While you’re furiously crossing off “2022” anywhere you mistakenly write it (does anyone write checks anymore?), you’re probably wondering what 2023 has in store. Well, if your firm is a small practice, there’s good news: 2023 is likely to deliver some events favorable to your business.
Throughout 2022, events conspired to make things challenging for businesses. Whether it was continued remote work (sometimes with employees fiercely opposed to returning to the office at all), health concerns, labor shortages, inflation, or something else, employers at all levels and business sizes breathed a collective sigh of relief once 2022 was behind them.
Small practitioners’ challenges persist
Though it’s never been an easy thing to be a small firm, recently things have become even more complicated. Both domestically and internationally, finances and supply chain issues are beating up firms and their clients, giving rise to one of the harsher environments we’ve seen in a while.
Let’s be clear though, not every small firm has the same goal. Some seek unfettered growth. Others are more interested in niche work, and are focused more on developing their client base for its characteristics and qualities rather than size. Because of these differences, the emphasis a small firm places on addressing its challenges will vary. But overall, they all face the same hurdles.
The pool of qualified accountants and CPAs has been shrinking for a while now, with seasoned professionals retiring en masse, and fewer students choosing to pursue a career in accounting. The labor shortage that began in earnest in 2022 just made everything that much harder.
Of course, those firms that are fully and satisfactorily staffed still face issues, including evolving employee expectations regarding benefits and compensation and work/life balance, and incessant pressure to preempt poaching attempts. Retention is always going to be a concern, but recently it’s become central to a firm’s operations.
Keeping up with changes in the profession and regulations
Where even to start with this?
For YEARS now, firms have breathlessly chased The Latest Thing as profession leaders and regulatory authorities have pitched change after change at them. Firms have been weathering an intensifying focus on advisory services, the rise of management accounting, worsening IRS service issues… the list goes on and on. For smaller firms, just staying on top of new guidance and standards can be a dizzying, never-ending task.
It doesn’t look like it’s going to let up anytime soon.
Evolving technology and security threats
There’s a widening technology gap between large and small firms. Solutions are getting less expensive, but remaining cutting-edge can be complicated and sometimes expensive, especially if you don’t choose the right vendors.
Factor in training, compatibility with existing technology in your firm, and employee acceptance, and it’s easy to see why technology is top-of-mind for resource-constrained small firms. And all of that is before we even discuss both rising cybersecurity challenges and potential liabilities that could theoretically wipe out any small business overnight.
But here’s the good news
In 2023, some of these traditional small firm challenges could be diminished a bit. In this swirl of mayhem and weirdness, some trends have emerged that could make it a very interesting — and potentially easier — year for the small firm.
Mergers and acquisitions march on
The trend of accelerating mergers and acquisitions continues. While this can obviously be a good thing for those firm owners in the M&A mindset, it can also have a halo effect for small firms with no interest in M&A at all.
With consolidation, often duplication follows. Recently combined or acquired firms turn to finding efficiencies as one of their very first tasks, and oftentimes that means layoffs, especially when functionality is duplicated between two merged firms. Why is that good for anyone? Well, simply put it increases the available pool of talent for small firms, helping to address those staffing issues we mentioned earlier.
For those small firms that DO participate in M&A activity on 2023 (yet remain small firms), the exciting news is in new process ideas and exposure to different (or possibly new) technology that can boost productivity.
As a final benefit, firms that operate in niche areas could well see returns as firms around them merge or are acquired. As many (not all, but many) of these competitive firms become more generalized, the niche firms will be more relevant than ever in their vertical.
Big companies are slimming down
You’ve probably heard about layoffs in tech and finance sectors, both of which employ professionals who could be of tremendous interest to firms. And while some firms have announced massive potential hiring that could theoretically offset this boon for the talent pool, it’s important to note that these professionals will have come from some VERY big players.
The opportunity here for smaller firms is to offer a more attractive work/life balance than the jump-the-starter-pistol pace of the bigs can offer; it’s no longer JUST about compensation. Smaller firms can provide a quality of work and life that just doesn’t exist in the big leagues. For someone coming out of a highly corporate atmosphere, that could be extremely attractive, indeed.
The caveat here is that you need to make sure you have a well-defined, positive firm culture that offers the kind of environment these disappointed and run-down workers will be most attracted to. Be prepared to discuss that culture — as well as your compensation — openly and honestly, making specific points about why your firm is the right place for them.
Work from home is normalized — and expected
The COVID pandemic really threw the traditional office model into chaos. The original intent, of course, was that workers would be off-site temporarily until the crisis abated. That hasn’t fully materialized.
We’re now years into COVID, and workers have grown attached to the flexibility and freedom of a work-from-home arrangement. There’s little point in fighting it too hard, unless your workers’ positions absolutely require them to be in an office; especially since studies prove organizations with hybrid or fully remote employees actually gain productivity.
But this is good news for small firms, because it means you’re no longer restricted to hiring only in your immediate geographic area. No moving expenses, delayed start dates, or awkward group welcomes (unless you like that kind of thing, in which case there’s always video conferencing).
You can save on overhead with a smaller (if any) office, and free up resources from other in-office necessities that will either be completely unnecessary with remote workers, or can be scaled back to more budget-friendly levels. And of course, with freed resources you can look at reinvestment into efficiency builders like improved technology, more staff, or buying yourself the really good coffee. Just sayin’.
Technology is becoming more accessible all the time
The technical wonders of automation and cloud-based software are only matched by the speed and capability of modern computer systems themselves. The comparison in processing ability per dollar of a desktop or laptop system in 2023 and one from 2010… well, isn’t one.
The same is true of software. More features, more speed, and better accuracy are polished to a high shine by included machine learning and artificial intelligence that can literally make your tech solutions better as you use them. Even better — pricing for much of the technology once only practical for larger firms has come way down, leveling the playing field for smaller firms.
Investing in cutting-edge tech won’t just set your firm apart, it will drive efficiency and productivity in exciting new ways (if you find that hard to believe, talk to us about how our automated bookkeeping solution can do just that for your firm).
And when you choose carefully, your tech will be something that helps you retain staff, by removing dull or repetitive tasks from their workload, helping them to be more creative, innovative, and present for their clients.
Those who know how to look for it will always find good opportunities in any circumstances. But 2023 is turning out to be a year that could prove pivotal in the success of small firms around the country by delivering circumstances that make it easier than ever.
But if you want a little peek into the crystal ball, we can help you there, too.