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Why specialization is the key to firm growth

Personalization is no longer a ‘nicety’ for today’s sophisticated customers – it’s a requirement.

Leading-edge firms recognize this evolution and are creating tailored service offerings for clients. These firms are moving away from “generalist” services to practice areas specializing in one or a few industry verticals. This shift to niche practices enables them to deliver deeper expertise and strategic guidance through insights such as industry KPIs, benchmarks and business strategies.

Types of niches
Building and growing a niche practice offers many benefits, but first, let me explain the two primary areas of specialization— practice area and industry vertical.

Firms that specialize in practice areas have expertise in how to offer and implement a particular service offering such as Financial Planning and Analysis (FP&A), Client Advisory Services (CAS), Sales & Use Tax or Cybersecurity services.

Firms that specialize in industry verticals have deep knowledge in advising businesses in a particular market segment. Examples include restaurant/hospitality, agricultural, financial institutions, real estate, healthcare or professional services, among others.

Some firms have gone so far as to specialize in both a practice area and industry vertical, positioning themselves as leading subject matter experts in particular industries for specific services. For instance, a firm might specialize in outsourced accounting & CFO services for microbreweries, or SOC examinations for SaaS technology companies.

Increased efficiencies
Regardless of whether your firm decides to specialize in a practice area or a vertical or both, a key benefit is the opportunity to realize numerous operational efficiencies.

As staff is focused on just one industry or practice area, you’ll have more capacity to truly understand your client’s business – the important trends and sector disruptors, as well as their customers and competitors. You’ll also be better positioned to invest in new technologies and systems that create and enhance efficiencies. And since multiple clients will benefit, you can justify the time and expense associated with implementing new technologies.

Firm specialization also makes marketing your practice easier and more effective. You’ll know the right vernacular to target prospective clients and can achieve a higher return on investment on marketing spends because you’re focusing on the right messaging, channels, and keywords.

Improved quality
It’s no secret that specialists create higher quality output. By focusing on a specific service line or industry, you naturally establish a body of knowledge and deep expertise from your experience and repetition. It also results in a more consistent and quality work product and the ability to spot errors when they arise.

Technology also helps drive quality. Whether you automate work deploying robotic process automation (RPA) or other capabilities such as machine learning and artificial intelligence to process industry specific data, you remove the human (mistake-prone) element from the process, thereby increasing quality.

Greater Value
The ability to deliver clients insights on how their KPIs compare against industry benchmarks is a key value of specialization. Restaurant clients, for example, might be interested to know their competitors’ average check amount, tables turned per hour, peak traffic by meal and the takeout versus dine-in variation by day or time. Likewise, subscription or SaaS-based companies would be interested to see how they stack up against their industry’s customer acquisition cost, lifetime value of customers, customer churn, and more. As a subject matter expert in your client’s industry, you’ll be well-versed in benchmarks, putting your services in high demand and positioning you well to charge a premium fee.

Creating a niche practice
If your firm is offering general accounting services to a broad array of clients across a variety of industries, now is the time to assess how to focus on a few key specializations. Consider these steps to build your niche practice:

  1. Assess your resources. Ensure your firm has the presence and reputation to specialize without overextending you or your staff. Also explore opportunities to partner with other firms to build a niche.
  2. Be strategic in selecting your niche. Analyze your revenue to see if a particular type of client or industry is making up a significant portion of your revenue – then spend more time developing business in this area. Consider also building a niche based on you or your firm’s interests or hobbies – passionate employees deliver the best work.
  3. Establish yourself as a subject matter expert within your niche. Learn the issues impacting your niche clients – then create a solution. Seek out opportunities to be a guest speaker or author for industry events or publications.
  4. Ensure firm alignment. While your firm may have several focus areas, it’s important that partners and staff understand the strategic vision and goals for the niche practice. To identify staff, it’s not necessary to recruit those with your niche industry knowledge. Hire smart people and then teach them the industry.
  5. Promote your niche. Don’t just rely on your reputation – branding and marketing should be critical components of your outreach strategy. Many niche practices have also secured their preferred .cpa web domains, including dentist.cpa, church.cpa and forensics.cpa, to promote their firm’s services to target clients.

For more tips and strategies on how to accelerate your firm’s journey towards a thriving niche practice, leverage the following CPA.com resources:

Outlook 2022: Four Takeaways from Digital CPA

We recently celebrated the 10th anniversary of Digital CPA—the annual conference that brings together the entire accounting ecosystem to glean insights, exchange ideas and network. The energy at this year’s event was phenomenal, with more than 700 forward-thinking practitioners gathering in Nashville and virtually to discuss how they can lead the way within their practices and the profession.

