CPA firms down, but not out, from COVID-19, survey finds
Accounting firms have been affected, but not sunk, by the COVID-19 pandemic, according to a recent webinar hosted by Sarah Johnson Dobek, founder and president of Inovautus Consulting.
The "CPA Firm Growth Outlook Amid COVID-19 Survey Findings Webinar" explored how firms have been managing since the onset of the COVID-19 pandemic and where they are likely to stand at year's end.
Inovautus surveyed 109 firms and received 95 unique responses. Of the firms polled, 31 percent had revenues between $10 million and $30 million, 16 percent had revenues over $30 million, and another 16 percent of firms had less than $1 million in revenue.
When asked about the anticipated impact of COVID-19 on their total net revenue goals for the current fiscal year, 50 percent of the firms said they were on track for 10 percent below their projected goals from the beginning of the year. Twenty-one percent said they were 11 to 30 percent below their projected goals, with 9 percent expecting a growth in business.
"Firms of every size face the same conundrum as a result of COVID-19 ramifications: Their outlook on growth does not look the same today as it did in January of 2020," Dobek wrote. "While it’s clear there is an expected decline in the initial growth percentage goals for 2020, that doesn’t mean firms will not see growth this year. It will just look different than what was planned."
Both the largest and smallest firms polled expected to have revenue goals of less than 10 percent below their original projected goals. “The smaller firms, we believe, are benefiting from advisory services … COVID is creating more advisory opportunities,” Dobek said during the webinar.
Dobek added that marketing is still an important part of firm services during the pandemic, even if markeing is not top of mind. "While marketing is usually the first area cut in times of economic stress, such as 2008, the crisis created by the pandemic has presented a different mindset around a commitment to marketing," Dobek wrote. "Overall, many firms are taking a wait-and-see mentality. Firms are using cautious optimism and realigning dollars in response to the now virtual business climate."
Other notable figures from the poll include:
- Fifty-three percent of polled firms expected to grow at a lower rate than their budgeted growth rate; 24 percent believe they will grow and meet their budgeted growth rate. “By and large firms believe they’re going to grow, but not at the rate they thought they would," Dobek said.
- 89 percent of respondents felt optimistic about their firm’s continuity and feel they will “weather the storm”;
- 78 percent of respondents felt confident that their roles and responsibilities will remain similar after the pandemic;
- 84 percent of marketing respondents felt optimistic about their job security;
- 61 percent indicated they were making no changes to contractor/employee compensation at the time of the poll;
- 55 percent of respondents indicated they had created and launched new services as a result of the pandemic;
- 88 percent of these added services are related to the Paycheck Protection Program.
Dobek stressed the importance of advisory services during the pandemic and their importance in retaining clients.
"Firms have long been focused on making the transition from compliance to advisory services, and while the challenges presented by COVID-19 and related legislative opportunities have altered focus, a commitment to advisory services is still proving the catalyst to firm growth," she wrote. "While a subset of firms is launching new services (mostly related to PPP) or enhancing existing services, some are taking a wait-and-see mentality here as well. The critical task for firms looking to grow is how to pivot from PPP and other compliance work toward more long-term advisory services. Important to note is that clients who feel they didn’t receive adequate support during the crisis will be looking elsewhere for advisory eventually."
For more on the report, head to Inovautus Consulting's site here.