The Year Ahead: Top opportunities for 2023

November 28, 2022 9:00 AM

The next 12 months are a great time for accounting firms to rethink their growth strategies and business models to position themselves to make the most of a range of new opportunities, according to a panel of managing partners, thought leaders, consultants and other experts surveyed by Accounting Today as part of our annual "Year Ahead" program.

Many suggested that in 2023 firms should focus on a more "intentional" approach to what services they offer, what clients they serve, how they price their offerings, their growth plans and just about every other aspect of their practices.

Others pointed to the opportunities to leverage technology and digital transformation to make firms more efficient, more effective and more profitable (to say nothing of being better able to handle the ongoing staffing shortage), while still others noted the continuing high demand for accounting services, particularly advisory services, as a positive aspect of the next 12 months.

The panels' responses to the question, "What is the biggest opportunity for accounting firms in 2023?" are below. You can also see their thoughts on the biggest challenges facing accountants, and the results of Accounting Today's annual survey of accounting firms about their plans for next year.

Aiello-Michael-Centri Business Consulting

A focus on transformation through technology is an opportunity for any accounting firm, regardless of size or maturity. Technology advances are integral in the way we serve our clients and how our clients will grow and thrive. Technology will transform what is possible for businesses — firms and clients alike — and employees, clients and partners are eager to see how firms harness these changes.

— Michael Aiello, CEO and managing partner, Centri Business Consulting

MACPA

The human capital challenge we face as a profession goes far beyond the initiatives or reach of any one firm or corporation and beyond any association. It is only through purposeful, transparent collaboration that recognizes that a rising tide will raise all boats, that our profession will not just survive but thrive into the future. Working toward this, together, is not optional. The "public" in our middle name mandates it be a collective effort for the betterment of all.

Though often silent and behind the scenes, the accounting and finance profession is a critical piece of infrastructure in the economy and our world. Having the talent to serve and maintain that infrastructure is essential.

One final and hopeful insight: Henry Ford once said, "Coming together is a beginning. Keeping together is progress. Working together is success." Through the challenges of the last two and a half years, I have seen the power of this on display in our profession and it gives me great hope and excitement for our future.

So, in a word — the opportunity is for collaboration. To share and learn from one another and, in doing so, create relationships and opportunities, that build something bigger — something that benefits all of us (individual professionals, our organizations, our profession and our world).

— Rebekah Brown, CEO, MACPA

The biggest opportunity is specialization. Mergers, private equity and chronic understaffing will motivate some clients to consider provider alternatives. Firms who have the discipline to reshape their client base, display a differentiated value proposition, and grow revenue strategically have a unique opportunity to grab market share.

— Gale Crosley, Founder, Crosley + Co.

While we are currently dealing with rising inflation and interest rates, energy shortages, geopolitical instability and declining growth, firms in the accounting profession can still find significant success if they find ways to streamline their processes and cut costs through digital transformation. Firms that invest in bolstering their tech stack and training their employees to become proficient in digital skill sets will keep pace with client needs and remain competitive within their respective sectors.

— Avani Desai, CEO, Schellman

Decide who you want to be and intentionally grow toward that vision. For so long, firms have taken anything breathing, believing that business development is learned by taking on clients that wouldn't serve the long-term purpose. The smart firms are using this forced transformation to redefine who they want to be in the future and start to align their practices around that.

— Sarah Dobek, President and founder, Inovautus Consulting

Strategy, technology, valuations, transformation and ESG initiatives are all areas where our critical thinking, analysis and risk management skills are opportunities for firms. The "bad" news of increasing complexity and uncertainty is also the good news. Our value to our customers, clients, business partners and other stakeholders is reinforced even more so in an environment of increasing ambiguity.

However, to maintain our role as trusted advisors, we have to be further ahead and anticipate change faster than those who rely on us for the answer. Otherwise, they will ask someone else — perhaps not in our profession. Further, our clients are consumers. On-demand food, rides, classes, financial services, etc., have raised client expectations and, to maintain relevance, we must be responsive to automation expectations, market news and trends. By updating and enhancing our services, we can reinvent ourselves even as we serve the public interest and also unlock increased growth and revenue.