A single continuous theme throughout the event was opportunity. There has never been a better time to be in a firm and supporting clients with these transforming capabilities. As you look towards 2022, I want to leave you with four key takeaways from Digital CPA:

  1. Take Client Advisory Services (CAS) to the next level to fully realize opportunity and explosive growth. New CPA.com research underscores the continued high growth of CAS related to other practice areas, and also highlights the key attributes of the high performance firms. New capabilities in FP&A, business intelligence and other key areas also suggest there’s more room to define and expand the category and build client value. In the coming year, we’ll be introducing new tools and learning opportunities to help firms fully realize the CAS opportunity and make the leap to what we’re calling CAS 2.0.
  2. CPAs + FinTech are a powerful combination. Over the past 20 months, the accounting profession proved its worth, playing a crucial role in helping America’s small business community secure forgivable loans through various business relief programs. FinTech solutions such as the CPA Business Funding Portal were key to streamline the process and elevate CPAs’ role as trusted advisors. Firms are well-positioned to advise clients on financing solutions and the evolution of the Portal with the new term-loan offering reflects the growing opportunity for the profession in business financing advisory services.
  3. Focus on the evolution of client relationships to increase value. As former Tesla and Apple executive George Blankenship remarked during his keynote, the customer relationship is constantly evolving, and firms need to work to build long-term relationships. “Once you get people into your ecosystem and keep taking care of them, the chances of them going elsewhere are really small,” he said. How can firms create exceptional client relationships? By fostering innovation to maximize client value through new technologies and business models, including new pricing structures.
  4. It’s critical to continue to specialize as technology advances. In his keynote, MIT Futurist David Autor discussed the future of work, including how the profession can augment its work by automating manual, rote processes. Doing so will free up accountants to focus on delivering business insights and strategic guidance to clients. Autor’s advice on how the profession can remain in high demand? Specialization. “There’s a scarcity of people who can take data and turn it into useful information. Allocate your efforts towards the area where expertise is needed,” he advised.

The Digital CPA community has always been the embodiment of leadership, embracing innovation and pushing the profession forward. We invite you to be a part of this incredible community in 2022. Best wishes for the year ahead.

Talent is Key for Success in Client Advisory Services

Client Advisory Services (CAS) is the fastest growing area of consulting in public accounting. Building the right team to start or expand a CAS practice can be challenging, especially given the pressures CPA firms are under in general on staffing. But a blend of strategies, such as automation, expanded hiring and flexible work opportunities, can help practice leaders meet their goals and keep team members happy.

CPA.com and the American Institute of CPAs’ Private Companies Practice Section (AICPA PCPS) recently put out our latest CAS Benchmark Survey, which offers insight into the challenges firms face in this fast-growing service line, as well as best practices from top-performing practices. The topline results – a 20% growth rate and profit margins for top performers that outpace traditional practice areas – underscore the opportunities in CAS, which we define as a practice area in which firms advise clients across a spectrum of financial and accounting related decisions, with the goal to deliver higher value and deepen the trusted advisor relationship. When it comes to talent development, the survey’s insights fall into three main categories:

Increased Focus on Recruiting and Retention. Acquiring and keeping talent has been challenging throughout the profession, and broader business trends such as increased turnover (what some call the Great Resignation) are also causing headwinds. On a positive note, our survey found that CAS staff were paid on par with other professionals in their organization, so a brain drain to what could be perceived as higher-reward practice areas shouldn’t be occurring.

We found a majority of firms use traditional online advertising, social media, internal recruiting and campus recruiting to fill their staffing needs. However, top-performing firms (defined by us as those in the top 25% of all CAS practices in terms of net client fees per professional) were more likely to pay a recruitment bonus and rely on internal recruiting than their peers. We also know many non-traditional firms look beyond just CPAs and are recruiting data analysts and others with critical skill sets essential to this category.

When it comes to retention, more flexible working arrangements can be a means to convince staffers to stay. The good news is a majority of firms in our survey (59%) said they adapted to remote work surprisingly well during the pandemic and another 13% reported being completely remote – that’s a solid baseline to build on. Another advantage for the category: Unlike tax practices, CAS work is subject to less seasonality, so work-life balance can be easier to achieve.

One key element for firms to focus on is workplace culture. In a recent AICPA Town Hall, for example, Elinor Litwack, CPA, a partner at GRF CPAs & Advisors, said the firm’s emphasis on shared values and respect within the workplace was a critical driver in its growth.

