How to develop your firm’s transformation strategy

Editor’s note: This is the second article in a series. For the first article, which provides a series overview, see “Transform Your Business Model,” also in this issue.

Accounting firms come to Kassi Rushing, a business consultant and owner of Kassi Rushing Consulting in Madison, Miss., because they’re in a perilous spot and lack appealing choices.

Many end up in this predicament because they lack a strategic plan. Their leaders spend their time and energy responding to events rather than planning for the future and capturing the opportunities.

In working with these firms, Rushing encourages them to grab the wheel and take responsibility for steering it in the right direction. “Let’s own our own destiny,” she said. “Let’s be in control of our decisions.”

Coming up with a business transformation strategy is one of five pillars that undergird the business model transformation resource initiative the AICPA Private Companies Practice Section (PCPS) launched to help firms modernize for future competitiveness and profitability.

While change doesn’t have to happen all at once, planning for business model transformation is about taking new approaches in many significant firm functions and processes. It means reconsidering issues such as what kinds of clients the firm takes on, how it works with and bills them, what services it offers, and how the firm can use technology as a collaborator rather than just a tool, Rushing said.

“You can’t talk about each of these elements in isolation,” she said. “You really have to look at how they intersect with each other.” She compared it to the game Jenga, where blocks are stacked up and the entire structure can come apart if the wrong one is pulled out.

With a strategic plan, “you interweave strategies that build on each other to create strength,” Rushing said.

Many firms have something they call a strategic plan, but it is more of an operational effectiveness plan, according to Rushing. The latter tends to establish the best ways to navigate the next few months or year and focuses on questions such as how to become more efficient. “That’s not a bad question, but it is insufficient to really prepare a firm for owning its future,” she said.

The potential benefits for firms that are open to transforming their business model are numerous. “When we manage our client workloads and give our team better work/life integration, we can work less and make more money,” said Lisa Simpson, CPA, CGMA, AICPA vice president—Firm Services.

COLLABORATING WITH THE RIGHT PEOPLE

The most important step, according to Rushing, occurs before strategic planning actually starts. “It is deciding who is going to be in the room,” she said.

In many firms, the managing partner creates the strategic plan and shares it with firm members. “Those firms miss out on the value of collaboration, the dissent that might come up, and the conflict that needs to happen and be resolved in order to get buy-in,” Rushing said.

Even firms that involve some or all of their partners, and perhaps some senior managers, depending on the size of the practice, aren’t getting all the value they can from the process.

Firms should broaden their thinking to consider who can offer the perspective that will help them develop the best plan. Those people may include firm members who will be in leadership positions in five years, as well as those whose personalities will aid the process, such as big-picture thinkers and risk takers, Rushing said. Other people whose unique viewpoints might be valuable include technology experts and administrators.

Firms should be aware that “a great strategic plan is one of the best ways to start to enhance the employee experience because it can show every person in the firm what’s possible in their own careers and what we are all going to do together,” Rushing said. “People want to be part of something special.”

Strategic planning provides clarity of vision and of roles, so that staff understand how they fit in. Enabling those outside the partner group to share in planning gives them a sense of the issues and decisions that owners deal with, said Carmen Aguiar, CPA/PFS, CGMA, CEO and co-founder of the six-person Aguiar Group in Bellevue, Wash.

“We want to develop future leaders,” she said, and encouraging staff to understand and implement strategy can help.

Also, she added, “there’s just so much joy in simply going around the table and having people contribute.”

Aguiar recommended ensuring that small wins are celebrated, so that team members can see the process working and understand the value of every step.

ASKING THE RIGHT QUESTIONS

Many practitioners make the mistake of asking what steps to take to transform the practice before asking what they want the firm to be once transformation begins, Rushing said.

In making a plan, it’s important to determine who the ideal client is, according to Simpson. “If you know that,” she said, “you can build your business around that client.”

Assuming the firm will want to deepen its relationship with ideal clients, “you can keep the compliance practice, but it will be a byproduct of the advisory relationship you have with the client,” Simpson said.