— Kimberly Ellison-Taylor, CEO, KET Solutions

Terri Keefer

Becoming very intentional about who we serve (client selection), what type and level of work we focus on doing more of and less of, and how we price the work we choose to keep. We are at a crossroads with all three.

— Michelle Golden River, Founder, Fore

Finding ways to tap into the demand for advisory services … getting face to face with key clients. It appears the art of consulting with top clients has been difficult in terms of purely having time to do so. Accountants report to us that when they do sit down with clients, they are always able to pick up new work. The challenge has been having enough resources to allow time to get back to meeting with the clients.

— Julio Gonzalez, CEO, Engineered Tax Services

The biggest opportunity firms face in 2023 is reinvention. Firms must plan differently now than they did previously. Leaders must make investments in team member development and retention a priority. A focus on streamlining operations, efficiencies through technology, outsourcing in some cases, client culling, pricing strategies, and improved communication and culture should take center stage. An appropriate focus on these issues will allow firms the opportunity to continue emerging as the most trusted or valued advisor. In addition, it will create more meaningful and exciting work for team members, positively impacting member and client retention and increasing profitability.

Firm leaders should include people at multiple levels, offices and diversified roles to aid in planning for the future. Gone are the days when a few should make all decisions. Instead, we need all hands on deck to innovate our strategies to create new thinking, expand buy-in, and solve and anticipate future challenges before they occur. Nothing treats burnout like excitement for the future. The more talented and diverse minds are working together to reinvent firms and create opportunities for team members, clients and the firm, the better.

— Angie Grissom, Owner and chief relationship officer, The Rainmaker Companies

Automation. The training of AI models has improved 94% since 2018, according to McKinsey. Automating systems creates efficiencies, enabling teams to shift their focus to higher value-based activities. This not only results in happier employees, but also enables firm scalability.

— Kacee Johnson, Vice president of strategy and innovation, CPA.com

With staffing being the most significant overall challenge, I believe firms will make concerted efforts to adopt tools to automate processes and to further leverage the capabilities of existing staff. This means adopting "modern" portal solutions to allow firms to collaborate digitally with clients, digital signature/engagement tools that include automated payment capabilities, and I see firms latching onto the advanced capabilities of workflow/ERP systems that will manage all firm engagements, especially the increasing volume of CAAS (client accounting and advisory services) engagements. In particular, I see a significant competitive advantage for firms building or acquiring a comprehensive technology stack of applications in which to build their advisory services upon and training their people to optimize the business information it produces.

— Roman Kepczyk, Director of firm technology strategy, Right Networks

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The biggest opportunity for accounting firms in 2023 will be in raising rates and spending more time with A clients and less time with C and D clients. Some firms have been doing this the past couple of years (since 2020) and the results have been staggering.

— Allan Koltin, CEO, Koltin Consulting Group

Balancing remote/hybrid work environments and career progression for those that are remote. Our biggest issue is still people — finding good people at a reasonable compensation to do the work. As compensation rises for our people, we raise our rates and pass through to clients, but that's not sustainable if the compensation continues to rise like it has this past year. We need to outsource and automate more to balance this.

— Heidi LaMarca, CEO and MP, Windham Brannon

The need to transform their firms by adding or increasing their advisory footprints. It increases profitability, provides enhanced value that clients will remember, and enables a firm to deliver these services without being dependent on a CPA. The staffing issue is not going to get better so they either need to move into this sector or watch their firm fall into the tar pit.

As an M&A professional in the middle of 30-plus live transactions, we have tough-love conversations with firms weekly on their expected value and unfortunately have to tell many of them they have very compromised value or are non-saleable. To be clear, the compliance service model is not going away, but the value add is in advisory and the compliance focus has material capacity problems that will not be resolved.

If you want to sell, merge or conduct an internal succession in your firm, which every firm has to do one of these steps eventually, firms need to understand what buyers want. That buyer can be a third party or your internal succession team.

