Over eight out of 10 firms are offering nontraditional services, according to a new study, and the most successful are posting an average annual growth rate of 29%, up to five times the rate of their slower-growing peers.
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"These three factors are not only drivers of growth, but also signs that accounting firms are evolving their business models," said Hinge managing partner Lee Frederiksen in a statement last week. "Firms across the board are offering nontraditional services like 'business consulting' and 'advisory,' which can be delivered by non-CPA talent. HGFs, in particular, plan to bump up their budget for product development in a bid to diversify those offerings even further — a strategy to address the talent shortage and leverage existing talent."
While most accounting firms have increased their use of digital and cloud technology over the years, high-growth firms sped up the pace of their digital transformation. On a five-point scale, over nine out of 10 HGFs scored in the three highest levels of maturity, according to the study. In contrast, only 23% of low-growth firms achieved that level of digital maturity.
"None of this digital maturity and diversification of offerings is possible without a strong growth function," said AAM president Nicole Sterling in a statement. "This fast-paced growth takes high-caliber expertise in branding and marketing that targets three audiences: buyers, talent and industry media. In order to thrive in today's competitive marketplace, firms can't afford to tighten their marketing belts. In fact, the study's HGFs are planning to spend even more on technology, marketing, and people."
HGFs are more committed to building and reinforcing a workplace culture that draws and retains hard-to-find talent than low-growth firms. They spend 14% more of their marketing budget on people and resources, and are 48% more likely to publicly recognize people for professional and personal accomplishments. Their efforts are bearing fruit. HGF employees are 75% more likely than LGFs to be highly satisfied with their firm's culture. To ensure their advantage in recruiting and retaining talent, HGFs plan to grow their budget for the marketing department's compensation. If jobs are hard to fill, they turn to external resources such as consultants and marketing agencies.
A total of 115 firms participated in the study, representing 954 total offices and more than $6 billion in revenues. The study and an executive summary can be
