With future challenges with firm succession looming industry-wide, tax & accounting firms need to make critical investments in talent & marketing
It is no secret that tax & accounting firms are facing a succession crisis on a number of levels. The percentage of partners who are over 50 years of age has grown to 61% in 2019, up 5 percentage points over the previous decade for firms with revenues greater than $2 million, according to the Rosenberg survey. It is much worse for smaller firms, where that cohort has grown to 72% in 2019 from 58% in 2009.
Compounding this challenge is that tax & accounting firms are facing a shortage of newer talent that will be able to step in and take over key client relationships as the older contingent retires, the Rosenberg survey noted. And many firms lack the number of rainmakers and leaders to drive the firm once that older group retires, says Allan Koltin of Koltin Consulting, adding that this presents a double-whammy for tax & accounting firms’ succession plans.
The good news for these firms is that there is still time to take action by making some intentional planning and investing in intersecting activities around marketing and talent development. To invest appropriately in marketing, firms needs to understand their current employees’ collective skill levels and then determine what skillsets they need to address and plan accordingly.
Doing so creates a so-called flywheel effect on the return on investments in both categories. Several such actions include:
Invest in business development among your talent — Honing business development skills for the next generation of leaders at the firm is one of the best investments firms can make. Important business development tasks such as reaching out to existing clients or getting in front of new customers initially require different skills. For younger accounting professionals, improving their relationship management skills is crucial. They need to learn how to ask the right questions, identify potential new business opportunities, and position themselves to gain the business.
The good news for these firms is that there is still time to take action by making some intentional planning and investing in intersecting activities around marketing and talent development.
Separately, firms may identify different professionals who may have excellent public speaking and writing skills, but cannot speak the client’s language in order to adequately describe how the firm could solve the client’s problem. Because this challenge involves so many different skillsets, firms may need to acquire this expertise by hiring individuals for full-time business development and sales roles.
Have career development conversations with existing employees — At the same time, firms may have the potential to groom next-generation leaders to fulfill this need for individuals in full-time sales roles. To identify internal talent, it is essential for managers and supervisors to have regular career discussions with their team in order to communicate what team members are doing well, where they need to improve in their current role, and what the future needs of the firm are.
Having these conversations enables managers and supervisors to understand what interests their current team members have and to determine how the firm might leverage these interests to address any gaps in sales and marketing. Indeed, given the labor shortage within the accounting industry, the most efficient way to address a firm’s marketing needs is to analyze the collective skillset of its existing talent and if possible, invest in their skills development to allow them to become excellent managers, rainmakers, and leaders of the future.
Develop niche-specific marketing plans for growth — One of the key differentiators that sets tax & accounting firms apart is building plans around a particular niche, practice area, or a common pain point among a particular group of clients. Indeed, firms that are taking the time to build plans at the practice level or unique customer need are seeing a positive return on investment. Net income per partner is $22,000 higher in firms that have a formal written marketing plan, according to the Rosenberg survey.
Invest in digital marketing — Many firms already have a website and social media accounts, and many firms offer webinars as part of their digital marketing footprint. With these foundational elements, it is relatively easy to modernize a firm’s marketing efforts. Simple ways to elevate digital marketing include:
- Automating the deployment of marketing tactics, whether blog posts, social media outreach, or email campaigns. Many digital marketing tools allow firms to schedule when the content goes live. Therefore, creating marketing plans, drafting thought leadership and email content, deploying social media posts, and buying software content can be disaggregated. For lower cost options, there are software solutions that can help create and curate blog posts, deliver and deploy email marketing campaigns, and schedule social media posts.
- Create a customer relationship system (CRM) that stores customer and prospect contact information, identifies sales opportunities, and records service issues. The key purpose of a CRM is to make information about every customer interaction available to anyone at the firm who might need it. This could be manual tool, such as a spreadsheet stored in a central location where everyone can access it; or something more complex that offers automated options and integration with management in one central location.
The succession planning challenge of tax & accounting firms is not going away any time soon, and is likely only to intensify in the near-future. Those firms that are taking action now by proactively assessing their skill gaps, developing the talent of existing employees, hiring to address identified needs, and modernizing how they use digital marketing tools have the best chance to thrive in the long term.