“One thing that really resonates with us at GRF is leading the ‘people first’ culture,” Litwack said. “We’re nothing without our people. It’s not just a talking point.”

Sharpening Skills. Top-performing firms were far more likely to use dedicated staff for their CAS practices than other firms (52% versus 32%). This focus allows firms to provide better engagement efficiency and increased quality in service delivery.

Our survey also showed an across-the-board increase in training hours for CAS firms since 2018 (37 hours per full-time equivalent position versus 27 hours), and an even sharper increase among top-performing firms. The latter are more likely to have staff attend vendor training or certification programs, sit in third-party workshops or conferences, and otherwise invest in outside learning. Some 68% of top-performing firms, for example, said staff had attended one of CPA.com’s CAS-related workshops for practice development. Jennifer Wilson, partner and co-founder of Convergence Coaching, says core training should include soft skills, such as leadership and communication, which are essential to advisory practices.

Emphasis on Efficiency. Billable and total hours were up over 2018 for CAS team members in our survey, probably due to the net fee growth practices experienced. Introducing automation and repeatable processes is key to maximizing staff. Top-performing firms are more likely to use workflow tools (87% vs 77% for all CAS firms), dashboards and alerts (78% vs 66%) and are also more likely to employ artificial intelligence and robotic process automation.

Top performing firms were also more likely to limit the general ledger software programs their clients use to three or less, simplifying staff training and easing client onboarding. Rather than doing custom work for everyone, they are more likely than other firms to productize service delivery, creating defined, repeatable client deliverables to increase team efficiency, scalability, and margin – and, more importantly, free up staff to focus more on advisory work.

Building your CAS practice

The CAS Benchmark Survey offers a wealth of information on staffing practices that firm leaders can review to see how they stack up against their peers. CPA.com has a number of resources to expand training, from our CAS workshops and certificates to our signature Digital CPA conference, which has a considerable focus on CAS. Moving forward, we’re committed to providing new tools and learning opportunities for firms to move into the next level of CAS, an array of higher-order advisory services we’re calling “CAS 2.0”. Talent development will of course be key to this transition.

Phil Quimby is CPA.com’s Product Marketing Manager for CAS

3 Ways to Future-Proof your CPA Firm

DCPA21 Poster

In these disruptive times, one thing is certain: Change is inevitable. In this landscape, it has become increasingly important for CPA firms to know that they’re taking the steps necessary to future-proof their practices against the uncertainty of the future.

That’s precisely why Jeremy Senften, CPA, CGMA, COO at Rea & Associates and long-time alum of the Digital CPA Conference, sat down with Colette Sharbaugh, Director of Communications & PR at CPA.com, for a special LinkedIn Live. In just around 10 minutes, he shared three ways firms can prepare for the future:

  1. Stay ahead of emerging trends

    Trends are just like the savviest accounting professional: They’re always evolving. But in order to truly future-proof your firm, you must be one step ahead of them. Senften says attending top industry conferences, such as Digital CPA, keep him well-informed on new and emerging technologies. In fact, he and his team implemented Robotics Process Automation (RPA) after hearing about it from both session speakers and peers at a previous DCPA conference. Senften recommends educating yourself on new technology solutions that can create efficiencies in your firm’s workflow and delivery of services.

    Preparing your firm for the future also means anticipating your clients’ needs and the opportunity for new service lines. Senften said his firm had always offered some form of Client Advisory Services (CAS), but through the guidance provided at Digital CPA, the firm learned how to grow and refine this practice area.

  2. Watch what best-in-class firms are doing

    It’s also important to keep tabs on what other firms are doing. Pay attention to your competitors, understand the industry benchmarks, and network with other professionals. Every business is different but when you have a true grasp on the differences and similarities between your firm and others in the same market, you can use that data to great effect. Further, by networking you can hear about practical strategies from your peers that are facing the same challenges as you and build long-lasting and mutually beneficial relationships. Digital CPA has been a great help to Senften and hundreds of other accounting professionals by allowing them the means to connect, collaborate, and learn about topical industry updates that they won’t get anywhere else.

  3. Understand your top challenges – and how to address them

    We all face challenges no matter how big, small, specialized, or experienced our firms are. However, Senften explains that it’s helpful to definitively identify those challenges before addressing them. These days, talent and technology challenges are top of mind for every firm. In order to address these challenges, Senften has benefited from the latest research, strategies, and tips that he’s gleaned from past Digital CPA conferences. The information gained during all the sessions, keynotes, and networking activities has made a significant difference in how he’s addressed these problems. In fact, his firm now has 5-6 employees attending each conference so that they all come back to the firm with different insights that can be immediately implemented into their firm.

