By Randy Shattuck, Connect with Randy on LinkedIn >>>

By James Hickey, Connect with James on LinkedIn >>>


In our first article on the topic of the top 5 CPA challenges, we provided a root-cause analysis of the issues facing mid-size CPA firms today.  This is, however, only half the equation.  We know that to solve the issues that confront you, you need to understand them and you need solutions to overcome them.

Periods of disruption produce big winners and losers.  This is why we took the additional step of brainstorming what we’re seeing work today to address the top 5 challenges.  We compared notes on the CPA firms we’ve served over the last 20 years or so.  Here are some of our best ideas to help you come out on the winning end of this period of disruption. 



The Alliott Group and The Shattuck Group both serve mid-size CPA firms.  After reflecting on our mutual experiences, we identified the top 5 challenges our clients report to us.

  1. Succession of the firm
  2. Consistent strong growth
  3. Ideal client acquisition
  4. Service model differentiation
  5. Leadership, strategy and decision-making

To provide context to the advice we are about to put forward, please see our other article so you understand the root causes we’ve identified for each of these issues. 



You’ll notice that our presentation of challenges took a specific order: succession, growth, client acquisition, service model and leadership.  This is nearly the order with which CPAs describe their top challenges.  But we believe this is backwards.

If you want to build a highly valuable CPA firm that clients love, that is clearly differentiated, highly profitable and that a young and vibrant work-force embraces for life – in other words a firm that is succession-ready – you must start with leadership.  Leadership is the beginning, not the end, of all the answers.  Succession is the end-result of great leadership.

That is why we believe the first step is to re-order the list this way:

  1. Leadership, strategy and decision-making
  2. Ideal client acquisition
  3. Service model differentiation
  4. Consistent strong growth
  5. Succession of the firm

If you get the priorities straight, firm succession nearly takes care of itself.


Key Take-Away:




Leadership is the first and most important area to focus on to overcome these challenges.  Leadership is ultimately about the ability to envision the future and to develop and execute long-range plans that produce the outcomes you desire.   These skills – future-visioning, long-range planning and measuring outcomes – have little to do with the day-to-day activities of a CPA firm.

However, to earn decision-rights at most CPA firms, a person must achieve milestones relating to billable hours and work-product.  This produces an inherent mismatch.  As stated in our analysis article, this is why many CPA firms never move beyond a certain level.  The partner model attracts people who are good at billing, but maybe not so good at leading

Strong leadership leads to a strong CPA firm.  This strength translates into higher profits, attraction of the right clients and the ability to secure and retain top talent.  All of the outcomes you want to achieve begin with the right leadership.

So you have to ask yourself some questions:

  • Can the leaders we have today put forward a vision for our future that everyone believes in?
  • Do we have a long-range plan, say for the next 10 years, that we are confident in?
  • Do we have the right people in positions of responsibility to execute, measure and make course-corrections to the long-range plan?

If your answers are primarily “no” then we submit that it’s time for a new leadership model at your firm.  This is a trend we are seeing today that we believe will only grow stronger.  Many CPA firms are changing their leadership structure to include C-level executives with core expertise in critical areas.

For instance, a Chief Operating Officer will have a much better sense of how to run a CPA firm than a partner who spends their day interacting with clients and producing work-product.  That partner’s best and highest use to the firm is to continue what they’re good at doing – serving clients. 

However, if the core areas of operations – IT, HR, finance and facilities management – are not managed by someone with a COO’s background, it’s probably only a matter of time before you run into issues.  Jim Collins, the noted management consultant, calls this getting the right people in the right seats on the bus. 

The right seat on the bus for a partner is working with clients, not trying to do a COO’s job without a COO’s background or qualifications.  This is why we recommend that you ask yourself:

  • Who should bear CEO-level responsibility for our firm?
  • Who should bear COO-level responsibility?
  • Who should bear CFO-level responsibility?
  • Who should bear CMO-level (Chief Marketing Officer) responsibility?
  • Who should bear CSO-level (Chief Sales Officer) responsibility?

This is not about creating unnecessary levels of management that can lead to political conflicts.  This is about off-loading responsibility from people who need to focus on serving clients and bringing in talent who is qualified to lead functional areas.  In some instances, you don’t need full-time talent in these areas. 

What should not be off-loaded, in our opinion, is the over-arching strategic direction and vision of the firm.  This is where firm partners can be invaluable in helping answer and maintain a laser-focus on some key questions:

  • Why are we in business?
  • Why do we love what we do?
  • Why did we become CPAs in the first place?
  • Why do we want to see this firm thrive in the coming generations?
  • What is it that we do that no one else on planet Earth can do as well as us?
  • What is the greatest impact we have on clients and how do we know this?
  • Why do the clients we have today choose us instead of someone else?
  • What gives us satisfaction and deep meaning from our work?

Answers to these questions form the core of your mission.  Firm partners who are close to the mission and who live it out every day should be building responses to these questions. 



We stated in our root-cause article that acquisition of ideal clients is a challenge for three reasons: too many potential clients; pressure to be rainmakers and the absence of an ideal client profile. 

We believe the solution to all these challenges is a clear and well-developed ideal client profile.  An ideal client profile, that contains both demographics and psychographics of ideal prospective clients, helps you in several ways.

