How Small Firms Can Grow in a Challenging Marketplace
The CPA firm marketplace is changing rapidly, as consolidation of the profession is creating larger regional and national firms and providing the small local firms that combine with them much greater resources. In addition, the competition for quality clients and staff has reached an all-time high.
These dynamic market forces are changing the way small firms are competing now and how they will compete in the future. It’s critical for small firms to properly position themselves in the marketplace to retain their clients and compete effectively for new business. The underlying logic here is that a firm’s strategic options are changing quickly due to the constant flux of the CPA firm environment. Thus, what made a firm successful in the past may not be the same strategy that it will need to be successful in the future.
Market positioning should be a significant factor in determining where to dedicate and invest resources to sustain a competitive edge in the local marketplace. When determining a small firm’s positioning, the following factors should be considered:
- The size of the firm relative to the competition in the marketplace and geographic territory
- The niches and specialty areas the firm is capable of servicing and that are in high demand
- The marketing and practice development capabilities of the partners and the level of talent and the availability of marketing support systems and marketing professionals
- The ability to attract, develop and retain highly qualified professionals to service current clients and new business with a value-added and client-centric approach
- The competencies and technical skills of the partners and staff and the willingness of the partners to be proficient in new services and niches
- The firm’s financial resources to invest in marketing, public relations and lead generation initiatives
- Anticipating the future competition for clients and staff in the firm’s geographic marketplace
Most small-firm partners have the technical and advisory skills to provide quality and value-added services but lack the staff capacity to take on new business. Outsourcing as much work as possible to free up staff time allows the partners to delegate more work to staff and to be client-trusted advisors and relationship managers while also developing new business. Typical work to be outsourced includes:
- Tax returns
- Accounting services, including compilations
- Wealth management and financial planning
- IT consulting
In developing a marketing strategy, first create the criteria of ideal clients within high-growth types of industries and niches and the related services that are in demand. Then develop a plan to target ideal clients that meet the criteria that will provide the greatest ROI. Some of the growth areas that small firms can target are:
- Family office and personal financial business management
- Wealth management and financial planning
- Outsourced CFO, controller and accounting functions
- Pre-audit preparation services
- Medical marijuana and cannabis industry accounting services
- Startup company services
- Small business advisory and industry consulting
It’s also necessary for small firms to develop and implement contemporary marketing strategies, such as:
- Outsource the firm’s marketing, public relations and lead generation activities.
- Embrace digital marketing and social media.
- Develop new and innovative services.
- Join an association/network of firms to obtain additional technical resources and extensive geographic coverage.
- Create a high-performance website and that is comparable in professionalism to larger firms’ sites.
- Develop thought leadership content using ghostwriters and customized newsletters.
- Publish blogs on “hot topics” on a regular and consistent basis.
- Speak directly to your target market via webinars and podcasts.
- Hire a part-time lead generator.
Proper market positioning and targeting the best potential new client prospects is an important factor in determining a small firm’s strategy. Positioning a firm involves making hard decisions about how the market is shifting for clients and staff and analyzing the changing landscape of the competition. To be successful over time, the firm must align and adapt its market positioning, partners and staff according to the changing marketplace. The ability to take a good look at the future of the CPA firm marketplace and to realistically assess the resources required to effectively compete in the future are the necessary ingredients to developing and implementing a successful strategy.
The time to make critical positioning changes is now. Remember, “It is not the strongest of the species that survive, not the most intelligent, but the ones most adaptable to change.” — Charles Darwin
Joseph A. Tarasco
Joseph A. Tarasco, CEO and senior consultant, Accountants Advisory Group, LLC, assists the leaders of public accounting firms by consulting in all areas of firm practice management, including succession and strategic planning, firm governance, mergers and acquisitions, partner compensation structure, practice development, facilitating partner retreats, and leadership consulting. He is a member of the NJCPA Content Advisory Board and can be reached at firstname.lastname@example.org.
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