Can Growth and Balance Coexist in Accounting Firms?

Art Kuesel President, Kuesel Consulting
Moving Your Firm Forward

Much has been written about and discussed on the topic of work-life balance in firms—so much, in fact, that even I covered the topic in my winter 2024 Insight article, “Want a 40-Hour Tax Firm? Your Wish Is My Command.”

In case you missed it, the concept I explored was building a firm that eliminates the need for overtime. If a firm limits their client load to maintain balanced staff hours, it can’t materially grow without adding staff—and when great staff is already nearly impossible to find, balanced growth is a challenge.

Let’s face it, a no-growth environment isn’t compatible with the aspirations of your top talent (including future partners) or the sustainability of your firm. While there will always be room in firms for great people that don’t have professional growth aspirations to become partners, there’s also always a segment of your staff that requires upward momentum to be satisfied for the long term. After all, top talent wants to learn, build their technical expertise by working on new and challenging assignments, be promoted and earn more responsibility, and increase their compensation.

Further, consider that growth provides for additional margins that can be deployed to offset the increasing cost of doing business. This includes raises, technology, and employee benefits. Also, don’t forget that in the face of flat growth and rising costs, your income as a partner will certainly suffer.

Suffice it to say, whether some of us want to admit it or not, growth is important in thriving accounting firms. But with everything we know about burnout and talent and retention challenges impacting our firms, we also can’t ignore the need for balance.

So, how can we reconcile the equally important and seemingly competing levers of growth and balance? Well, perhaps we don’t have to choose one over the other. Perhaps, it just needs a fluid approach where both can be blended together seamlessly. To help illustrate this, consider these five tactics:

1. Identify your target goal: Start with a top-line target in mind that you feel will adequately provide upward growth opportunities for rising talent, as well as financially reward your partners and expand margin growth. On average, this top-line number is between 5% and 20% for most firms (the average last year was around 11%).

2. Build out your plan: Once you identify your top-line target, model it out so it’s more than “just a number.” Sketch your thoughts out on planned fee/rate increases, expected client and team attrition, offshore capacity changes, and advances in technology that can increase output without more input. Further, don’t forget to account for changing expectations or needs that may impact your plan, including lateral hires (increase in capacity), interest in pursuing additional services like client accounting or advisory services and wealth management, business development initiatives, and other strategic plans. Be sure to also keep your eye on the potential for mergers and acquisitions, as those can be a part of the equation to drive growth (however, in the first few years, margin growth doesn’t always materialize).

3. Be flexible: Your skills in planning for growth may have atrophied in the last several years. For so many firms, the volatility of the past few years has led to a reactionary and triage-laden operating environment. While many firms have posted revenue and margin increases, their successes weren’t necessarily the result of following a deliberate and specific playbook. While having a goal is important, being rigid with that goal doesn’t work in the dynamic operating environment in which we live today. Your approach to growth and balance needs to be fluid to allow for changing circumstances. For example, you may encounter unexpected staff departures that decrease capacity, or you may encounter client departures that increase capacity. You may even recognize efficiencies that come from offshoring or technology adoption that you weren’t expecting. Overall, don’t be afraid to alter your plan as needed to address a changing environment.

4. Measure your progress: Once you’ve set your goal and established your course of action, don’t wait for a year-end progress check. I know most of you are regularly reviewing your work in progress, accounts receivable, and monthly financials—measuring your progress on growth should be no different. Take this opportunity to track your progress on the additional inputs you utilized to create your goal. This will give you frequent measurements of results, and it’ll allow you to adjust course if needed.

5. Don’t forget about balance: As you pursue profitable growth, keeping balance front of mind will also have you checking your staff hours to make sure you’re honoring your promises to your team.

Remember, the pursuit of both growth and work-life balance within accounting firms isn’t just about numbers—it’s about fostering a thriving and dynamic culture. By embracing a fluid approach to growth and balance, firms can adapt to changing circumstances, seize opportunities, and overcome challenges while providing meaningful careers for their top talent, driving profitability, and sustaining long-term success.

Related Content:

• Want a 40-Hour Tax Firm? Your Wish Is My Command: Wishing away another busy tax season is easier than you think. Here are five strategies to make it a reality for your firm.
• Why Don’t Young Professionals Want to Be CPA Firm Partners? If we can get the next generation to look beyond the oft-noted negatives of the partner role, they’ll see a brighter, positive narrative awaiting them.