june2022 - 31

FEATURE
Is Your Firm at the Crossroads of Change?
By Ernie Villany, CPA
WHEN A FROG is first placed in a pot of hot water, it must feel comfortable.
A relaxing soak that loosens the muscles, lowers its stress level, and allows
it to relax. For the most part, the frog remains blissfully unaware that the
pot is slowly heating up. Soon, the temperature and pressure will become
unbearable. And by the time the pot is boiling, it's sadly too late for the frog
to do anything about it. The poor creature is cooked by the heat and pressure,
soon to end up a delicacy on someone's fancy dinner plate.
Of course, this cautionary tale is both a metaphor
and an analogy facing the leadership of small
to mid-sized CPA firms everywhere. But it neatly
sums up the current situation staring down the
C-suite class. We've just limped across the midApril
finish line once again, gutted by yet another
bruising and stressful tax filing season. But know
this - our workforce is keenly aware of what's going
on. Every year, they soldier on, producing the same
amount of work with 20, 30, or even 50% less staff
than before. We joke about surviving the grind but
continue to operate according to the industry's
status quo expectations. Small to mid-sized firms
have reached a crossroads, with an employee retention
problem that threatens the sustainability of
our business model.
HOW BAD IS IT?
This is due to a combination of factors. The
long-term effects of major overhauls of the tax
code on an annual basis for the past decade. An
under-funded and understaffed IRS, along with
other government agencies. The harsh reality of
not being paid enough. Not having an organizational
or staffing structure that fosters internal
promotion and development. The combination of
these issues, coupled by a pandemic that amplified
mental health issues, forced scores of accounting
professionals to hit the eject button and bail out.
The erosion of the traditional career path for
accountants is real.
As leaders, we're getting up there in age and
we must be willing to confront the issues related
to the sustainability of our practices. It's time to
evolve, to be bold and change, even though it's a
scary proposition. Many feel they have no financial
motivation to take the associated risks. They simply
refuse to justify significant financial commitments
on solutions they don't understand, preferring
instead to sock away profits ahead of retirement.
But there is a way forward, and it involves
external solutions - outsourcing and workflow
technology.
THE COURAGE TO ACT
Our firm took a proactive approach and found a
way forward. We located a competent outsourcing
partner that now handles three-quarters of our
repetitive accounting tasks and implemented
a workflow software suite that dramatically
increased productivity.
As small to mid-sized firms weigh their own
options, they should look at the cost-benefit
analysis involved. Outsourcing greatly improves
the work-life balance of in-house personnel, reducing
time spent on tedious, time-consuming, and
repetitive tasks. And the workflow component
greatly improved our efficiencies, defining our
scope of services to the point that they're no
longer a drag on the working capital we needed to
be competitive with marketing, technology, staff
retention and recruitment. Since implementing
these solutions, we're no longer giving away our
collective " brains " for the price of a tax return. Our
core services always delivered consistent cashflow,
but we've now updated and streamlined our
approach - leading to higher value, more rewarding
client relationships.
TIME TO ACT
The leadership of small to mid-sized accounting
firms need to gather their teams and listen
carefully. This is not a one size fits all situation
and firm leaders must identify what works best
for them. A collaborative conversation between
managers and staff will reveal what version of
the future works for their own firm. Bite the bullet
and have difficult conversations. How will we
increase retention and elevate our compensation
model? Will we expand hiring initiatives? What
metrics will we create to measure these decisions?
How will we manage a better work-life
balance for our company and team? What fringe
benefits are we now willing to consider?
Employee retention was once a serious problem
for us. Had it not been a significant issue, we
would never have found our outsource partners,
nor landed on a business model that allows us to
scale our operation - even the elusive advisory
services. But the experience and unintended
consequences have now become game changers
for us. Were it not for these departing staffers
whose decisions were made in their own best
interests, we would never have discovered the
solutions that ultimately had our own best
interests at heart.
Our story is a cautionary tale. As for the
leadership of small to mid-sized CPA firms in
this day and age, the water may feel warm
and inviting at the moment. But there's
no excuse for waiting until it's too late.
■
Ernie Villany, CPA is the founder and president
of Boulder Valley CPAs (BVCPAs), a Colorado-based
CPA/advisory firm representing
clientele in 30 states. Ernie has over 20
years of experience in public accounting,
helping small to medium-size businesses
around the world plan and manage their
financial growth, while mitigating tax liabilities.
JUNE 2022 ■ www.CPAPracticeAdvisor.com
31
http://www.CPAPracticeAdvisor.com
june2022

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