Small firms find success with advisory services

Five years ago, T. Jayden Doyé, CPA, prepared clients’ tax returns in his employer’s Atlanta office and dreamed of doing work on a beach.

Today, he runs a small accounting firm and does the work he wants anywhere he wants.

“Now I live that life,” Doyé said.

In 2019, he started Prestige Accounting & Consulting in Atlanta, joining a wave of small accounting firm owners who are embracing fresh approaches, and modern technology, to distinguish their businesses.  (See the sidebar, “Tips to Build a Small Accounting Firm.”) 

Facing major changes to the profession, many small firm owners are shifting away from once-a-year audit and tax-compliance work. Instead, they’re building deeper, year-round relationships with clients by offering advisory services in specialized niches.  They are also embracing remote work to create new workplace flexibility; using dashboards and project management software to track increasingly complex client relations; and using automation to speed billing and client communications.

Today, Doyé employs a fully remote staff of 21 and has grown Prestige Accounting & Consulting into a seven-figure business with a focus on legal professionals.

Doyé is one of four small firm leaders who shared their insights and experiences.  While Doyé is relatively early in his career, other accountants have taken a new path after decades of traditional tax and audit work.

“This profession has changed dramatically in the last 10 years — dramatically,” said Wayne Shelton, CPA, who has recently transformed his firm, Shelton & Associates CPA PLLC in Paducah, Kentucky, from a once-a-year audit and tax approach to year-round services, as well as offering training for other small firms.

Running a small accounting firm isn’t easy, but its rewards often include independence and work/ life balance.  Here’s how these owners are making it work.

WORKING SMARTER WITH TECHNOLOGY

The modern small firm needs to be efficient, maintaining deep relationships with clients while using its staff time effectively and avoiding overwork.

That’s not possible without a range of tech tools — from relatively simple communications upgrades to more advanced management systems.

With a team spread across multiple states, Doyé has built his firm around cloud-based software that provides a dashboard showing a clear, constant picture of the status of projects.

“I’m able to see everything at a bird’s-eye view,” he said.

Doyé has tailored that dashboard for multiple scenarios.  An “operations” mode is focused on work that is ready for his immediate review, while a “CEO” view shows projects in the queue and the firm’s overall capacity.

Specialized technology platforms can also aid a firm in its journey to advisory services. For Shelton and new partner Ryan Conn, that has meant investing in practice development software that offers extensive templates, calculators, and other materials for developing advisory-style relationships.

“We were trying to figure out how to get all of these processes and all these PowerPoint presentations and trying to do that on our own. [The software provider] already had this done,” Conn said.

Firms also are turning to technology to manage external relationships.

Clients increasingly expect firms to use secure digital portals for document transfer, especially as the cadence of communication becomes more frequent and regular.  Automated, scheduled reminders ensure documents don’t go missing and deadlines aren’t missed.

“We know that our clients are super busy.  And we don’t want the deliverables to be delayed because the client is forgetting to send us what we need,” Doyé said.

Meanwhile, remote-work technology is opening new avenues for developing staff and clientele. It’s what allows Doyé’s firm to spread its team across the country, or even work from the beach — making flexibility a major perk for employees. Shelton and Conn also have invested in a dedicated videoconferencing screen and camera, which was on display in a recent interview they conducted from their conference room.

Increasingly, those kinds of investments aren’t “nice to have” or particularly innovative.  Instead, clients and employees alike have a baseline expectation that small firm owners will use technology to manage and communicate.

“Our tech is table stakes for the type of work we want to do.  Personalized upload links for document requests and videoconferencing for in-depth Q&A gets us out of our email and allows more time for advisory work,” said Gary Wood, CPA, firm runner at Compere Robinette CPAs (CRC) in Ozark, Mo.

But his firm’s success, he said, is built on more than just tools.

“We’re smart with our technology, but I would say it’s our practice management concepts that make us stand out against the rest,” Wood said.

BUILDING THE RIGHT CLIENT BASE

The foundation of the firms owned by Doyé, Shelton and Conn, and Woods is client advisory services, or CAS, a growing segment of public accounting that provides business clients with year-round accounting and advisory support. Services offered by CAS firms include accounting and bookkeeping, payroll management, and outsourced CFO services like cash flow forecasting, tax planning, and industry benchmarking.  CAS firms often specialize in industry niches so they can develop deep understanding of that industry and provide better targeted advice to business clients.

How does a small firm select a niche?  It depends on the firm, of course.

For Doyé, it started with a careful and strategic analysis of the market.  He identified five potential niches, developed a marketing campaign for each one, and tested the campaigns through interviews with dozens of people.  That intensive research led him to Prestige’s eventual focus on legal clients and, specifically, on work with IOLTA, or Interest on Lawyers’ Trust Accounts, a type of program that deals with small client funds and collects interest for charitable purposes.

“I knew that there was a need in the market,” he said.  “I liked the fact that it was complicated.  I didn’t want to go into an industry that was too easy, because if it’s too easy, then anybody can do it.”

Of course, not every firm is starting fresh with a brand-new client base.  It can be a different story for CPAs taking over or trying to transform an existing firm.