Just a few of the other questions Rushing, Simpson, and Aguiar suggested considering with the future in mind include:

• What are our talents, strengths, and weaknesses?
• What do our key metrics tell us about the health of the firm?
• What kind of work are we doing now? What kind of work do we like to do? What do we wish we could stop doing?
• What type of lifestyle do firm leaders and staff desire?
• What are our processes for each element of our engagements? Which ones might hinder our progress toward our goals?
• Do our billing practices reflect the value of the work we do? Do they help clients understand the value of our services?
• What is our competition?
• What trends are affecting the competition, as well as client companies and industries?
• Do we need new skills to move in the direction we want to go? How can we get them?
• Can we fill specific needs with outside consultants, or do we have capacity needs better addressed with outsourcing or offshoring?
• What kinds of systems do we have? Are they adequate for the future we are planning? Do our people have the technology knowledge to move us to our desired destination?
• How are demographics changing the workforce?
• What are the potential near- and long-term impacts of the regulatory and political environment?

In imagining the ideal firm, Aguiar cautions against setting unnecessary limits. “You can be a small firm and still be international,” she noted. “You can specialize in particular areas, or you can be more of a generalist.”

Small firms can use outsourcing or offshoring for everything from administrative work to practice areas such as tax preparation and compliance or accounting. “It is one way to fill the gaps and make sure your firm is performing at its highest and best value,” Aguiar said.

STRENGTHENING A FIRM’S CAPITAL

Mergers and acquisitions and the entrance of private equity into the market have been hot topics in the profession for a while. Capital considerations and whether a firm can or wants to remain independent of outside investors are issues to address in a strategic plan.

What are the options for those that want to maintain partner ownership? Traditional capital sources include bank loans and the readjustment of partners’ payouts, but business transformation can also open new ways to strengthen a firm’s capital. For example, an examination of a firm’s billing practices, something that’s part of business model transformation, might well provide some answers, Aguiar said.

“If you look at your fixed expenses and you don’t have enough for reserves or for innovation, then you’re not billing enough,” she said. In addition, firms may find that a new approach to fees — such as value pricing or subscription billing — may increase their profitability and help clients better understand the range of client advisory services their CPAs can offer. Similarly, a pivot away from compliance services toward client advisory services can allow firms to charge higher fees for more satisfying work.

Firms should also recognize the value of examining their succession practices, Rushing said, so that they don’t feel compelled to sell because none of their people are prepared to take on leadership or fund partner buyouts/retirement packages.

Many firms are developing processes for future ownership that let their best people know that they are seen as potential future leaders while also being transparent about the financial and other expectations for partners.

MAINTAINING PROGRESS

Strategic planning is not a one-time action but a process that benefits from — and also drives — firm innovation, according to Aguiar. “A business plan should never sit on a shelf,” she said. “It should be a living document.” Firms should revisit the plan at least quarterly to assess progress and make any necessary updates and to determine if people are being accountable for their part in the process, she said.

To keep the planning process fresh and moving forward, firms should allocate time and resources to it. That could mean asking firm members to allocate a set amount of time each week to the process, said Aguiar, who recommended that people be encouraged to treat the firm like a client and make the same commitment to protecting its welfare.

For more ideas and insights, she also recommended reaching out to other CPAs who are on their own journeys to business model transformation, through PCPS firm networking groups and other channels. Given the importance of having a clearly defined strategy, Rushing worked with the PCPS to develop the PCPS Strategic Planning Toolkit, which is designed to help firms create their vision for the future.

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 Jeff Drew at Jeff.Drew@aicpa-cima.com.

LEARNING RESOURCES

Business Model Transformation Webcast Series

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AICPA & CIMA MEMBER RESOURCES

Articles

• “Tips for Providing the CAS Services Clients Want,” JofA, July 1, 2025
• “Employee Ownership and Taxes: Why Firms Are Choosing ESOPs,” JofA, April 1, 2025
• “Tips for Building a Firm to the Right Size for You,” JofA, Dec. 1, 2023

Websites

• PCPS Strategic Planning Toolkit
• PCPS Transforming Your Business Model landing page