately, and she leveraged her virtual firm's strong online presence to attract new clients. Making the decision to significantly restructure her business model worked.

During the three years since her move from traditional services, "we experienced extreme growth" of 20% to 30% in annual revenue through the beginning of 2019, she said. While Luoma had eight employees before the joint venture, the new practice now has 25 staff members.

3. Anticipate hiring needs

As her firm grew, Luoma set a specific revenue target that she believed each person could manage, then took on more people when her revenue began to exceed her staff capacity.

"We pay attention to timeliness and our ability to expand services with clients we already have," she said. "If we aren't hitting our marks, then we start thinking about hiring." She prefers to have more staff capacity than she needs so that her new people have time to learn. "We want to have the bandwidth to take on great opportunities."

Crosley recommended creating an "opportunity pipeline" to spot emerging market opportunities, then planning ahead to staff for the work they'll provide.

"The process of identifying and closing opportunities typically takes several months," she said. "So your opportunity pipeline should provide a window into potential future hiring. If you don't have an opportunity pipeline, then it's time to start one. This is key to calibrating the appropriate future talent."

4. Find the right people

Firms in transformation will need people who are ready for a fast pace and evolving circumstances. Luoma seeks out people she believes can adapt and thrive amid change. "The truth is transformation is difficult and requires a growth mindset," she said. "We can't grow if they can't grow. Period."

Luoma relied mostly on word-of-mouth recruiting and turned to business contacts for job candidate recommendations. Because of the firm's virtual business model, she could expand her search geographically and make hires outside her area.

Reaching out to contacts in your firm's various industry practice areas will produce valuable market intelligence, according to Crosley. "Many of the people you meet will be able to point you to potential talent," she said. Within any given practice area, she noted, there will be vendors, thought leaders, professors, writers, speakers, or consultants who can offer recommendations.

5. Communicate with clients

Crosley recommended keeping clients informed and managing their expectations during a transition. She herself was a client of a fast-growing small CPA firm that dealt with growth by shifting some clients from working directly with the managing partner to a talented staff member. The managing partner contacted her firm to introduce the staff member and to vouch for her abilities and then also urged Crosley to call him with any concerns or feedback about the staff member's work. "That messaging was so important," Crosley said.

6. Think long term

In some cases, a firm may appear to take one step backward in order to better position itself for a reinvigorated, growing practice. At the 10-person firm ClearPath Advisors in Littleton, Colo., Victor Amaya, CPA, switched his focus to client advisory services to revolutionize his practice, consulting with clients on issues such as refinancing and cash flow management rather than compliance concerns.

As part of that effort, Amaya said, "we've had years when we let go of 7% to 10% of our book of business" by grading clients twice annually based on their fit with the firm and dropping those with lower grades. The firm then offers the remaining clients added advisory services and emphasizes bringing in new clients who are also seeking advisory help.

Having 300 clients, instead of 500, while still hitting the same top line revenue and increased profit margins made workflow more manageable, he said.

7. Use technology to manage volume

When it came to keeping up with increased work, greater use of technology was the answer for Luoma. As her firm expanded, she researched ways to use QuickBooks and other programs to allow her team to streamline. The technology can add or update recurring details so that the staff doesn't have to and allow them to skip other simple tasks like choosing a chart of account category.

"We're not constantly updating routine information or repeating steps," she said. "We only handle what's important."

8. Adjust to new demands

Many growing firms fail to reconsider the importance of making the best use of their people, leaving key performers bogged down by tasks that others could easily handle, Crosley warned. "The partners make coffee and count paper clips in addition to driving the business," she said, a situation that doesn't make the best use of top talent's time. Having sustainable growth means firm leaders can't be filling every role.

Crosley recommended dividing a piece of paper into a list of things that you love and are uniquely qualified to do and a list of other duties that are important to the firm. Then find good people — including part-timers if appropriate — to handle the work in that second list.

When Crosley applied the exercise in her own firm, "I tripled my revenues in about two years," she said, because she was able to make more profitable use of her time by delegating work others could do.

9. Empower people in growing the firm

Firms will also need to be prepared to take on new people, and firm leaders — as well as new and veteran staff members — may need to take on different roles. Luoma has changed how she runs her practice to ensure her team is in top form. "I don't do client work," she said, instead using her time to support, coach, and mentor her staff on how to meet client needs.

"You need to teach them to be leaders" to step up with the firm as it grows, she said. "If you help people manage their own growth, personally and professionally, you will be more successful" because they can better respond to a growing firm's demands.

With his eye on growth, Amaya wanted to enhance the contributions his staff could make to the firm by giving them a deeper understanding of small businesses' needs. He decided to use his own firm as a teaching tool and began working to make sure staff understood the firm's inner workings. "We've been very transparent with staff," he said, giving them access to firm financial statements, training them on the value of the consultative approach, and implementing a profit-sharing plan. Once they get a sense of how the firm is run, they can use their practical knowledge to develop a greater understanding of client needs. "We want them to be more informed and proactive in talking to clients," he said.

10. Plan in order to grow

Finally, growth isn't necessarily easy and can mean "living in a world of constant change and taking on new business problems," Crosley said. Some practitioners may decide it's not best for them. But thinking through the decision ahead of time will serve you well, whether or not you opt to grow, she said.

"If you take the time to strategize, you'll end up where you're supposed to be," she said.


About the author

Anita Dennis is a New Jersey-based freelance writer.

To comment on this article or to suggest an idea for another article, contact Chris Baysden, the JofA's associate director, at Chris.Baysden@aicpa-cima.com.


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