Nearly three-quarters of accounting firms say they are thriving or growing, according to a new survey by L. Harris Partners, the fifth consecutive year that firms responding to the annual survey reported that their overall condition has improved.
The trend has largely been driven by year-to-year improvement in the health of firms’ consulting practices. Those firms that indicated they are either “very optimistic” or “optimistic” about the year ahead totaled 75 percent this year, compared to 47 percent five years ago.
However, the total is down from last year’s survey, when 86 percent of respondents were positive about the year ahead. The decline appears to be caused by several factors, including uncertainty about the regulatory environment and health care reform, the scarcity of experienced staff, competition in recruiting and retaining talent, and the challenges of growing organically when the market for traditional services is not expanding.
Among the priorities and goals cited by the survey respondents for this year are recruiting and retaining quality talent (13 percent), strengthening existing practices and niches (11 percent), training and developing staff and future leaders (8 percent), and merging with or acquiring another firm (6 percent).
In terms of specific growth strategies and tactics, recruitment and retention of top talent was cited by 80 percent of survey respondents, up 21 percentage points from last year, and 58 points since 2010. Selling more services to existing clients was the second most mentioned strategy at 78 percent, slightly less than last year, when it was cited by 82 percent of the respondents. In third place came selling more of the firm’s existing services to new clients, which was noted by 63 percent of the firms polled. Asking clients for referrals was a strategy cited by 57 percent of the respondents. However, the same percentage of respondents said they are not spending enough time asking for referrals.
Merging with or acquiring other firms, practices or offices was a growth strategy cited by 55 percent of the firms surveyed as one of their top-priority growth strategies for 2014, up from 22 percent last year and just below the 59 percent of respondents who mentioned it in 2010.
Sixty-seven percent of the firms surveyed admitted that they do not spend enough time having conversations with their most important clients to understand their goals and plans. In addition, 57 percent of the survey respondents confessed they don’t spend enough time cross-selling services to existing clients. Fifty-two percent of the firms said they need to spend more time developing client service plans for their top clients. And 41 percent of the firms surveyed said they don’t spend enough time measuring the satisfaction of their clients with their services.
For more details on the survey, visit www.LHarrisPartners.com.