Busy is an understatement when it comes to describing the workload of most CPA firms. From solo practitioners to large regional firms, the shortage of work simply does not exist. Less than 100,000 candidates a year are sitting for the CPA examination and only about 80% pass to continue into the workforce.
This number is statistically declining by about 6% a year, leaving much to be desired regarding where the future accounting workforce will come from. All this adds to busy existing firms with more work than most can reasonably manage. Accountants are so busy being busy that we fail to look at what’s coming for our profession and practices.
“The great resignation,” as it has been dubbed, is hitting the accounting industry as much, if not harder, than others. Where we have already struggled to find qualified staff, the move of the workforce away from the traditional 9-5 has made staffing even more challenging than in the past. The number of firms seeking help for tax season is unprecedented, and most struggle to find an experienced manager level and above.
Despite these challenges, as owners and managers of our firms, we must keep our heads up to changes coming. Firms were vastly under-prepared for the staffing challenges that are now hitting. Hiring top talent in a time of inflation and rising costs is a less-than-ideal situation.
So, what else are we potentially missing?
Technology is playing a more key role in our future than ever before. As tech continues to improve, we rapidly speed towards technology replacing data entry and transaction-level jobs. Think automated bookkeeping and tax return data entry. That means that our advisory and consulting services are more critical than ever to remain relevant in the future.
Most of us know that strategic planning and advising is where our clients get the most bang for their buck, and it’s also a feel-good service, unlike the necessary evils of tax return preparation. But not everyone is making this a focal point in their practice.
Advisory work comes easier with years of experience, and it’s harder to train staff as there isn’t always a checklist to be followed. Firms need to start including younger staff on these projects in these conversations. Offering these services is critical to remaining relevant to your clients. Any box shop preparer can enter data into a tax return, making it meaningful to your client’s long-term financial strategy is what sets you apart from your competition.
With the shift to advisory work, as well as a shift in the workforce, the interest from private equity is also a major factor moving forward into the future. Private equity firms want to merge tax and strategic advisory services from CPAs into their financial services business models to make themselves a one-stop shop for their clients. We have already seen top 100 firms closing mergers with strategically aligned private equity partners.
Despite these challenges, as owners and managers of our firms, we must keep our heads up to changes coming. Firms were vastly under-prepared for the staffing challenges that are now hitting.
This is a shift from the traditional model that most of us have seen for decades. We would grow our practices and, at retirement, hopefully, sell out to a younger partner or compete for practice to take over our book of business. But the prospect of private equity means money is on the table now, and it’s not something to be ignored.
These mergers potentially can change the industry’s trajectory quickly. Private equity brings deeper pockets to invest in the future for both technology and staff. Failing to have foresight in this area can mean missed opportunities, or worse, being pushed out in a space where your competitor can invest more in long-term strategy than you.
Before diving into another tax season, it’s critical for us to take the time to strategically look at our practices and consider our short-term and long-term plans. Beyond just surviving another busy season under-staffed, where do we want to be a year from now? Three years from now?
Answering these questions is the critical first step to a sustainable future.