Can your firm thrive from the coronavirus?
What a great question. Right now, most CPA firms are working through the CARES Act. This is going to create a short-term revenue windfall, but once that slows, the extent of real client damage will emerge. Some clients are thriving, but most are suffering. Thriving clients might also experience a revenue drop once COVID passes. The wildcard is how much could firm revenue shrink?
Some positive outcomes for CPA firms from COVID-19:
- Education. The experience their staff is being exposed to on how to consult with clients.
- Change. The ability to transform their firm into a deeper consultative position.
- Alignment. The opportunity to realign who they target as a client and how to pursue them.
- Merger. The potential to acquire or merge other firms into their existing office to make both firms stronger and/or to expand a firm’s footprint into new geographies.
Change creates opportunity. What comes next is endless possibility. How each firm decides to emerge from this will define how they control their future. Some firms will go back to the way things were and focus on their compliance services. Others will learn from the consulting situation being forced upon them from COVID-19 and move deeper into the advisory space.
Assume firm revenue decreases. How prepared is your firm to be the aggressor? Is there a track record of targeting and approaching prospects to pursue? Has there been a display of successful sales skills to close work? Firms need to objectively evaluate three elements of their business development efforts:
1. Total need. How much new work is needed to achieve their growth targets? A key aspect is how to predict firm runoff. Traditional runoff is consulting that does not repeat and clients who exit due to a sale or merger. Use 10 percent for your runoff estimate. Firms with deeper consulting services and mature clients should use higher numbers. Post-COVID-19 runoff might be steeper.
2. Selling skills. Who in the firm brings in material new work? Not referrals when the economy was booming or won because another firm had excessive fees. Who can convince a prospect to work with your firm over the other choices a prospect has? In most firms, it is a few people. An industry-trained CPA salesperson is not the answer. Clients are buying the relationship with the partner, not a salesperson. You need to train the partners and managers how to sell.
3, Defining targets. Weak sales skills are a major barrier, but selecting which prospects to target and creating the messaging and processes to pursue them is essential. Does your firm have defined prospects to pursue? Are you calling them? What strategies exist to get in front of them? There needs to be a compelling reason for a prospect to switch firms.
There is a silver lining: The recruiting gap should close. A 30 percent unemployment rate will have a lasting change. For CPA firms, if revenues shrink, more accountants will enter the workforce. Another bonus is what if employees come back from the isolation and feel more engaged and appreciative of their job?
The accounting profession has been changing for some time. COVID-19 is forcing change. Once this crisis passes, it is just a question of what move every firm decides to take. Will they slide backward, try to remain the same, or transform and adapt?