It’s clear that the future will always be uncertain, but that doesn’t mean firms can’t prepare. Our Digital CPA 2021 conference, held onsite in Nashville Dec. 5-8 and live online, brings together industry experts and profession leaders to share the latest insights, trends and practical strategies to help you take the steps necessary to future-proof your firm and lead the way within the accounting profession. Register before Oct. 31 and automatically save $100 per person on top of group discounts.

Recruiting & Developing FP&A Talent – 4 Tips for your CAS Practice

Client Advisory Services (CAS) practices have been leading the way in growth for CPA firms for several years now. Initial data from CPA.com’s 2020 Client Advisory Services (CAS) Benchmark Survey (launching later this fall) further underscores this point: CAS practices reported a median growth rate of 20% last year and are showing significantly stronger performance than other practice areas.

With growth like that, it’s no wonder CAS is getting a lot of attention. Within CAS practices, one of the fastest growing areas is Financial Planning & Analysis (FP&A). New, all-in-one software tools such as Jirav are helping CAS practitioners take forecasting, budgeting, and other planning and analysis activities out of Excel, enabling them to seamlessly integrate and extract data from the general ledger and other systems such as payroll and customer relationship management.

Your firm may already be employing such tools and processes, or you may still be using Excel for advanced and complex forecasting and budgeting and are struggling with its limitations.

Regardless of where your firm is in your CAS journey, there’s an opportunity to deliver greater value to clients through agile forecasting and budgeting — the pandemic has made this need obvious. As firms move to meet this new demand, a key challenge will be recruiting and training talent. For CAS and FP&A, appropriately skilled talent is critical to long term success.

We spoke recently with Dan Gertrudes, CEO of GrowthLab Financial, a Finance-as-a-Service firm with an established FP&A practice, about how to identity and develop top talent. While GrowthLab is not a traditional CPA firm, the strategies he shared can help CAS practices build solid teams and talent pipelines:

  1. Dedicate Staff to FP&A. A key takeaway from the 2020 CAS Benchmark Survey was that top performing firms have staff exclusively focused on CAS. That bears repeating. CAS team members work solely on CAS. Extending that further, again depending on your practice, you may want to consider positions that are entirely FP&A. In GrowthLab’s case, they have a dedicated FP&A group that works with clients on their long range and annual operating plans as well as monthly deliverables.

  2. Understand the skills required for the role. Gertrudes recommends developing the profiles and skills needed for each role and then seeking the right talent. “We hire based on fit,” he says. His firm often recruits from non-traditional backgrounds such as econometrics or marketing. “Our hires are entry-level for the role, then receive the mentorship and training from our more experienced team members.”

  3. Invest in staff. Your talent development program starts as soon as a new hire walks in the door. The onboarding process is your opportunity to set the tone and make the right impression. “Our values of transparency, mentorship, balance and risk-taking are intentionally aligned with developing strong team members,” Gertrudes says.

    Additionally, CAS Benchmark Survey data shows top performing firms investing over 40 hours annually in each staff member in areas such as vendor training and certification programs, CPA.com conferences and workshops, vendor conferences, and internal training programs.

  4. Rethink how you look for talent. In the wake of the pandemic, the question of remote work is front and center for the profession. Many firms have implemented technologies to make work-from-home or work-from-anywhere a long-term viable option. Hiring remotely can also give firms struggling to recruit in their local geographic market a broader candidate pool.

    Gertrudes admits, however, there is downside to remote work: mentoring can be challenging. “Remote isn’t a great option for our entry-level folks. We place a huge emphasis on mentoring and in a remote environment they miss out on a lot.”

    As for sourcing talent at the entry level, he suggests recruiting at the second and third tier schools that aren’t on the larger firms’ radars. “We end up being the big player at some of our target schools and have made some great hires,” he says. “While we don’t avoid tier one schools, it goes back to hiring based on fit, not academics.”

FP&A services offer a tremendous growth opportunity for CAS practices. Put in the work now and develop a talent strategy that will help keep your CAS practice on its upward trajectory. Watch our free webcast “How to Recruit and Upskill Staff to Grow a Successful FP&A Practice” to learn strategies to identify and cultivate a high-potential team for FP&A services.

A Closer Look at Our Startup Accelerator Companies

The CPA.com/Association of International Certified Professional Accountants Startup Accelerator is an annual program that finds, invests in, and guides early-stage tech companies with solutions that support accounting and finance professionals. This blog series provides a deeper look at the five companies in the 2021 cohort.