In this challenging environment for the accounting profession, large regional firms, and small and midsized firms, have to come up with innovative strategies to grow their top line.

Focusing on client needs, expanding beyond traditional audit and tax services, outsourcing activities from the Big Four, and employee engagement are four tactics that smaller firms are using to increase revenues this year.

"Smaller firms should proactively target and solicit clients from larger firms that may be open to a cost saving," said Arlis Esnough, president of the Association for Accounting Administration and firm administrator for Hansen, Jergenson, Nergaard & Co. in Minneapolis. "Smaller firms also need to increase their exposure, especially where they can showcase technical knowledge, as well as get the firm and its principals known and in front of their target market and community."

There are choices: deciding between the personal touch and the kind of direct partner contact a small firm offers, or choosing a large firm with more expensive fees to buy higher-level knowledge and experience. "Smaller firms can be more competitive in pricing services," Esnough said. "Making firm principals available to prospects and clients is a good way to demonstrate an improved service model. Be proactive, responsive and committed to deadlines. This demonstrates a services model that many larger firms, with higher leverage, sometimes struggle to provide."

Growing advisory service lines is another important area. Certainly, regional and local firms continually rely on them to build revenues, often cross-selling these services from a firm's tax and assurance client base.

"Just being a compliance provider is a losing proposition; without advisory services such as litigation support, bankruptcy consulting, business valuations and other management consulting services, clients will ultimately move on," said Michael I. Daszkal, CPA, managing partner of Daszkal Bolton, a full-service firm in South Florida. "The key to communicating this information is to consistently provide clients and referral partners with a steady and focused stream of information about the value the firm can offer."

In markets where the Big Four also have offices, firms of all sizes with specialty practices or niche interests can take on outsourced business from large firms - an unusual, but quite profitable additional source of revenues for smaller firms. Dawn Hanna Bell, immediate past president of the AAA and firm administrator for Wright, Griffin, Davis and Co. in Ann Arbor, Mich., said that smaller firm partners should create personal relationships with partners in larger firms in order to capture some of this outsourced business. "This would facilitate larger firms feeling more confident and comfortable with the concept of outsourcing to smaller firms," she said.

Big Four firms have outsourced benefit plan audits, tax compliance, internal control outsourcing, SOX 404 and international tax to Daszkal Bolton. "In my experience, there is an art form to selling to the Big Four," Daszkal said. "In our case, we use our Big Four-type talent, quick response times and reasonable fee structure to keep prominent in the minds of Big Four referral sources. Since our firm has a large number of former Big Four professionals, we are able to work through multiple channels to stay connected and identify outsourced opportunities as they arise."

Finding and retaining talented professionals remains an ever-present issue. In contrast to large firms, smaller firms offer a faster track to partnership, with these partners managing fewer associates. This provides a conducive professional environment and, eventually, a higher level of client service.

"The road to partnership in the Big Four is a tough and long process," Daszkal said. "Our firm culture has facilitated an environment that allows us to attract Big Four alumni looking to fast-track their career. Like other firms, we do this through work-life balance and competitive pay, but we also tout the fact that smaller firms can find quicker, often more viable opportunities in middle-market companies the Big Four can't serve."

As the economy improves and business escalates, all accounting firms, no matter their size, will no doubt be closely monitoring the marketplace for additional sources of revenue. The leaders will be the firms that remain innovative in their approaches to retaining clients, while continuing to market their services to prospects and referral sources.

Scott H. Cytron, ABC (www.absolutecytron), is a frequent contributor to industry publications covering professional services. Reach him at

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