Accounting and Tax Services Firms Have Had a Good Year

In Monday's blog, I wrote that according to SageWorks, Inc., accounting and tax services firms have grown 10.89 percent in the last 12 months and increased their profit growth by 20.90 percent.

Since Monday I have spoken with several experts in the field and numerous accountants to try to determine why this industry has done so well in the recession. There are a few pockets of the country where this is not true, such as Southern California and South Florida, where the local economy is in particularly bad shape.

I found that the big four accounting firms are not experiencing the profit or sales growth that small niche firms are.

Many small business accountants don't have the bookkeeping businesses they once did, and many are finding profitable niches in business consulting, business valuation, and other non-bookkeeping-specific income producing activities.

These small business accountants are small businesses like their clients, and many of them face the same challenges as their clients.

According to an Intuit survey of 250 accountants and 250 small businesses conducted in July 2008 and again in January 2009, the following trends have emerged between small businesses and their accountants:

• Nearly 80 percent of small business owners now say they feel more comfortable having an accountant as a trusted business advisor during this rough economic time.
• 73 percent of accountants are proactively advising their clients on how to conduct business during the economic downturn.
• In order to help small business owners weather the economic storm, 66 percent of accountants have increased the services they offer, with the biggest demand being business consulting.
• More than 90 percent of accountants and small business owners are taking nearly identical steps to succeed and grow their firms including: increased networking, adding new services or products, and providing training and education to clients.

Rich Walker, an Intuit Accountant Communications Manager, emphasized that, according to recent surveys, accountants' expectations about what their clients thought about their value and their clients' actual expectations have grown much closer. In January 2009 approximately 98 percent of accountants believed their clients were somewhat or very satisfied with their work, while 95 percent of small business owners actually responded that they were somewhat or very satisfied with their accountant's value.

Walker indicated that Intuit has been doing this survey since 2003 and there was a much larger gap in the early years between what the accounting professional and client believed in terms of satisfaction of clients.

In discussions with other accountants I have learned that many small business accountants believe the QuickBooks family of products has dramatically improved over the years since it was first introduced. Those same accountants don't see QuickBooks as a threat, but rather an opportunity. CPAs who better understand how to use QuickBooks can provide "over the shoulder" guidance to their clients that use the product, while taking the data and making sure it is GAAP compliant. The client wins because they have lower bookkeeping costs, while the accountants win because they get to bring a higher value service to their client.

I suspect it is the "higher touch" that many accountants are giving their clients in non-bookkeeping areas that has brought the 2009 Intuit accountant-client satisfaction survey results closer together.

In an April 1, 2009 article, WebCPA describes a number of firms that use creative ways to bring value to their clients. "At Reno, Nev.-based Rand & Associates, a team of small business specialists administers the Small Business Growth Program, offering three options for the business owner to assess the business, develop action items, and execute a growth plan. One-to-one counseling covers such areas as profitability, cash flow, marketing, and KPIs."

Perhaps the most interesting (if you are an outdoors person) small firm with multiple non-bookkeeping specific services is CFO Services, LLC of Denver. When founder Kira Riedel isn't climbing the vertical face of a mountain with a client, her firm provides transactional assistance on M&A transactions, turnaround work, investment banking, and valuation services. Nothing develops trust in a business advisor and accountant like climbing a 300-foot sheer cliff with them.

Remember the old saying, "This isn't your dad's Oldsmobile"? Well folks, this isn't your daddy's accounting industry anymore either!

Sam Thacker is a partner in Austin Texas based Business Finance Solutions.

You may contact Sam directly at: sam@lesliethacker.com

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EXTRA: If you have questions for Sam regarding business financing, the credit market, and similar issues, please send an e-mail. Your questions will be recorded and Sam will answer the best ones in his Ask the Expert podcast show.