Opportunities for Top Line Growth in 2017 and Beyond
Business is good in the accounting industry.
Sure, there are problems with talent acquisition, boomers aging out, and low hanging merger targets becoming harder to find, but overall, it’s good to be an accounting firm.
The last Rosenberg MAP Survey of smaller firms reported firm revenue growth of 8.1%, up from 6.7%, with organic growth hitting 5.8%, up from the 4.7% reported in last year’s survey. Accounting Today’s last Top 100 Report told us that for large firms, overall growth was 9.3%, up from 8%.
And, for both small and large firms, mergers accounted for roughly 30% of firm top line growth.
What’s on the Deck for More CPA Firm Sales and Organic Growth?
Over the past 10 years, merger activity in the accounting industry has been frenetic, and by all accounts, will not be slowing. But in addition to an acquisition strategy, what opportunities will firms have for top line organic growth in 2017 and beyond?
First, new opportunities will come about because of what’s looking to shape up as legislative, regulatory, standards, and code changes made at the Federal level that will impact every single business and person in the country, as well as in foreign countries. Second, issues related to cybersecurity are only going to get worse, and those firms that can bring solutions to the table will see revenue gains. Third, wild and crazy demographic shifts from baby boomers changing their life priorities to millennials becoming an ever more dominant and driving voice have consequences for the business of accounting.
And fourth, organic growth can come about as a result of making improvements to existing marketing and sales technology, tools, strategies and tactics.
Here’s my take on those opportunities for improvements.
What’s Killing Your Firm’s Organic Growth?
I read an interesting article by Ric Telberg on the Texas Society of CPAs website called The Five Factors Propelling Growth at CPA Firms Today and Why So Many Firms Are Falling Behind that was a comment on the 2015-16 Rosenberg MAP Survey. In the article, he postulated that the reasons for low organic growth rates could be attributed to four factors: lack of hustle, mergers, labor shortages and baby boomers refusing to release their grip on the firm.
While these are certainly all good points, I’d like to add 6 others based on what I see from being on the front battle lines:
1. You’re not spending enough on marketing.
A few years ago, the Association for Accounting Marketing (AAM) partnered with the Hinge Research Institute see what CPA firms are spending on marketing. Per Katie Tolin of CPA Growth Guides, they found that that “firms spend 3.94 percent of revenue—including compensation—on marketing. When compensation is excluded, the amount drops to 2.26 percent of revenue.”
Gartner others have done research showing that marketing budgets in the B2B universe range from 8% to 10% of revenue. In fact, a recent study by Deloitte cited that on the average, B2B firms are spending 7.5% of revenue on marketing, and firms in the “service consulting” industry spend 12%.
2. You lack focus and are spread too thin.
Your organic growth may be stymied because of too many requests for too limited a pool of marketing and sales resources, and in the attempt to be egalitarian rather than strategic, you’re spreading yourself too thin.
It may be time for selecting just a handful of niche practices and focusing marketing and sales resources to those that show the most promise for the best ROI from a concentrated initiative. Check out LeadG2’s Partner’s Guide to Niche Marketing for more observations, insights and guidance on best niche marketizing practices, as well as reading our blog posts on this topic.
3. You’re not spending smart.
Increasing your budget may not be the proper solution and here’s how to tell: if you double your budget and spend it on the same items, will your organic growth double?
It’s not so much about how much you spend, it’s about how smart you spend, and how strategic your spending is. It’s likely that your budget is riddled with a combination of legacy and vanity spending that aren’t contributing to organic growth, and it may be time for a reallocation.
4. Your business development and marketing functions are not in alignment.
Your low organic growth rate may be a function of your business developers not operating on the same page as the marketing team, and vice versa. For example, does your firm have consistent definitions for marketing qualified and sales qualified leads? Have these definitions been developed jointly by biz dev and marketing?
If not, how can your firm possibly make marketing accountable for quality leads capture and handoff, and sales accountable for nurturing and closure?
5. You don’t have enough visibility.
One serious consequence of underspending or ill-advised spending will be the lack of resource needed for your firm to get more visibility in your market. No eyeballs, no leads. No leads, no organic growth.
Visibility is going to be a result of a weave of two strategies: a digital strategy based around SEO and content marketing, and a traditional strategy based around networking, sponsorships, trade association involvement and community involvement.
6. You’re not doing proactive lead generation.
If you’re marketing strategy is geared toward waiting for the phone to ring with a hot lead, then it’s likely that your organic growth isn’t where it should be. Of course, these over the transom opportunities are the best possible leads, but consider this question: is there anything in the foreseeable future that gives you the confidence that the sheer volume (and quality) of these leads over the next year will be so great that it will make your organic growth blues disappear?
It may be time to think about doing some proactive lead generation. Check out this new resource, from LeadG2.
7. Your entire business development structure needs a major tune-up.
The struggles of trying to get partners to be salespeople, or hiring people “for their rolodex” (Oh. Oh. I think I just dated myself!) regardless of their sales talent or skills are organic growth killers. Couple that with antiquated or nonexistent sales technology, tools, processes, accountability, talent and training, and you have the perfect storm for high expectations and low results.
It could very well be the case that making modest improvements to sales infrastructure and processes are gateways to bigger and better organic growth for your firm.
If you would like to investigate now to bolter your organic growth, or want to discuss making movements to your sales infrastructure or processes, click here or call Dean Moothart, Director of Client Services at (407) 913-7091.