Leadership Forum Report - Observations of CPA Firm Growth

This month's Leadership Forum Question is:  What is your current observation of the growth of CPA firms? Over the next three years, what do you expect of the growth of CPA firms?

Here is a first look at an early response from Marc Rosenberg:

 What do I expect? I’m always nervous to project the future because no one knows – no one. The CPA industry graveyard is littered with pundits who predicted the future and failed miserably. (I actually keep track of this so, predictors- watch your back!). Demand is strong for CPA services. Firms are providing an increasingly diverse portfolio of services to meet clients’ needs, the latter of which are growing at a healthy rate. It’s a great time to be a CPA firm. The SCIENCE part of projecting the future can be observed from the last three years Rosenberg MAP Survey results. In every one of those years, the growth rate (excluding mergers) projected for the following year was generally exceeded by 10%. The growth rate projected for 2016 ranged from 5% to 8%. I have every reason to believe that these rates will continue for the next few years. The ART part of projecting the future depends upon the impact of the following:

1. I am incredibly excited about the future of technology, especially in two areas: (a) the evolution of artificial intelligence and (b) the development of IT systems that allow CPA firms to access their clients’ data directly and thus, streamline the work process while reducing liability risk. This may finally, finally be the answer to the horrible labor shortage that CPA firms suffer from.

2. External factors such as a recession and a continued downturn in the labor supply always remain a peril that could stifle growth.

3. Partners in CPA firms are as successful (i.e., wealthy) as ever. We live in a time where partners are fat and happy – they love their work, they manage, on average, $1.5M of clients and earn, on average, $406,000 a year (all from the 2016 Rosenberg Survey, based on 2015 data). It’s natural that partners’ ability and willingness to grow, when they are busier than they want to be and earning more money than they ever thought they would, will be curtailed by complacency.

4. One way to combat this complacency is the presence of strong, dynamic, growth-oriented new leaders who hold partners accountable for proactively contributing to the firm’s growth. There are some very talented new MPs taking office, but whether or not they are able to get line partners to follow them on the path to growth remains to be seen.