Greetings from Colorado. The RV is parked just north of Alamosa where we were taking in the sights of Great Sand Dunes National Park. At 600-750 feet high, these dunes are the tallest in North America and are steep and slick enough to sled or “sandboard” down.
Our last conversation provided 10 ways to differentiate yourself by taking a stand against something you don’t like about our industry. Do you have the guts to try any of them? Because if you have a truly audacious way of standing out – something your competitors can’t or won’t do – no one will compete with you.
On to this week. Is BVFLS losing its luster as a niche service for the Top 100 accounting firms? For as long as I can remember, the segments of BVFLS were among the top niches pursued by the Top 100 accounting firms. Looks like that is changing. And that may be a good thing for the rest of us.
And if you’re new to the blog, welcome aboard. This is what we do!
One thing I found last week: How to Optimize Your Website for Voice Search from John Jantsch at Duct Tape Marketing.
My take: I recently read that future PCs will ship with a built-in Alexa-like virtual assistant. So optimizing your website for voice search is a logical step in the direction that technology is moving. And if you think this won’t ever apply to your website (or LinkedIn profile), remember that some older wizened senior partner in a law firm isn’t searching for someone like you. S/he assigned that task to a millennial associate who understands voice search capabilities.
So, is BVFLS losing its luster as a top niche for the Top 100 accounting firms? And would it be so bad if it were?
Back in April, Accounting Today published its “2018 Top 100 Firms” supplement. I always read this supplement cover to cover because we can understand/infer transformations in our BVFLS industry by looking at the broader trends of the Top 100 firms.
Latest top niche listings
This chart shows the top niche services reported by the Top 100 firms for 2018.
As I said at the start, for as long as I can remember the BVFLS segments were among the top niches pursued by the Top 100 firms.
In 2017, Business Valuation ranked #2; in 2018, it dropped six spots and “a whopping 13 percentage points” to rank #8. Here’s another perspective, only 65% of the Top 100 firms are increasing their business in this service area in 2018 versus 78% in 2017.
Forensics/Fraud and Litigation Support tumbled out of the top 10 niches, to 11th and 14th place, respectively. These niches also experienced double-digit drops in the percentage of Top 100 firms who say they are increasing their business in these service areas – percentage drops that were even greater than that of Business Valuations.
Read the fine print under the chart title: “Percentage of firms increasing their business in these service areas” … the key phrase is: increasing their business. So it doesn’t mean the Top 100 firms are cutting back on their BVFLS work, just not expanding as rapidly in BVFLS work.
I mean, you gotta figure that every Top 100 firm probably has a BVFLS practice area … how much more can they grow them? Especially with the demotion of the gift/estate tax valuation work.
And if the Top 100 firms are slowing their increase in BVFLS business, isn’t that a good thing for the smaller firms and solo practitioners who make up the lion share of the BVFLS profession?
If you have a different take on or interpretation of my reading, I would love to hear it!
In real life
You could stop reading here.
But if you are curious, here are some stats and quotes from the supplement about those broader trends I mentioned and that are having a profound impact on our related accounting profession.
Can you relate any of these seven trends to our BVFLS profession … or your practice?
#1 – Growth
It all starts with growth, or lack thereof. The Top 100 firms reported an average growth rate of 6.3% – the lowest growth rate in a non-recession in the past 20 years.
Growth by tier:
– The 7 firms with revenue over $1 billion – 5.9%.
– The 37 firms with revenue between $100 million and $1 billion – 8.3%.
– The 56 firms with revenue under $100 million – 7.2%
And 7 out of the 10 geographic regions reported average firm growth rates in 2018 that were lower than 2017.
#2 – Business Development
As a result of no longer being able to count on answering a ringing phone to bring in new work, many Top 100 firms are diving into the old-fashioned work of business development. Deepening relationships with clients — and developing stronger cross-selling skills — is a strategic priority for a number of Top 100 firms.
#3 – Staffing
One of the most important obstacles to growth is an issue the Top 100 have been grappling with for several years now: the ongoing difficulty in recruiting and retaining the talent to staff engagements (to say nothing of developing potential successors). It was by far the most common issue faced by the Top 100, with almost half citing it as a problem.
#4 – Specialization
One major path to growth is doubling down on a specialization; the Top 100 firms reported growth across a wide range of specialty services and individual client niches.
#5 – Commoditization
The profession’s core offerings of audit, accounting, and tax are subject to intense fee pressure because clients often perceive them as services they are required to buy, as opposed to services they want to buy. And many of these services are being commoditized by technology.
#6 – Technology
For most of the Top 100 firms, the commoditization brought on by new software is less of an issue than how best to quickly make the most of the opportunities all these new tools offer.
#7 – Mergers and acquisitions
The Top 100 firms reported 120 individual combinations over the past year.
This strong focus on growth, and the lower-than-average growth rates of this year’s Top 100 Firms, shouldn’t obscure the fact that the Top 100 are, almost by definition, very successful businesses. Better talent, more valuable services, deeper client relationships, and an aggressive focus on technology will all help firms boost their bottom lines — but only if they realize the need to take those extra steps, and look up from the flood of client work to look down the road a bit. “We are successful,” pointed out Carl Schultz, CEO of SVA CPAs, in Wisconsin. “How do we stay motivated and hungry?”
PS – I’m a fan of actionable ideas that move you forward, so I hope you find this content useful. If something resonates and you want to reach out directly, you can email me or schedule a call with me!
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