plus: ppp loans helped firms in multiple ways.
by gary adamson
it looks like 2020 will be a good year for almost all small to midsized firms.
more: survey: 2020’s disruptions are only the beginning | covid brought us more and better client communication
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revenues will be flat to up with the ppp application and forgiveness revenue helping out, plus most firms will recognize their own ppp loan as additional income. the big question is what will 2021 look like for us and how deep will the economic damage for our clients be when the economy finally opens back up?
the biggest change during the pandemic has to be the forced remote work environment. a client of mine in st. louis probably said it best: “we talked about working remotely and really gave it lip service until it was forced upon us. it’s amazing how quickly you figure something out when you don’t have a choice. there were a lot of bumps and it’s not perfect but thank goodness we had the technology.”
last year was a good year for most of my clients. top-line organic growth was stronger than the prior year with growth in profits available for partners not keeping pace with the growth in revenue.
i continue to see the talent wars pushing costs up faster than the top line. that doesn’t necessarily mean that income per equity partner is coming down, as firms are reducing the number of equity partners splitting up the pot.
a few trends and issues that firms are working on:
- we were somewhere around halfway through the baby boomer retirement process so succession was still a big issue in most firms.
- because many firms will not be able to execute an internal succession plan, we are nowhere close to consolidation in the profession being done. the market was very active pre-covid and will pick back up post-covid.
- every firm was talking about how to move from compliance to more consulting, but no one knew what the new compliance would look like, how big the change would be, and when the freight train would arrive.
- one of the fastest-growing areas was cas, which is client accounting services (we used to call it bookkeeping). it will be a survivor in the movement to consulting and the demand is exploding.
i hear a lot of talk about the “new normal.” i think that many of us are hopeful that we will soon be able to get back to the “old normal” with enhancements and some lessons learned. to me the acceptance of remote work and the new definition of the workplace will be the most significant lasting covid impact. there are still lots of questions such as
- how do we really manage the people and the work effectively,
- how will our firm culture adapt when most of our workforce may not be in the office and
- what new tools/apps/software will be invented to connect us and make the interaction and collaboration more natural and seamless?