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2013 2012 EXECUTIVE PREDICTIONS YEAR IN REVIEW & 2013: Succeeding in the New Normal Looking forward to 2013, CPA firms find themselves at a crossroads. Tey have weathered the recession and even their clients in small business America are becoming more optimistic. But practitioners cannot expect to prosper in the future by following the same strategies they did before the recession. As we head into the new normal, strategic planning HOW ARE WE DOING? JAMES C. METZLER Vice President - Small Firm Interests for the AICPA James C. Metzler, CPA, is Vice President – Small Firm Interests for the AICPA. In that role, he leads AICPA initiatives aimed at serving the needs of practitioners, including the activities of the Private Companies Practice Section. He serves as an advocate for small firms on standard-setting, legislative matters, practice issues and as liaison between the AICPA and its member firms. He has frequently been named as one of the "The Top 100 Most Influential People in Accounting," a national listing compiled annually by the editors of Accounting Today. In 2005 through 2011 those chosen for the list were asked to compile their own "most influential" list and Jim was one of ten luminaries in the profession selected for this distinction. Jim received the U.S. Small Business Administration's New York District Office 2007 Financial Services Champion of the Year Award. He was cited for his significant contributions in helping small businesses obtain the accounting services they need to succeed. Jim has spent more than 37 years working with small firms. Prior to joining the AICPA, he was a co-founder of ConvergenceCoaching, LLC, a national consulting firm dedicated to helping CPAs prosper by assisting them to develop and implement success plans. Jim spent 32 years in public accounting, 24 of them as a partner with Gaines Metzler Kriner & Company, LLP, a local firm in Buffalo, New York. He was also founder GEMKO Information Group, Inc., a successful technology consulting organization. He is the author of How to Build a Million Dollar Technology Consulting Practice and of numerous articles on practice management issues. He is a frequent lecturer for the AICPA, State Societies and global CPA professional associations. t www.aicpa.org Aſter holding their own since the economic crisis occurred, most CPA firms actually experienced some degree of revenue growth in the past year, according to the 2012 PCPS/TSCPA National MAP Survey. Tat's good news for the profession, and other positive survey findings indicated that CPA firms are steadily gaining momentum. Te more sobering news is that, given the many uncertainties in the economy, we can't expect to go back to business as it was before the recession and expect similar results. Our clients are facing new realities and CPA firms have already done as much cost cuting as can be expected. As a result, practitioners will have to be strategic and creative to drive future growth. Tat may mean reconsidering their client base if they are serving industries in decline and switching to areas, such as healthcare, that have more favorable long-term prospects. It may mean moving or branching out into new locations if their local economy is stagnant. An aging client base, particularly if it includes companies without realistic succession plans, is another red flag. Overall, practitioners should be channeling their energies into atracting clients with a promising future. Your first step in strategic planning should be to assess your current position and then begin to consider if a new direction is needed. What Internal Changes Should We Be Making? Te answer to this question will vary depending on a variety of factors. Succession planning should be on every firm's list, however. It's critical to have plans that set the stage for a future transition to new ownership, whether that involves a merger or acquisition or a takeover by existing firm members. Succession planning is a big concern for the profession, according to the 2012 PCPS Succession Survey, which found that 79% of multi-owner firms expect succession to be an important issue for them over the next decade. A large number of Baby Boom owners will be retiring during that time, which will mean competition for those who want to sell their firms, along with competition for talented younger leaders. On another front, the most recent AICPA PCPS CPA Firm Top Issues Survey found that partner accountability was a hot topic for larger firms. While partners might have once functioned in their own silos—and rested on their past laurels—we can expect to see more emphasis on bringing in new business and working together to promote the firm's best interests. What New Opportunities Should We Pursue? Changing times create many new opportunities for firms as clients turn to us for advice and direction. Te AICPA has long been involved in initiatives to draw atention to the unique financial reporting needs of the millions of private businesses in the United States. Te Financial Accounting Foundation this year created the new Private Company Council (PCC) to set differences in U.S. GAAP for privately- held companies. Te Institute has also released its (FRF- SME), a self-contained framework intended for privately held small to medium-sized entities that are not required to have U.S. GAAP-based financial statements (www.aicpa.org/FRF- SMEs). Tis less costly and less complicated special purpose framework is generally intended for owner-managed, for- profit entities. Te comment deadline for the ED is January 30 and issuance of the final document is expected early next year. Tere will not be an effective date because use of the framework is purely voluntary, but we believe that it will be widely adopted for use by small companies across the country. We've consulted with bankers and other financial statement users about their financial reporting needs, and they have told us they would welcome statements prepared using the principles that comprise the FRF-SME. Needless to say, the FRF-SME should open a wide range of opportunities for CPAs. Reinforcing Our Strengths While so much is new in the world in which we do business, there is a great deal that remains the same. To pull themselves out of the recession, many of our clients have created leaner and smarter operations that position them to flourish in an uncertain climate. But they still turn first to their CPAs for the personalized and informed advice they need to run their businesses. Our clients are dealing with the same issues we are: growing regulatory complexity, economic uncertainty and succession concerns, as well as tight credit conditions and changing market conditions in many cases. CPAs are uniquely qualified to help small businesses address these issues. In a changing world, the one certainty is that the strength of our client relationships is the key to our firm success. Te firms that can integrate this unique client connection into their cultures will be well positioned to thrive in the new normal. is more critical than ever. For all firms, that will mean taking a hard look at their current approaches and deciding whether they will continue to serve them well in the future. When practitioners undertake their strategic planning for 2013, there are three questions they should be sure to address. 24 December 2012 t www.CPAPracticeAdvisor.com