Focus Article- Apoorv Dwivedi

Rise Above the Challenges: Planning for Firm Growth in 2023

Strategic planning is crucial for growth in the accounting and advisory industry.

It involves assessing the external environment for threats and opportunities before identifying potential strategic actions.

Challenges to Firm Growth

In 2023, accounting and advisory firms face several looming threats to business growth. Some of the top threats include:

Uncertainty in the domestic and global economies.

Economic uncertainty and instability can make it difficult for firms to plan for growth, especially for consulting and advisory services because firms may face forecasting challenges about future demand for these services.

Failure to rebound to prepandemic levels.

The pandemic significantly impacted the global economy and many businesses are still struggling to recover to pre-pandemic levels in 2023. Many firms and industries were expecting business to return to pre-pandemic levels, but it will not.

Increased competition from nontraditional sources.

With the rapid rise of remote and online work, more players in the market are offering accounting services in this manner, which can lead to increased competition for traditional firms. Taking remote work a further step, offshoring can challenge pricing models for traditional, commoditized services.

The increasing role of technology.

It can be challenging for firms to keep up with the latest technology developments and trends, particularly with artificial intelligence's (AI) explosive growth in late 2022 and early 2023. AI applications can be far-reaching, with new use cases and applications hitting the market daily, it seems.

The regulatory environment.

Changes in tax laws present opportunities for compliance and tax strategy but can require firms to invest more resources to stay abreast of changes and adapt to meet client needs.

Talent attraction and retention.

One of the continuing threats to accounting and advisory firm growth is the ongoing challenge for firms to attract and retain top talent. In a labor-intensive industry such as accounting, overcoming capacity restraints due to labor can be crucial for firm growth and success.

Industry mergers.

Mergers and consolidation in the industry will decrease the number of independent firms, making it harder for small and independent firms to compete. This may lead to reduced profitability, market share and, potentially, the exit of some of these businesses from the industry.

Strategies to Address Growth Challenges

By monitoring the economic conditions and being proactive in addressing potential threats, firms can position themselves for success in the future. Consider the following growth strategies to meet threats to business growth head-on:

Build a strong brand and reputation.

One of the most important growth strategies for accounting and advisory firms is building a solid brand presence. Now is the time to have a point-of-view in your marketing and build the strength of your reputation.

Ensure that your positioning as experts is clear and increase your visibility to your audiences. Offering your clients resources and information helps build trust and loyalty in an economic downturn.

Invest in long-term relationships with clients.

Now is not the time to have a short-term view of client and engagement profitability. Firms should consider the history of client relationships and the potential customer lifetime value. Prioritize high-value client relationships and look for ways to add value to them. For example, conduct strategic planning workshops and offer forecasting and scenario analysis to assist clients in evaluating their options and best courses of action. Also, invest in maintaining and deepening personal relationships with clients. They may be facing hardships and they will remember the trusted advisors that were there for them.

Offer cloud-based or hybrid service models.

With the rise of cloud-based accounting software and online tools, more clients are opting for digital solutions over traditional in-person services. To stay competitive, firms need to be prepared either to offer cloud-based services or a hybrid model. Firms can invest in their own cloud-based software and technology to increase efficiency and reduce costs. By being proactive, firms can attract and retain clients looking for a more modern and efficient approach to accounting.

Use automation for a competitive advantage.

Another growth strategy for accounting firms is to use automation for competitive advantage. Automation and AI can increase efficiency and reduce costs, particularly for repetitive data-driven tasks. It also can help firms improve the client experience. By automating repetitive and time-consuming tasks, firms free up their staff to focus on higher-value tasks such as advisory services and client relationship management, improve the accuracy of data and reduce the risk of errors.

To implement automation, firms should explore AI tools that use Robotic Process Automation (RPA) and machine learning. It's essential to evaluate the options available and select the best one for your firm's needs, as well as make sure that the team is trained and ready to use the new tools.

Be Informed and Flexible

As the economy and business environment change, it's important for firms to be aware of the potential challenges to their growth. By staying informed and being flexible in their strategies, accounting firms can navigate these challenges and position themselves for success in the future.

Apoorv Dwivedi, president & strategic marketing advisor, Fixyr. Contact at apoorv@fixyr.com.