Growth Weak But Income Up Slightly

We recently surveyed CPA firms across the country.

• 2010 revenues up only 0.5%.  This compares to a 1.4% increase in 2009. 69% of all firms posted revenue increases in 2010 and 31% saw decreases.
• Income per partner for 2010 is projected to increase 1.8%.
• For 2011, firms are projecting an improved but still modest 3.7% revenue increase and a 4.4% increase in income per partner.
• 31% of firms laid off staff in 2010 compared to 60% in 2009.
• 74% of firms say the number AND the quality of available experienced staff is good: 26% disagree.
• 67% of firms hired staff from the increased labor pool.  Firms are taking advantage of the best labor market in 15 years to upgrade their staff.
• 83% of firms plan to do more marketing in 2011 than 2010.
• The vast majority of firms say the recession has not impacted their merger pursuits.

Common recession strategies:

1. Focus on providing excellent service to existing clients; keep current clients happy.
2. Take advantage of technology to do more with fewer people.
3. Little or no pay raises; layoffs and furloughs. But danger lurks:  60% of firm’s staff are considering leaving, eager to make up for their flattened compensation.
4. Greater efforts to hold partners accountable for their performance.  With the increased effort to avoid reductions in total partner income, there is more scrutiny over partner performance.
5. Focus on improving the efficiency of internal workflow processes.
6. Control costs; cut overheads.
7. Ask for more charge hours from staff (finally!) now that work-life balance has taken a back seat to “I’m glad I have a job.”
8. Watch collections and past due A/R more closely.
9. Increase the focus on strategic planning and goal setting.