Editor’s note: This is the fourth article in a series. For the full series schedule, including links to previous articles, see the sidebar, “Building a Better Firm,” at the end of this article.

Accounting practices are breaking away from old service models to generate better results, satisfied clients, and team members who are growing professionally. By challenging not just traditional services but also how they are offered, firms can reduce roller-coaster workloads, engage more deeply with clients, and manage growth and margins that meet strategic objectives.

Examples of successful service model transformations abound; CRC in Ozark, Mo., and Swindoll, Janzen, Hawk & Loyd LLC, a firm with offices in Kansas and New Mexico, are two of them.

A pair of CPAs took over CRC, a firm with a heavy emphasis on tax return compliance, and transformed it into a thriving client advisory services (CAS) practice. Swindoll, Janzen, Hawk & Loyd is right-sizing its client base so that it can ultimately institute a 40-hour workweek during tax season and lay the foundation for a CAS practice.

Having experienced ups and downs, these firms and their owners offer advice on how other CPAs can make their own transformations.

TURNING ACCESS INTO A SERVICE

Gary Wood, CPA, and his partner bought CRC, a 30-year-old firm in Ozark, Mo., 10 years ago. It was “a high-volume tax factory with intensive tax return work compressed into a 10- to 15-week season,” he said. He and his partner believed their small firm would find more success with personalized year-round advisory services to a smaller portfolio of clients. “The legacy firm had thousands of clients paying a few hundred bucks a year, but now we have a few hundred clients paying thousands of dollars a year” (see “Small Firms Find Success With Advisory Services,” JofA, Aug. 1, 2024).

To overhaul the approach to providing services to clients, CRC adopted three standardized seasons, providing multiple collaborative meetings with clients throughout the year for review, planning, and updates:

• The first season runs from May through August and is devoted to reviewing year-to-date trends and numbers, talking about business changes, and planning for significant expenses or hiring decisions. It comes first, because the firm owners want to emphasize that, rather than being the pinnacle of the year, tax season should be at the end of months of advisory work.
• Season two focuses on tax projections and tax planning from September through November.
• Season three is when busy season finally rolls around. The season is much less stressful because the firm and clients are already familiar with the tax picture. “We want the tax return to be the byproduct of the year-round experience,” Wood said.

As the three seasons progress, CRC might be doing burn rate evaluations, spend management, financial planning and analysis, and cash planning, among other activities. No two client experiences are the same, but the recurring back-and-forth of CRC and clients interacting is what delivers the results.

The three seasons have improved capacity and workflow planning, Wood said. While traditional firms are often forced to react to unexpected client needs, schedules and assignments for each season are clear in advance. Clients appreciate the disciplined and thoughtful approach to services, according to Wood. Without it, “the pressure is on clients to engage the CPA, and they don’t really know the questions they should be asking,” he said.

Employees benefit by avoiding intense busy season periods, which have been shown to negatively impact employee satisfaction and create a negative perception of the profession, according to the National Pipeline Advisory Group’s Accounting Talent Strategy Report.

MAKING THE MOST OF RIGHT-SIZING

Swindoll, Janzen, Hawk & Loyd improved their service offerings via a new pricing model. Five years ago, the firm decided to make a significant change in how its people worked. “We didn’t just want to reduce hours, we wanted to work less, make more money, and have more fun doing it,” said Chet Buchman, CPA, CGMA, managing partner of the Kansas-based, roughly 100-person practice. The firm set out to meet all those goals in its transformation journey.

Firm leaders had talked for years about eliminating some smaller legacy individual tax return filing work that consumed staff time but was not especially profitable and didn’t lead to larger assignments. The stumbling block was that, with its main office in a central Kansas town of about 14,500 people, the firm had built strong relationships over its nearly 90 years in business. “Your clients are your friends or connections, or your kids go to school with theirs,” Buchman said.

However, “we were facing a lot of pain,” he said, working long hours and not being there for family as much as they wanted. To discourage small individual tax return clients, the firm raised minimum fees on Form 1040, U.S. Individual Income Tax Return, from $500 to $750 and ultimately to $1,250 over the past five years. During that period, the effective fees on services for other existing clients rose between 30% and 50%. A year and a half ago, the firm set new client minimums at $5,000 to $10,000.

The firm believed that, especially with the new higher fees, it could afford to lose some clients that would be well served somewhere else. A minimum fee increase is one of the strategies recommended in the AICPA Private Companies Practice Section (PCPS) Right-Sizing Your Client Base Toolkit (see the sidebar, “The PCPS 5-Step Client Culling Process,” near the end of this article).

