2023 Strategic Planning Considerations for CPA Firms
Making choices that help accomplish your strategy and reach your goals
By Nancy Damato and Stacie Malgieri
At this time of the year, a lot is being written about setting goals and making resolutions for 2023 and beyond. In our last Growth Zone blog, we addressed, “How Small to Midsized CPA Firms Can Increase Capacity for Growth.” We showed how even in the midst of the staffing crisis, CPA firms can increase profitability, service new clients, and continue to provide quality services to existing clients by implementing a combined strategy of:
M&A: Acquiring Firms
Culling the Client Base of Low Realization Clients
Using Onshore and Offshore Outsourcing
As you incorporate these initiatives into your 2023 strategic plans, some additional ideas and concepts should be considered.
Evaluate and access what you’re doing and not doing, and don’t jump into 2023 on ‘auto-pilot.’
Cultivate creative thinking, your awareness, and intuition. Pay attention to your clients and Partners and staff, and quickly adapt to the trends in the marketplace. Don’t be reactive and just do the same things over and over again out of habit. Your services might need to be ‘shaken up’ to meet new challenges, so be prepared to modify, upgrade, innovate, and align your services to match clients’ needs and expectations. Examples of growth areas over the last five years include CAS and cybersecurity services. Remember the famous Henry Ford quote, “If you always do what you always did, you'll always get what you always got."
Consider the choices you are making to help your Firm reach your well-defined goals.
Assess your options, evaluate your choices, and make strategic business decisions that land you closer to your goals. The quality of your choices matters, and we recommend testing your choices to assess if they are helping you accomplish your strategies. Decision-making is the process by which people reach actionable strategies after careful consideration of the facts, the values of the situation, and all factors involved.
Before you ring in the New Year, take a historic look at the ROI of your previous decisions. Determine if they helped your Firm accomplish your strategy and reach your goals, or at least helped you take positive steps forward. If the answer is no, consider:
Was your timing off? As we all know, timing is everything in life. Making sound decisions at the right time and properly sequencing your implementation is essential. Looking at your past decisions, did you act quickly enough or did you miss an opportunity? Did you act too quickly, before being fully prepared and ready to properly implement your plan, causing an opportunity to be mishandled?
Did you innovate and adapt to the trends and your marketplace? Or did you continue to focus on the same services, industries, and niches, even if there was a lack of interest in the marketplace or you didn’t have a solid client service team? Were you apprehensive about dedicating additional resources to developing new niches?
Did you take advantage of opportunities? With the war for talent in a “crisis mode,” has your Firm invested more resources into outsourcing work offshore, or acquiring a firm or growing an existing firm in India or the Philippines?
Is your firm future proof? If your goal is to remain independent, did you dedicate the proper resources to structure and manage your Firm like a corporate business and less like a traditional CPA firm practice? Have you identified and developed your future leaders, and did you develop and implement an internal succession plan? Firms with succession challenges that wait too long to merge or be acquired, or that are forced to make decisions based on lifechanging events or out of fear, may experience significant decreases in practice valuations. It is much better to be in the drivers’ seat and make strategic decisions on your own terms, conditions, and timing.
Have you developed a culture that fosters Partner collaborations and do your Partners regularly meet and communicate? Partner consensus on key issues such as the strategic direction of the firm, succession planning, and remaining independent or exploring M&A and whether to merge into a larger firm, is essential. Smaller CPA firms are especially vulnerable and will sometimes split up due to communication gaps and disharmony.
Are you keeping up with and using technology to your advantage to increase efficiency and productivity? Rapidly changing technology plays a significant role in your Firm’s future. Does your Firm use a CRM to track new business opportunities, activities with referral sources, and communications with prospective recruiting candidates?
Did you enhance your Firm’s image and brand in the marketplace, with prospective clients, referral sources, and recruiting candidates? If you are unsure about your Firm’s image and brand, if it is less than desirable, or does not align with your goals, what steps are you taking to upgrade or enhance your image to target markets?
Is it time for a ‘Course Correction?’
After you have evaluated the ROI of the choices you are making, you should ask, “Can other and better choices be made to change the direction or the trajectory of where the Firm is heading?” The good news is that the answer is always yes, and you can change your choices and ‘course correct.’ Through your awareness and strategic evaluation, you have the ability to identify the opportunities and areas within your Firm where you are not making good choices. As you develop your Firm’s strategy and outline the specific action items toward achieving your goals, methodically take one implementation step at a time.
Make choices that align with and support your goals and strategic objectives.
Making choices that do not align with your goals and strategic objectives will cause confusion and disharmony amongst your partners. It can also stall or stop your forward progress or land you in the wrong place, and none of these are outcomes are favorable. If this is happening, you have to pause and ask yourself the tough questions and identify the choices that got you there. CPA firm leaders need to take responsibility and be held accountable for their decisions. Leaders do not blame others for the staff crisis, or undesirable market conditions.
Many of the CPA firms that we speak to throughout the country wish to remain independent, but few of them have implemented formal plans to ensure their legacy. Succession planning is not a program that should take place a few years before client service partners and/or leaders are about to retire. It should be an ongoing daily occurrence that considers partner governance and compensation, marketing, recruiting at all levels, and human resource management. Succession planning needs to start at the top with a true sense of urgency. Holding partners accountable for implementing the firm’s succession plan, and compensating them accordingly, is key to the success of the plan.
When it comes to strategic planning, Yogi Berra sums it up!
“If you don’t know where you are going, you’ll end up someplace else.”