Spike in Business Positivity According to the 2016 National Management of an Accounting Practice (MAP) survey, revenue increases ranged from 4.9% for firms with $500,000– $750,000 in revenue to 10.5% for the smallest firms, those with $200,000 or less in revenue. Accountants were bullish about Q1 2017’s economic outlook. Accounting Today’s 3-month Accountants Confidence Index (ACI)* increased from 48.31 to 53.24 during January 2017, and the 6-month ACI spiked from 51.63 to a robust 56.29. The ACI for the economy entered positive territory for the first time since October 2015. Accountants forecasted the most growth among midsize clients, with an ACI of 53.47, followed by small business clients at 53.09 and large clients at 51.44. *Any index greater than 50 represents growth

Deloitte in the Lead Deloitte & Touche acquired 9 net new Securities and Exchange Commission (SEC) audit clients during Q1 2017. All the other Big 4 accounting firms had net- negative new audit clients: PwC, -7; Ernst & Young, -4; and KPMG, -7. Deloitte & Touche was also first, as measured by new assets audited, at $104.1 billion; followed by KPMG, $31.9 billion; BDO RCS Auditores Independentes, $24.47 billion; Ernst & Young, $19.71 billion; and PwC, $17.45 billion. Among smaller firms, DLL CPAs was first with 5 net new SEC audit clients; followed by Soles Heyn & Co, +4; Anthony Kam & Associates Ltd., +3; and 12 firms, +2 each.

Revenue Increases Steady; Medium-Sized Firms Are Top Performers According to Accounting Today’s 2017 Top 100 Firms report, total 2016 revenues for these firms increased 8.80%, a smaller increase than 2015, but slightly more than the increase of approximately 8% each year from 2011 through 2014. Medium-sized firms ($100 million–$1 billion in revenues) performed the best, with a 10.52% increase. The top 7 firms, with more than $1 billion in annual revenues, increased 8.58%, and the small firms, less than $100 million in revenues, at 7.91%. Overall, the Big 4 remained at the top of the list, with Deloitte & Touche first at $17.52 billion in US revenues; followed by PwC, $14.92 billion; Ernst & Young, $12.2 billion; and KPMG, $8.63 billion.

Tight Labor Market Challenges Firms According to the American Institute of CPAs’ (AICPA) 2017 Top Issues Report, “being current with changes and the complexity of tax laws” was the biggest challenge for sole practitioners, with “seasonality/workload compression” second. “Finding qualified staff” was #1 among all firms other than sole practitioners. “Retaining qualified staff” was #2 among firms with 11–20 and 21+ professionals. “Succession planning” was second for firms with 6–10 professionals. A January 2017 article in Accounting Today found the top 5 issues for 2017 were fallout from the election/new president, being current with regulatory change, the overall economy, recruiting/training good employees and data and IT security.

Traditional Practice Areas Blurred Larger firms ($10 million+) are shifting towards more client accounting and outsourced CFO services, increasing from 3.9% of total fees to 9.0%. Small firms (less than $1.5 million) have dominated this practice area at 10%– 15% of fees. Individual tax planning and processing revenues have increased, despite the availability of DIY tax software. Firms between $200K–$500K in revenue are benefiting the most, with almost a third (31.2%) of this business. All 7 categories of accounting firms, as measured by annual revenues, generated most of their 2016 revenues from tax-related services, ranging from 60.4% for firms with annual revenues of $200–$500K to 40.6% for those with annual revenues more than $10 million.

Advertising Strategies To attract Millennials and Millennial-age business owners as long-term clients, advertising messages from accounting firms of all sizes must emphasize that they are equipped with the right technology and have a tech-savvy staff. Tax preparers and tax preparation firms can distinguish themselves from their competition by stating in their advertising that they have passed a competency test, secured a license and/or post their fees in their office, if they have done so. Accounting firms of all sizes can use TV advertising to direct specific messages to specific audiences, such as tax services for business owners 40–55 years of age, bookkeeping for Millennial-age entrepreneurs and audits for those business owners 56 and older.

New Media Strategies To capture a larger share of Millennial business owners, focus on the use of Search Engine Marketing (SEM) and Search Engine Optimization (SEO). Create a referral program directed at current clients via email and social media campaigns, with appropriate rewards for those providing referrals. Accounting firms and tax preparers can create a series of video presentations to build firm and professional awareness with topics, such as fee transparency, monthly flat-rate plans, availability of strategic consulting and no-nonsense straight talk about finances.