Swindoll, Janzen, Hawk & Loyd’s pricing increases have resulted in a significant drop in staff workload and a significant rise in employee satisfaction. After generally working an average of 52 hours per week in recent tax seasons, most firm members put in no more than 45 hours per week for the past two years, and the firm is on a path to a 40-hour week.

In the meantime, the firm’s top line has been growing at a rate of 10% to 15% per year. Its net margin has decreased by three to five percentage points due to an intentional investment in capacity for the short term. Buchman believes the net margin will return to industry norms over the next three years as the firm grows into its capacity. Additional capacity investments have included executive assistants, year-round interns, administrative interns, an international team, and business development, as well as reduced chargeability of some of the firm’s top leaders, who have embraced leadership roles in the firm.

“Right-sizing the client base was one of the best things we did,” Buchman said. As part of its transformation, his firm also cut down on its industries and service lines, either referring affected clients to other firms or partnering with other practices on the work. The firm bases client-culling decisions in part on how many people in the practice have the skills to perform the engagement. Highly specialized work is hard to delegate, making it difficult for the firm to build a scalable leverage model around it, he said.

PERMISSION TO EXPERIMENT

Both CRC and Swindoll, Janzen, Hawk & Loyd hit some potholes on the road to success.

Buchman’s firm, for example, tried to shift its people too quickly from performing compliance work to tackling high-end advisory work. Some staff found the new responsibilities so overwhelming that they considered quitting, he said.

Recognizing that no tax practice leader would give a new recruit the most complicated return, the firm now concentrates on what Buchman calls “basic advisory.” Many of the firm’s new clients mentioned feeling neglected at their previous firms, he said, so the firm made relationship building a priority rather than trying to create a new service immediately. This approach gives staff members an opportunity to build a foundation with clients through regular meetings and greater responsiveness.

“We don’t come in with an agenda,” he said. “We come in with an open mind.”

The basic advisory mindset often leads to what he calls “random acts of consulting,” or smaller advisory projects. As the relationship grows, “we’re in a position to develop a more structured advisory relationship with them,” he said. “We find if we just show up for clients, they have a lot of questions about taxes or their businesses,” leading to new projects, he said.

Wood’s firm also has levels of advisory work, with the simplest covering areas such as owner payroll and tax withholding, while advanced advisory might address pricing strategy evaluations and decisions such as using cash versus accrual accounting.

“It’s a mistake to think that advisory has to mean fractional CFO services,” he said. “There is a much smaller and lighter version of advisory work before that level — and a lot of small businesses are in need of it.”

A measured introduction to new services can make changes easier for everyone involved, Buchman said. Clients have a chance to understand what the firm can provide, and team members have the room to develop the client and industry knowledge they need to better advise the businesses they serve.

Based on some rough patches during his firm’s transition, Wood warns against getting frustrated with new services that don’t meet initial target profit margins. “Give yourself permission to experiment,” he advised.

His firm’s tax projection service, now a cornerstone of the firm’s three seasons, did not meet profit expectations in its first year, which he attributes to inefficiencies and pricing errors. “We didn’t sell that capacity of our firm at the right margin,” he said.

The partners even considered giving up on the tax projection service offering. However, the firm continued to give itself permission to experiment with their vision of the service, and “persistence has paid off,” he said. Today this service earns the firm’s highest client reviews.

QUESTIONS FOR SUCCESS

Firms seeking to step up their service offerings don’t have to go into CAS. Rather, they should look to find a niche that works for them. Carrie Steffen, founding partner and president of the Whetstone Group and CEO of the Iowa Society of CPAs, recommends that firms ask sets of questions in developing the right service and client mix for their practice. Steffen advises that firms ask the questions in the following order:

1. What is our strategic vision for the firm? That will encompass determining the firm’s ideal client by asking:
   • What kind of business do we want to be in?
   • Who do we want to serve and what services will we offer them?
   • What kinds of problems do we want to solve?
2. Firm leaders then need to ask staff and themselves:
   • What are you interested in doing?
   • What kind of professional or personal growth appeals to you?
   • What would you like to learn?
3. What do our clients need?

Although it may seem counterintuitive to consider clients’ needs last, Steffen noted that many firms add new services based on the needs of one or two clients without considering whether a service fits leadership’s vision, reflects firm members’ talents or interests, or aligns with the firm’s definition of its ideal client.