First, it gives you clarity.  It empowers you to bypass the temptation to work with clients who are not a great fit.  Most CPA firms acquire new clients by way of referrals.  This means that you are taking whatever the market and your referral engine gives you.  It’s tough to say no to these opportunities, especially if referrals are your primary growth source.

A much better strategy is to choose your clients instead of allowing clients to choose you.  When you know who you are best-suited to serve and you commit to attracting and serving those clients, you get much better outcomes.  This sharpens everyone’s mind to focus on those types of clients.

Second, an ideal client profile allows you to change your metrics for rainmaker status.  In other words, if all you have to do, to be seen as a rainmaker, is take in X number of new clients, the quality of those clients may not matter.  But if you have to take in X clients who fit a profile, and the metrics are clear, the game suddenly changes. 

Our sense is that client acquisition drives everything else that follows: service model, consistent growth and firm succession.  If you want to take control of your growth and your future, you need to start with a clear ideal client profile. 


Key Take-Away:




We see three root causes to the differentiation challenge: you sell intangibles, AI is changing everything; evolving client needs require differing services, but it’s hard to know which services to offer.  Here are our ideas about how to overcome these challenges. 

We believe there is a tremendous opportunity to move away from a time-based value model and move toward an outcomes-based value model.  Here is what we mean. 

The core billing practice of CPA firms today is the time-value-model.  You work 5 hours on a project and you bill the client $1,000: $200 per hour x 5 hours = $1,000.  This works well for CPA firms because it allows for internal controls.  CPA leaders ask each associate – what did you do today and how many of your hours are billable to clients? 

In ever increasing numbers, this model does not work for entrepreneurs, high net-worth individuals and SME businesses – likely your biggest market opportunity.  Why?  Because they don’t care how long it takes you to get something done.  They care about two things:

  • How long it takes them to understand what you’ve done and what they must do to take action on your counsel.
  • That you understand what needs to be done to protect their interests and that you can communicate this as concisely as possible.

The overriding challenge for entrepreneurs, high net-worth individuals and SME businesses is that there are not enough hours in the day to get everything done.  They also have limited energy and focus and they want to apply that energy and focus on their business and their family.  The more you can do to protect their time and energy, the more they will value your services


Key Take-Away:



The AI challenge is actually driving the value-shift.  In other words, if a computer can now do in ten minutes the work that 3 of your staff members used to do in a day, you need to move up-market.  You need to begin to focus on service-levels and touch points that a computer cannot easily replicate. 

Let’s be honest about something here.  H&R Block is coming for your clients and they have data centers full of fancy apps and resources that you will never be able to replicate with your limited budget.  So if your primary value has been doing work that computers can now do as effectively as your firm, you are in trouble.  Just ask Taxi drivers who have been replaced by Uber. 



We believe there are three root causes of slow growth: an undifferentiated brand and service model; reliance on government agencies to drive clients through the front door; and dependence on client referrals for new client acquisition.  

If you want to realize consistent demand for your services and year-over-year growth in the double digits, there are several steps we advise you to take:

  • Develop an ideal client profile. 
  • Conduct research with your existing clients who fit your ideal client profile to identify unmet needs that might be a match to your capabilities. 
  • Decide which of these unmet needs you want to convert into a new service, how you’ll deliver the service and how you’ll staff for it.
  • Build a marketing and sales engine that pulls, not pushes, prospective ideal clients toward your firm. 

One of the best ways to do this is to gain visibility as a valued resource and thought-leader in circles where your ideal clients tend to hang-out.  We call this the generous brand, where you take the presumptive status of being an advisor to prospective clients BEFORE they ever sign a deal with you.  



As we stated at the outset of this article, if you get leadership, client acquisition and service-model differentiation taken care of, then succession almost handles itself.  Almost, but not quite.  We have another recommendation for CPA firms thinking about succession.  It begins with the T word – Talent. 

For CPA firms to pass from one stakeholder to the next, the firm itself must be of transferable value and there must be someone who wants to take possession of that value.  For the mid-size CPA firm that has been profitable for more than 10 years – the biggest challenge is attracting and nurturing talent.  Today’s intern could very well be tomorrow’s managing partner who is funding your exit

This is why we encourage you to think very carefully about who you hire, how well they match up temperamentally to the needs of your ideal client and how you structure a career path for them that they believe in. 

Of course you need to get your partnership agreements updated and your earn-out schedules defined and your firm properly valued.  These are all the mechanics of transfer.  But none of those things will matter if you don’t have the young talent to lead into the next generation. 

And this leads us right back to the beginning – the leadership imperative.  To nurture young talent, you need leaders who will take the time to invest in their younger colleagues. 



If you’ve enjoyed the ideas we’ve put forward in this article, we know you’ll greatly benefit from a webinar series we’ve developed called Top 5 CPA Opportunities Today.  This free webinar series goes into much greater about how to achieve the growth goals that matter most to mid-size CPA firms. 



Randy Shattuck is a seasoned entrepreneur who works hand-in-hand with senior leaders of mid-size professional service firms to grow revenues, acquire clients, open new markets, increase profits and effectively position their brands.   

James Hickey is CEO of The Alliott Group, a worldwide alliance of independent account, law and consulting firms.  The Alliott Group supports it members to develop their reputation and visibility within their respective markets as firms of choice for high net-worth individuals, entrepreneurs and SME businesses with multi-market needs on a national or international level.