Wood and his partner bought their accounting firm a decade ago, with a specific vision in mind. At the time, the firm was a “high-volume tax factory” with an intensive busy season, Wood said.

The partners aimed to transform that model. Instead of focusing on tax returns, the firm decided that yearly tax work would become “the byproduct of what we call our year-round service plans,” Wood said.

That aim has worked; three-quarters of the client base now pays for year-round services that focus on tax, consultancy, and business planning. But it has taken time to achieve.

“It was slower than expected,” Wood said.  His firm’s new business plan transformed a 30-year-old firm from a traditional tax focus to this new CAS model.  “We believe the next generation won’t say ‘this person does my tax return’ — they will say ‘this person does my planning’ and the tax return will be a byproduct of that planning experience.”

BALANCING CHALLENGES AND REWARDS

Running a small firm has never been easy, but the modern market has come with a raft of new challenges.  The fast pace of tax changes, not to mention growing regulatory scrutiny on topics like data privacy, has made it ever more difficult for small firm owners to keep pace.  Meanwhile, large firms are competing for a larger share of both the audit and advisory spaces.  Small firms also are vying for their share of the talent pool — in competition with the larger firms, the tech sector, and beyond.

Despite the growing challenges, small firms continue to offer an alluring alternative for future leaders desiring transformation.  “It’s always been the outlet for someone wanting change,” Wood said.  “It’s been an outlet for the dreamers to experiment a little bit.  … I think the smaller firms are proving the [CAS] model works.”

The key, perhaps, is to fulfill that potential for staff wanting an alternative to traditional firms. Doyé, Shelton, Conn, and Wood said they are creating workplaces where staff can learn, develop, and enjoy a rewarding work/life balance.

In Kentucky, Conn and Shelton have implemented a new team-based model that Conn, a former police officer, says was inspired by his leadership time on a SWAT team.

“We’re not going to have just a single work accountant in charge who’s responsible for everything, which is the tax factory model,” he said.  Instead, one person might take on the lead advisory role for a client, while others take on bookkeeping, data management, and administration for the same client.

That approach allows the firm, which now has 16 employees, to maximize attention on each client, while also giving staffers the opportunity to learn from one another.

“Now they are more empowered to take initiative, do the work, and hold on to the client relationship,” Conn said.

Newer staffers are also partnered with senior staff, beginning as a “fly on the wall” in client strategy meetings and transitioning to a leading role.

In Missouri, Wood said that small firms have a chance to create a culture and business structure that is ultimately more sustainable and rewarding for employees.

“There’s a lot of talk about the concept of work/life balance.  It takes an ownership, or a partnership, to really put their money where their mouth is to make that happen,” he said.

‘GETTING BETTER, NOT BIGGER’

At large firms, employees may be given more work when they make gains in efficiency and productivity.  But a small firm like Wood’s can try a different approach.

“We focus on getting better, not bigger, each year,” he said.

Over the years, the firm has built a deeper scope of work with a smaller portfolio of clients. The result is a retention rate of greater than 95% — allowing the firm to embrace “intentionally flat revenues” and discard overworking cultures of the past.

That’s only possible, Wood said, when firm management has a specific vision of the company’s workload and culture.  “I think the hardest thing is looking in the mirror and asking yourself, as the firm operator, ‘How much is enough?’ ” he said, referring to partner compensation.

Firm ownership is not for everyone, Doyé warned.  He noted that several entrepreneurs in his circles bought into accounting firms, or launched their own ventures, during the pandemic years.  But not all have stuck.  He credits his success, in part, to a recognition of where he’s strongest.

As a creative and forward-thinking person, he said, “my skill set is best utilized in business development.  And that’s how I’ve been able to grow this firm so rapidly, because I put a lot of time and effort into that.”

Tips to build a small accounting firm 

Running a small accounting firm isn’t easy, but its rewards include independence and work/life balance. Here’s how modern owners are making it work: 

• Focus on year-round engagement. Transition to ongoing advisory services to build deeper client relationships and ensure steady revenue. 
• Identify and develop niches. Conduct market analysis to focus on specialized areas that offer differentiation and higher margins. 
• Spread the word. Educate the client base about the benefits of new service models to facilitate transitions and ensure retention. 
• Implement reminders. Set up automated notifications for clients to ensure timely document submissions and fulfillment of deadlines. 
• Automate billing and communications. Streamline billing processes and client communications through automation to save time and enhance accuracy. 
• Get perspective. Create customized digital dashboard views for your various leadership roles. 
• Develop a sustainable work culture. Create a work environment that supports work/life balance and reasonable workloads to retain talent. 
• Embrace remote work. Implement flexible work arrangements to attract talent and enhance job satisfaction. Use secure portals for document exchange to protect client data and streamline communications. 
• Build a team. Implement a team-based approach to client service, with different staff members contributing their expertise to enhance service quality while also growing their own skills in different areas.

About the author 

Andrew Kenney is a freelance writer based in Colorado. To comment on this article or to suggest an idea for another article, contact Jeff Drew at Jeff.Drew@aicpa-cima.com.

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