{"id":4224,"date":"2009-08-17t16:29:10","date_gmt":"2009-08-17t20:29:10","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=4224"},"modified":"2016-09-27t09:54:58","modified_gmt":"2016-09-27t13:54:58","slug":"annual-rosenberg-survey-cpa-firms-feel-recessions-chill","status":"publish","type":"post","link":"\/\/www.g005e.com\/2009\/08\/17\/annual-rosenberg-survey-cpa-firms-feel-recessions-chill\/","title":{"rendered":"annual rosenberg survey: cpa firms feel recession’s chill"},"content":{"rendered":"
six-year culture of abundance ends with a thud, firms re-group, restructure and re-learn how to operate in a culture of recession.<\/strong><\/p>\n via news release<\/em><\/p>\n the cpa profession opened 2008 on the heels of several years of extraordinary growth and profits, hopeful that the economic slowdown would not morph into a recession.\u00c2\u00a0 cpa firms ended the year with results most industries would have been happy with.\u00c2\u00a0 the full effect of the recession didn’t have a big impact on cpa firms in 2008 because by the time the economic woes surfaced in the 4th<\/sup> quarter, most firms’ revenues were collected, invoiced or booked.\u00c2\u00a0 firms with annual net fees over $2 million (referred to as the “over $2m group”) posted the following 2008 results:<\/p>\n changes hit the cpa profession like a ton of bricks<\/strong><\/p>\n “the cpa profession had a great run for these past six years,” said marc rosenberg, creator of the rosenberg survey. “the post-enron climate created a huge surge in demand for cpa firm services, allowing firms to virtually become order takers.\u00c2\u00a0 throttled by a historically low supply of experienced staff, partners worked harder than ever before, and the benefits showed up in their paychecks: \u00c2\u00a0income per partner rose 50% since 2003.”<\/p>\n but like many businesses that experience an extraordinary run of success, a number of shortcomings surfaced that went unaddressed by firms because they were too busy getting the work out.\u00c2\u00a0 during the so-called “golden age,” many firms pulled back on their practice development efforts for fear they might be successful.\u00c2\u00a0 underperforming partners were given a free pass.\u00c2\u00a0 costs were not monitored closely.\u00c2\u00a0 a lot of marginal staff were hired and retained because firms were desperate for any kind of labor.\u00c2\u00a0 new services were back-burnered and strategic planning was put on hold at many firms.\u00c2\u00a0 “the recession is now focusing cpa firms to address these failings, thereby strengthening and \u00e2\u20ac\u02dcright-sizing’ their firms to position themselves for the healthier business climate that will surely follow the recession,” said rosenberg.<\/p>\n “flat is up”-the mantra for 2009<\/strong><\/p>\n “most firms tell us that if their 2009 revenues match 2008, they will consider it an \u00e2\u20ac\u02dcup’ year,” said charles hylan, senior partner of the growth partnership, parent company of the rosenberg survey.\u00c2\u00a0 “breakeven is the new profitability.”\u00c2\u00a0 surveyed firms are projecting very modest growth in 2009-3.1%.\u00c2\u00a0 roughly 20% of all surveyed firms are projecting a revenue decline<\/em> as their<\/em> clients struggle to weather the recessionary storm.<\/p>\n 2009: is the glass half empty or half full?<\/strong><\/p>\n firms seem to be split on how they see 2009.\u00c2\u00a0 the optimists expect a moderately successful year because they plan to pick up clients fleeing the high fees charged by bigger firms. \u00c2\u00a0they see a recession as a time to increase<\/em> their investment in marketing, not cut back.\u00c2\u00a0 these firms are drooling at the resumes they are receiving from highly skilled staff laid off from other firms.\u00c2\u00a0 this is the best labor market for the cpa profession in 15 years.<\/p>\n on the other hand, many firms are taking the practical approach.\u00c2\u00a0 they are laying people off, hunkering down, eliminating raises, cutting costs, freezing billing rates and granting price concessions to clients in order to keep them.<\/p>\n “2009 will witness a dramatic schism in the profession as a result of the recession.\u00c2\u00a0 some firms are battening down the hatches while others see opportunity amidst the chaos,” said jeff pawlow, president of the growth partnership, parent company of the rosenberg survey.\u00c2\u00a0 “in either case, firms are expecting dollars to go further and yield more than they have in the past.\u00c2\u00a0 we expect this to continue for the foreseeable future.”<\/p>\n <\/p>\n other noteworthy findings and results<\/strong><\/p>\n 1.\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0 fees per partner, which rosenberg says, “is the metric that correlates the strongest with firm profitability,” soared past the million dollar mark, finishing at $1,066,000 in 2008 for the group of firms with annual fees of $2-10 million.\u00c2\u00a0 “this is significant because we consider the $2-10 million firm to be emblematic of mainstream, local cpa firms,” said rosenberg.<\/p>\n 2.\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0 partners continue to age: 54-60% of all partners are now past age 50.<\/p>\n 3.\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0 an increasing number of firms have created the position of non-equity partner.<\/p>\n 4.\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0\u00c2\u00a0 firms’ internal valuation of their goodwill remained rock-solid at 80% of fees.<\/p>\n the rosenberg map survey, now in its 11th<\/sup> year, includes the results of 353 firms, most of which range from $2-20 million in annual fees.\u00c2\u00a0 nearly 100 map statistics are measured. \u00c2\u00a0accounting today<\/em> considers the rosenberg survey “the generally accepted barometer for practice management for midsized cpa firms.”\u00c2\u00a0 “we are passionate about our commitment to making our survey the most accurate and authoritative national map survey in the profession. \u00c2\u00a0\u00c2\u00a0every year, 30-40% of the data we receive contains gross errors,” said rosenberg.\u00c2\u00a0 “our team of three cpas reviews every survey input form and gets revisions where necessary.\u00c2\u00a0 we simply will not include data in our survey that doesn’t look right.”<\/p>\n the rosenberg survey was created and produced by chicago-based marc rosenberg, cpa, a nationally known consultant, author and speaker to the cpa profession.\u00c2\u00a0 rosenberg consults primarily on partner compensation and retirement, succession planning, cpa firm mergers, partner retreats and strategic planning.\u00c2\u00a0 for the past five years, he has been named by accounting today<\/em> as one of the 100 most influential people in the public accounting profession.<\/p>\n in 2009, the rosenberg survey partnered with st. louis-based the growth partnership, which serves public accounting firms in the areas of practice management, outsourced marketing, lead generation and human resources training.\u00c2\u00a0 its leadership development division, the partner institute, is the accounting industry’s premiere partner development program.\u00c2\u00a0 tgp employs 20+ individuals who, collectively, possess well over a century of accounting industry work experience.\u00c2\u00a0 its president, jeff pawlow, has been named by accounting today<\/em> as one of the 100 most influential people in the public accounting profession. \u00c2\u00a0it’s senior partner, charles hylan, cpa, is a member of the new horizons group, the largest consortium of cpa firm consultants in the u.s.<\/p>\n the rosenberg map survey can be purchased for $450.\u00c2\u00a0 call o(847) 251-7100 to order or visit at www.rosenbergsurvey.com<\/a> for an order form.<\/p>\n\n