Imagine a stunning garden, bursting with abundant flowers and shrubbery in a rich variety of sizes, shapes and hues. At first glance it appears as one rainbow-colored blanket. But if you know anything about growing, you know there are probably two distinct sources of growth in this mature garden — annual plants that live for one growing season then die off, and perennials that regenerate each spring. Savvy gardeners combine both for maximum yield, with one species blooming as others die back.
You’re probably thinking, “Good to know, Gale, but isn’t your specialty the growth of CPA firms, not flower gardens?” Guilty as charged! Stay with me and you’ll soon see where I’m heading.
Like a grower with a vision of that lush future garden, firm leaders need to know their why. Is the goal investing in strategies and assets that will lead to sustainable growth? Or is the objective short-term gain? Annuals will flower quick and bright before they die out. Perennial blooms take time. And while a perennial garden may appear dormant in its first year, there’s plenty of activity underground as roots take hold in advance of blooms one or two years down the road, and regularly after that. This distinction between immediate and strategic growth is not well understood within our industry, but it should be.
Minimum effort, max yield
Today, CPA firms are primarily engaged in annual gardening, reaping the rewards of excellent market conditions, snipping colorful bouquets with minimal effort. Thanks to government funding programs, new tax laws, and pandemic-related business restructuring, firms are so busy harvesting that there’s barely time to throw rain or sunshine at a garden that hardly seems to need it.
This bounty, while certainly welcome, is taking place despite the lack of planting and pruning. And, like the quick burst of color delivered by annuals like petunias or impatiens (an apt word for impatient gardeners), these market conditions will not last. That’s why I am counseling clients to take full advantage of the current harvest, while continuing to prepare the ground and plant the seeds that will germinate in years to come.
Luckily, there remains plenty of perennial growth in most firms — the results of prior efforts in marketing, technology, specialization and other areas. The problem is that practitioners have been so busy harvesting the low-hanging bounty that they have let their foot off the gas when it comes to planning, and planting, for the future.
The rub is that those firms that have conducted a thorough assessment of their direction, however, are discovering perennial growth that is tangled and overgrown. It needs to be thoughtfully pruned to ensure sustainable growth. Hostas may be the perennial that will contribute most to your garden in years to come, but there will be no room for their handsome blooms unless you prune the out-of-control hydrangea.
Prune with caution
As readers of my content know, I am a strong proponent of strategic, rather than opportunistic, pruning. For a firm with heavy highway construction clients, for example, opportunistic pruning might use the criteria to release a client:
1. Doesn’t pay on time;
2. Treats our employees poorly; or,
3. Has consistently low realization.
However, a deeper look might reveal that a major government infrastructure expenditure is on the horizon, with the potential to flood this market with business, rendering these clients significant assets to the CPA firm in the heavy highway space. Like the grower who uses a vision of the perfect garden to decide what to plant and what to prune, firm leaders must keep an eye on future growth, even as they reap the current harvest. To that end, I urge managing partners, despite the high volume of work and low staffing levels, to empower their industry and service line leaders to focus significantly on long-term strategy.
That bountiful garden we all seek — the one that yields bright color today, and rich growth tomorrow — is indeed within our grasp. But we’re going to have to get our hands dirty to make it happen.
