IMGCAP(1)]The current recession continues to linger, despite what the economists say, and though modest improvements are being seen, a return to healthy growth rates and profit increases is nowhere in sight.
In mid-December, we surveyed CPA firms across the country. The results showed:
• 2010 revenues will finish up only 0.5 percent. This compares to a 1.4 percent increase in 2009. 69 percent of all firms posted revenue increases in 2010 and 31 percent saw decreases.
• Income per partner for 2010 was projected to increase 1.8 percent.
• For 2011, firms are projecting an improved but still modest 3.7 percent revenue increase and a 4.4 percent increase in income per partner. Firms continue to surprise themselves by being able to maintain income levels in the face of flat revenue growth.
Staff Layoffs and the Labor Market
Thirty-one percent of firms laid off staff in 2010 compared to 60 percent in 2009.
There is a wide variation in how firms see the labor market. Some say the availability and quality is good while others acknowledge that the number of available experienced staff is up, but the quality is NOT good.
Our survey shows:
• 74 percent of firms say the number and the quality of available experienced staff is good. Several firms observed that the quality of staff is decent, but not as good as it was in 2009.
• 26 percent of firms say the quality of those available is NOT good or they are not sure.
Sixty-seven percent of firms hired staff from the increased labor pool. Firms are obviously not hiring to handle growth but are taking advantage of the labor market (the best it has been in 15 years) to upgrade their staff.
Marketing and Practice Development
Eighty-three percent of firms plan to do more marketing in 2011 than in 2010.
Strategies to be pursued by surveyed firms are:
• Building up a niche or specialty.
• Hiring a marketing consultant, sales person or marketing director.
• Training of staff in practice development.
• Focusing on differentiation of one's own firm from the competition.
Recession's Impact on Mergers
The vast majority of firms say the recession has had no impact on their efforts to merge in smaller firms. Many firms have always pursued mergers aggressively and see no reason to change.
Firms Pursue These Strategies to Address the Recession
1. Focus on providing excellent service to existing clients; keep current clients happy.
2. Take advantage of technology to do more with fewer people.
3. Focus on improving the efficiency of internal workflow processes.
4. Control costs.
5. Get more charge hours from staff (finally!).
6. Watch collections and past due A/R more closely.
7. Increase the focus on strategic planning and goal setting.
Marc Rosenberg is a nationally known consultant, author and speaker on CPA firm management, strategy and partner issues. He is president of his own consulting firm, The Rosenberg Associates, Ltd., based in the Chicago area. He has consulted with over 600 firms and publishes The Management Catalyst, a quarterly newsletter on CPA firm issues.
