Here's a fascinating fact: No one knows how many CPAs there are in the world. You may hear rough figures bandied about, but they're all just guesses, using approximations based on outdated figures that weren't reliable even when they were timely.
Sure, you can get pretty good figures for the membership of the American Institute of CPAs, and for all the various state societies, which you could conceivably add up, but not every CPA belongs to a membership organization. For something approaching a useful number, you'd have to go to each of the 50-odd licensing bodies (don't forget Guam!) and add up all their rolls - but, though that's as close to accurate as you're going to get, you're not going to get a completely accurate figure because each board of accountancy handles renewals and registrations differently, and many aren't totally on top of purging their lists of the inactive, the imprisoned or the interred.
Along similar lines, and for similar reasons, no one knows how many CPA firms there are, with best estimates ranging from 45,000 to 150,000 (depending on how you're counting sole practitioners).
Now, while it's odd that a profession best known for counting beans and crunching numbers should have such hazy statistics, it's not necessarily a problem. After all, there are much more precise figures available for some of the bigger issues -- the number of people taking the CPA Exam (not enough), the number of successors to the current generation of firm leaders (too few), the percentage of female partners (too low), the representation of minorities (ditto), and so on. (To be fair, there are positive figures, too -- strong growth rates, high demand for new services, rising salaries and so on.)
That we don't know exactly how many CPAs there are, or how many firms, is not particularly critical, but it is symbolic of all the other things accountants don't have hard figures for -- relatively simple things to measure and add up and otherwise crunch that might actually make a difference to your success. The plans you make for your practice need to take intangible things into account, certainly, but they also need to be based on real data. Here's a sample of things accountants shouldn't leave unquantified:
- Who are your best clients, in terms of actual hours worked and revenue realized? There's value to long-term relationships and working with clients you like, but you need to be able to measure that against hard numbers.
- Which of your staff and partners generate the most revenue? You can't afford coasters - and you can't afford not to recognize your stars.
- What percentage of firm revenue comes from one-off client work, and which from repeatable services? It's not uncommon to undertake a unique task for a good client, but bespoke services are worth less in the long run than those that you can roll out to your entire base.
- How are your competitors doing? As Gale Crosley pointed out in a recent column, many firms have a good idea of their own performance, but no idea how they stack up against rival firms.
- For larger firms, how long, on average, does it take to make partner? How many new partners do you make every year? These are crucial figures when it comes to succession, and they may be sending a negative message to the younger generation.
- How much is your firm worth? Not how much do you think it's worth, or hope it's worth, but how much is it actually worth? No matter what size your practice is, your idea of its value is probably different from the market's. Don't make plans on your own guesstimates -- get a proper valuation.
As all accountants know, numbers are much more slippery than the layman may imagine, and sometimes it's just not possible to get pinpoint accuracy. But where numbers are available, they should definitely be part of the conversation -- after all, they're the language of accounting.
