Financial Planning | Leadership / Management

MAP survey shows room for growth in recession’s wake

Graph Compared with the rest of the world, CPAs seem to have escaped the recession largely unscathed. Unemployment in the profession is running significantly lower than the rest of the population and financial results for 2008 -- while not as robust as in years past -- weren't disastrous, either.

A closer look tells a different story, though.

The annual Rosenberg Survey, an acclaimed practice management survey that's now in its 11th year, finds that the recession brought an abrupt end to a six-year run of remarkable success for the CPA profession.

According to the survey, annual net fee growth fell from 10.8 percent in 2007 to 8.2 percent in 2008. Average income per partner also fell from $369,000 in 2007 to $365,000 in 2008, with the earnings at larger firms falling by about 8 percent.

What's more, "(t)he full effect of the recession didn’t have a big impact on CPA firms in 2008 because by the time the economic woes surfaced in the fourth quarter, most firms’ revenues were collected, invoiced or booked," survey creator Marc Rosenberg said.

And that makes one wonder what 2009's results will look like. Indeed, the firms surveyed predict growth will continue to fall in 2009, perhaps to 3.1 percent. Said Rosenberg: "Roughly 20 percent of all surveyed firms are projecting a revenue decline as their clients struggle to weather the recessionary storm."

Here's the problem, according to Rosenberg:

The years after Enron and WorldCom "created a huge surge in demand for CPA firm services, allowing firms to virtually become order takers." Throw a staffing shortage into the mix and you had firms that were busier than ever, with little or no time to spend on practice development.

When the recession hit, their shortcomings in that area were magnified.

The staffing shortage is on the verge of ending, so that should help.

But the really good news is this:

“The recession is now focusing CPA firms to address these failings, thereby strengthening and ‘right-sizing’ their firms to position themselves for the healthier business climate that will surely follow the recession,” said Rosenberg.

There are plenty of tips out there to help them get started. Tom Hood has offered advice for how CPAs can weather the economic storm time and time (and time) again.

We've also mentioned a few BLI programs that teach business leaders how survive and thrive in tough times and thought they might be worth mentioning again.

Most of all, remember: With a little hard work and planning, this, too, shall pass.


Bill Sheridan