How to Build a CPA Firm That Puts Yours Out of Business

If you’ve been reading the trades, you’ve likely noticed that there’s one theme quite evident about our profession: We’re in an age of transformation. But not just any transformation— rapid transformation. Existing certified public accounting (CPA) firms and business models are evolving to adapt to new technologies, processes, and operating environments. At the same time, new CPA firms are sprouting right before our eyes, bringing better technology enablement, speed, and frictionless experiences to clients.

This, of course, is a regular part of the business cycle. New businesses emerge and render existing ones either disabled or completely obsolete. Look no further than the home entertainment rental space. Many of us can remember Blockbuster Video, whose dominance was ultimately rendered obsolete by Netflix. If you recall, Netflix was the first to pioneer a subscription platform that delivered DVDs to people’s doors. Eventually, Netflix went on to disrupt itself by creating a streaming platform, changing the way TV and movies are made and consumed by practically every human on the planet.

Needless to say, your biggest competitor might not be the CPA firm across the street—it might (just like Netflix) actually be an entirely new business model that’s created by you.

AI: The Ultimate Disruptor

It’s safe to say that artificial intelligence (AI) and other emerging technologies will transform existing firms and enable start-up models without the need for heavy human capital that’ll compete with your firm.

We’re all coming to terms with the fact that AI can replace a lot of what we’ve traditionally done in this profession. It can do repetitive tasks faster, cheaper, and often with greater accuracy than humans. Of course, whether it can offer perspective and context is still up for debate, and its growing presence raises important ethical questions, along with questions about how firms will train current and future professionals (but that’s a whole other topic for another column).

Building the ‘Netflix’ of Accounting

Rather than think about how you can adapt your current firm to today’s technological environment, it may be more useful to ask what you would build if you were starting completely fresh—a new firm altogether. Think of it as building your “Netflix of accounting.” How will you render your current firm disabled or obsolete? What would it look like? How would it be different than your firm today? What would it do and how? What advantages would it have over your existing firm?

There are no sacred cows in this exercise. You can do anything you want (within the confines of current state and federal regulation). In fact, I suggest sketching your plan out, giving yourself both a safe and bold approach. Here are some examples to get you started:

What’s the mission of your new firm?

• Safe: Serve a prestigious clientele of business owners and high-net-worth individuals with comprehensive and valuable advisory services.
• Bold: Be the No. 1 firm for business owners seeking premium outcomes, a high-touch approach, and impactful advice.

What would your new firm do that traditional firms don’t?

• Safe: Offer a highly automated service experience enhanced by technology.
• Bold: Employ a client concierge to assist with any task and ensure the client experience is highly customized to exceed expectations.

What wouldn’t your new firm do that your current firm does?

• Safe: Track time and bill by the hour.
• Bold: Allow each partner to set their own prices—value should be diagnosed and determined by someone not performing the work.

Why would your ideal clients prefer it?

• Safe: It would be a more seamless and convenient approach to getting your accounting and tax work done.
• Bold: 95% of the work is automated, allowing partners and engagement leaders to spend time in front of clients, provide context and relevance, and increase the value of the client experience.

Why would top talent gravitate toward your new firm?

• Safe: Top talent prefers employment at firms that have better technology.
• Bold: Top talent will be freed from less productive work to be able to strengthen relationships and provide meaningful value, context, and powerful advice to their clients.

How would it create value for clients?

• Safe: The focus would be on advising clients, not just completing work.
• Bold: The firm would create a periodic summary of value, comprised of the outcomes achieved together using the new approach.

What would your new firm’s pricing model be?

• Safe: Similar to customary pricing but more profitable because there will be greater automation.
• Bold: A fixed-fee subscription model, with pricing determined by value created. It’ll easily be the most expensive firm in the region.

What advantage does it have over your current firm? 

• Safe: The client experience will be more tuned into what the client wants.
• Bold: It renders your current firm obsolete in a matter of years due to its revolutionary approach, value provided, and impact it delivers to clients.

Now that you’ve completed this exercise, is there anything in here so profound and revolutionary that you should consider changing in your current firm? If yes, that would be an exercise in transformation!

Overall, transformation starts when you stop defending your current business model and start building the next one. After all, it’s good practice to identify what your firm must change before someone else builds a better version of it and leaves you obsolete.