— Bob Lewis, President, The Visionary Group

This is a great time to be in accounting and consulting!! Current and emerging firm leaders have the opportunity to reimagine and redefine their firm and build a practice they love and that brings joy. This will only happen if they are willing to focus and make the business model changes needed to solve the challenges they are experiencing. A practical plan for 2023 includes:

• Choosing no more than three strategic initiatives and make real progress on them and empowering their NextGen talent to lead these changes.
• Implementing more alternative staffing solutions and narrowing the client focus to create capacity, as listed above.
• Moving away from time-based results and instead focusing on new results-based metrics.
• Stop waiting to "get back to normal" and resisting the change they need to make with statements like, "Future leaders can make change when the current partners retire."

The real challenge for current leaders is that there won't be new partners to take over the firm if current leaders wait to change, which equates to not changing. So, the No. 1 priority for current leaders to focus on in 2023 is setting aside their preferences and building a firm that emerging leaders are inspired to own.

— Tamera Loerzel, Partner, ConvergenceCoaching

Future firm success depends on the transformative decisions made in 2023. The biggest opportunity is redefining the business model and the way we operate to better attract and retain talent. Whether it's reimagining roles within firms, establishing relevant KPIs, shifting away from a time-based revenue model or limiting the numbers of clients we serve, the important thing is to create our own destination before it's created for us.

— Eric Majchrzak, CEO, BeachFleischman

There is an accelerating trend for businesses to outsource their accounting and bookkeeping functions and CFO services. This is creating tremendous opportunities for accounting firms of all sizes to grow their revenue base.

— Ed Mendlowitz, Emeritus partner, Withum

Intention! The profession is at a breaking point and something has to give. I'm hoping that professionals actually pause to figure out how to move forward. They need to consider how they can use new technologies to evolve and support their teams. How they can reset their cultures by embracing work from home, limiting work hours or just doing something different. How they can rethink their business models and pricing to evolve to something that will be sustainable in the future.

The true positive is that technologies are really starting to evolve and are solid tools for professionals. But the million-dollar question is: Are CPAs willing to do something different in 2023? Let's hope this is the year.

— Jody Padar, Vice president of tax strategy and evangelism, April

The biggest opportunity for accounting firms in 2023 is providing valued insight and analysis to clients as part of our traditional services, helping clients increase their profitability and ensuring the profession's long-term relevance.

The current business model for most accounting firms is growing revenue by adding more of the same — traditional commodity work, primarily audits and tax preparation engagements. Firms are expanding into CAS (client accounting and advisory services), though predominantly in commodity-type services such as payroll, accounts payable and financial statement preparation. While increasing revenues, it's tedious work, which doesn't help with retention and recruitment, is ripe for automation and offshoring, and is not viewed as value-added by clients.

With an increasingly complex business environment and expanding automation, what clients and companies really want is help in making their businesses more successful and profitable. Clients don't become wildly successful by getting a clean audit or even a great tax strategy. They become wildly successful by increasing revenues or lowering costs and who better to provide that insight than one's accounting firm?

Changing will require a different skill set — developing strategic thinking skills in all staff — but, more importantly, a new mindset. We have to move from the most trusted advisor to the most trusted and strategic advisor. It will require us to have deeper relationships with clients versus just adding more traditional engagements. Many firms will say, "Why should I change? I'm making more money than ever and am busier than ever." Automation and offshoring will further commoditize our traditional services. Moving to become the most trusted and strategic advisor will increase our stickiness to clients, improve recruitment and retention by providing more interesting work for staff, and ensure the relevance of our profession.

— Todd Shapiro, President and CEO, Illinois CPA Society

The biggest opportunity for firms is to use the lessons learned from the past few years to shake things up when it comes to their culture. Firms can build (or strengthen) a culture that attracts, retains and develops talent — so that their greatest assets feel like they're invested in, that they have the flexibility they need in their lives, that they belong, and that they're being given opportunities to grow and develop. That growth can include the chance to work in new service lines like ESG, digital assets and deeper levels of client accounting and advisory.

— Lisa Simpson, Vice president of firm services, AICPA

Enoch Gonzalez - Enoch Photograp

ESG and sustainability reporting and decision-making for internal and external stakeholders. It incorporates many interdisciplinary value chain activities such as data modeling, ERM, internal controls, FP&A and more.

— Jeff Thomson, president and CEO, Institute of Management Accountants