GETTING IT RIGHT WITH REVENUE MODELING

Concerns about the financial risks of firing clients or starting a new service line can derail the transformation to new service models. Revenue modeling — or creating a blueprint for how firms make money — can help firms understand the impact that their transformation plans may have.

“Firms can use a revenue modeling tool to figure out how much revenue they actually need to generate at a certain margin level to be able to meet their goals,” Steffen said. (The PCPS Revenue Modeling Toolkit can help.) Firms can determine how to set a minimum price that will offset the cost of losing some clients through right-sizing, for example. Or revenue modeling can help firms consider the potential revenue of existing and prospective clients, according to Steffen. If the revenue model shows that one service offering won’t work as hoped, the firm can readjust before committing to a new step.

At CRC, revenue modeling helps the firm avoid the tendency to burn out by continually chasing more, according to Wood. The firm intentionally sets a topline annual revenue objective, and when it is reached, potential new clients are waitlisted. Even with this measured approach, the firm has achieved what Wood calls “accidental growth” most years because current clients turn to their trusted advisers for additional services.

Revenue modeling may be a good approach for firms that want to stay free of outside investors such as private-equity firms, Steffen said. “It allows them to be intentional about building a firm that will provide the right amount of revenue based on their structure, cost structure, workload, and expected profitability,” she said. It also gives firms greater control over capital needs and how best to address them.

FINDING THE MAGIC

Changing service models is a worthwhile effort, according to Steffen. “Some firms are working fewer hours but are bringing in more revenue and are more profitable than they were before they started the process,” she said. “That’s the magic.”

To pave the path to a smooth transition, good change management requires emphasizing to employees the things that will stay the same, such as the firm’s culture, its commitment to doing well for clients, firm members’ relationships with one another, and the way that the firm works, Steffen said. The firm can also assure clients that the people who work with them and the care with which they interact with clients will remain the same.

Firms undergoing transformation should also embrace the word process, according to Steffen. “It’s not something that happens overnight. It is something that takes some patience, some discipline, and some intentionality.”

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The PCPS 5-step client culling process

The five-step tool, part of the PCPS Right-Sizing Your Client Base Toolkit, offers practical details on how to accomplish these steps:

1. Define your ideal client. Focus on who the firm wants to serve rather than who it can serve.
2. Segment existing clients. Classify them with A, B, C, and D grades based on criteria such as value to the firm, how well they align with the ideal client profile, and how easy they are to work with.
3. Set the strategy to transition out those that are no longer a good fit for your vision. Consider how best to transfer them away from the practice.
4. Communicate internally. Share the strategy, reasons (especially the benefits to people in the firm), process, and timing internally and address any potential fears or concerns.
5. Take action. Develop an action plan to stay on track with implementation.

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Building a better firm

During the past decade, CPA firms have been caught up in changes and challenges from within and outside the profession, including the disruptions during the COVID-19 pandemic, evolving client and staff expectations, and rapid advancements in technology.

The “Building a Better Firm” series is based on the transforming your business model resource initiative that the AICPA and its Private Companies Practice Section launched to offer firms insights and to address the difficulties and opportunities that these changes and challenges present.

The six articles in the series provide an overview of the initiative and lay out the five key areas in business model transformation:

• Overview: “Building a Better CPA Firm: Transform Your Business Model.”
• Strategy: “How to Develop Your Firm’s Transformation Strategy.”
• Governance: “Getting Governance Right.”
• Service offerings: September issue.
• Technology: October issue.
• Culture and talent: November issue.

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About the author

Anita Dennis is a freelance writer based in New Jersey. 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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LEARNING RESOURCES

Business Model Transformation Webcast Series

This series brings together industry experts to provide actionable insights on how firms can adapt and thrive. Through these sessions, participants will gain the knowledge and tools needed to build sustainable growth strategies, implement strong governance structures, refine service offerings, leverage technology for efficiency, and develop a compelling workplace culture to attract and retain top talent.

Upcoming schedule

• Competing for Talent: Closing Gaps and Building Firm Culture, Sept. 24, 2–3 p.m. ET

WEBCAST

AICPA ENGAGE 26

Firm practice management will be on the agenda when the ENGAGE Conference celebrates its 10th anniversary at the ARIA in Las Vegas.

June 8–11

CONFERENCE

PCPS membership

The Private Companies Practice Section (PCPS) is an add-on firm membership section within the AICPA that supports CPA firms of all sizes in the everyday intricacies of running a practice by providing practical and customizable practice management resources. For more information, click on the PCPS membership headline above.

SECTION

For more information or to make a purchase, go to aicpa-cima.com/cpe-learning or call 888-777-7077.

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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