How do you grow your firm and increase its value, especially after everything that’s happened during the pandemic?
A lot has changed in business and accounting in recent years. Some of these changes may seem like only a necessary adjustment during COVID-19, but many company trends expedited by the pandemic were already emerging, the most obvious of which is employees working remotely.
Gusto’s friends and partners at CPA Academy held an incredibly edifying webinar about labor market trends and the importance of working with remote staff. Their webinar featured the accounting and remote hiring expertise of the CEO of Padgett Business Services and Accountantfly co-founder Jeff Phillips, and you can check out the full webinar here.
In this article, you’ll learn all about what the modern accounting firm looks like, the importance of hiring remotely, and the value of hiring freelance workers. In addition to this article, you can also read about the Part Two of this webinar article series, which covers how you and your firm can effectively hire and manage your remote staff.
Embracing the modern accounting firm
Work culture has significantly changed since the beginning of COVID-19, but the modern work environment was rapidly changing with advances in technology even before the pandemic. Jeff urged accountants and small business owners to embrace change rather than resist it.
“[Your team is] going to be more remote. There’s going to be more flexible work. There’s going to be more technology to tie people together and automate tasks and different ways of managing teams. My message is … just embrace it and don’t resist it.”– Jeff Phillips
Accountants and firm managers need to accept that the business model for operating a financially successful accounting firm will involve hiring people remotely and automating menial tasks. Automation is crucial for accounting firms so that accountants can focus on advising clients.
“In a modern firm, there is no manual data entry ever. We’re going to eliminate data entry from the firm. … If you’re automating tasks that allow you and your high-level staff to be the CFOs and controllers of your clients, you’re becoming key advisors to these small business owners and during a time, by the way, when we absolutely need it.”– Jeff Phillips
When you automate tasks, you gain the ability to proactively advise and meet your clients’ needs, which is especially important during and after the pandemic because small businesses need assistance in traversing this unprecedented crisis and economic rebuild.
In addition to implementing automation to better suit your client’s needs, it’s also essential for accounting firms to design a vision and workflow that doesn’t center around firm owners or managers.
“In the old system, the owner did all the production, but in the new system, think of your business truly as a system that you’re designing and that you’re building, and you’re defining where it’s going and what it will look like. … Your enterprise value is going to be based upon your ability to sell to the new owner a system, a money-making machine. If you’re a managing partner or a president of a small firm, it’s really about relieving you from being the key man or key woman from the firm and having a system that you can sell.”– Jeff Phillips
The enterprise value is your company’s value based on how much you can sell to a new owner. To increase your firm’s enterprise value, you need to focus on implementing automation and creating a reliable and repeatable process for hiring remote workers.
The importance of hiring remote workers
So why is hiring remote workers such an essential part of increasing your enterprise value? Isn’t it only a temporary solution for working during the pandemic?
Even though many people began working remotely because of the pandemic, remote work will likely become the new normal for accounting firms. Jeff Phillips cited the 2020 Anytime, Anywhere Work Survey that found that accounting firms are largely transitioning to hiring remotely:
“81% of firms surveyed indicated they expect to have an increase or a significant increase in the number of people working remote[ly] after the pandemic. And 30% said they’re going to shrink their office footprint, which I thought was interesting. And 55% are actually doing remote internship programs now. So we’re getting … remote down to the entry-level. … It’s important to understand that even if we recover from the pandemic, which we will and all the data’s [indicating] that we are recovering economically, they’re not coming back to the office. And you can find great team members when you go remote.”– Jeff Phillips
Remote work will continue playing a role in accounting firms long after the pandemic is under control. Job market projections predict that there will be 50 million new knowledge economy jobs in the next ten years. There will be a higher demand for knowledge economy work than qualified workers, which is already becoming visible with the low unemployment rate of CPAs:
“The talent market that you’re looking to hire, if you’re hiring CPAs, is only 660,000 people in the United States, right? And 1.8% of those … [are] unemployed. … And I will tell you if you focus on your local market, … it’s going to be nearly impossible to make these hires. So be used to the fact that we’re basically at 0% unemployment.”– Jeff Phillips
There’s a great demand for accountants, and very few are unemployed, so how are you going to fill your accounting jobs with qualified applicants if you’re only hiring people locally? Keeping your firm fully staffed as it grows is an essential part of meeting your clients’ needs and increasing your enterprise value.
It’s also essential for firms to have a repeatable and reliable process for hiring remote workers to meet your growing firm’s needs and quickly replace the accountants that leave your firm.
“If you’re in a firm with $20 million of revenue or lower, you’re already experiencing a 25% turnover among your accounting staff. … You’re going to have to have a predictable system that not only recoups the 25% of your team that you’re losing but then whatever your growth rate is. … You can’t afford to wait 18 months in your market to make a hire. You need to have a predictable system to be able to hire talent to meet your growing demand and capacity inside of your business.”– Jeff Phillips
Developing a system for filling new positions and replacing turnovers is crucial for your firm’s growth and increasing your enterprise value, and by hiring remote employees in the current labor market, you’ll make that process more seamless than ever before!
Why you should hire freelancers
In addition to implementing a reliable system for hiring remote employees, it’s also essential that accountants accept the important role that freelancers play in growing their firms. Freelancers make up a growing part of the labor force, and using freelancers is often a practical solution for meeting the specific needs of your clients:
“A full third of the labor force identifies as ‘freelance.’ That’s an expert that would not take a full-time job offer from you if you gave them one. … Every potential client arrangement that you have that comes down the queue into your pipeline, there is someone in the world … that can fill that role for a fee that is less than the fee it’ll take from your client. … You can find the best player for each project.”– Jeff Phillips
Using freelancers enables you to have access to a growing part of the labor force and is also a practical way of addressing your client’s needs. An additional benefit for hiring freelancers is your ability to hire seasonally or as your firm’s workload fluctuates:
“You may not want [a] full-time [hire]. Tap into the gig economy and in the 1099 economy because you can fill jobs to accomplish work without making a full-time hire, without adding benefits and different expenses to the bottom line. They can flex up and flex down as your business needs to. … It’s less stress on your team because you’re finding assistance to come in and support the team.”– Jeff Phillips
Hiring freelance for seasonal work or individual projects is a great way to find qualified experts for tasks while also not overloading your team. For example, if you’re a tax firm, you could hire freelancers seasonally during tax season to address the increased workload. Using freelancers is crucial for growing your firm, and your firm will be at a disadvantage if it doesn’t have a reliable hiring system for bringing on freelancers:
“If you don’t have a 1099 freelance strategy, you don’t have a predictable, reliable hiring system inside your business. And that is a detractor of enterprise value.”– Jeff Phillips
Establishing a system for hiring freelancers is essential for taking on your firm’s workload during busy periods while also increasing your enterprise value. Having a 1099 freelance strategy will help you grow your firm while not overworking your current staff.
Learn more about the future of accounting firms
Smoothly transitioning your firm into the new work landscape will play a key role in growing your company and increasing its enterprise value. Accountants need to create a system that doesn’t revolve around the firm’s founders and instead focuses on automation and hiring remote and freelance workers to better support the needs of their clients.
If you want to learn more about how your firm can thrive by implementing a remote staff, be sure to check out part two of this webinar series titled “Hiring, Managing, and Thriving with a Remote Staff.” Also, be sure to check out the full webinar here.
Here at Gusto, we offer small businesses and accounting firms a variety of tools and services to help their businesses thrive. We have payroll tools, HR, dedicated partner advisors, time tracking, insurance, and many other benefits that will take your firm or small business to the next level. If you want to learn more about how Gusto can assist you and how you can get started, check out our products page here.