The July issue of Journal of Accountancy (JoA) offered an important reminder that the profession is undergoing a transformation due to staffing shortages, technology advances, and the influx of private equity investment. It also highlighted the need for stronger firms to address the ever-changing industry landscape. As detailed in the lead story: Transform your business model, the AICPA Private Companies Practice Section has developed a roadmap for CPA practice modernization. According to the article, there are “five pillars” for transforming the CPA firm business model: 1. Strategy. 2. Governance. 3. Service Offerings. 4. Technology. 5. Culture and Talent. It’s a solid framework, especially as firms rethink how they create long-term value for clients, staff, and successors. Applying a buzzword like “transformation” to our profession is on point and is probably scary for many CPAs. Therefore, I think this outlook needs some added clarification. In my view, the transformation requires reshaping a firm to be more valuable, more sustainable, and more transferable. What is necessary, as the JoA article alludes to, building a better business altogether beyond viewing the firm as a practice. Our firm’s advisory work guides firms on all of the five pillars and focuses heavily on three: Strategy, Governance, and Culture & Talent. We also work closely with firms to help them reimagine their service offerings by helping them expand beyond traditional compliance work toward advisory services. This shift is not theoretical. It’s operational, and for most smaller to mid-sized firms, it’s a real challenge going from a historical perspective (compliance) to a forward-looking perspective (advisory). The challenge is greater for firms built on the partnership model. It’s an easier transition for firms that have proactively adopted a corporate model. Here are four reasons why transformation is difficult for many small to mid-sized CPA firms: 1. Governance is often mistaken for bureaucracy, with decisions being made via partner conversations rather than through defined structures. This is less of an issue with firms that have adopted a corporate model. 2. Culture is treated as a feeling instead of as a system. Without communication protocols, accountability mechanisms, and behavioral clarity in place, the way it feels to work at such a firm is inconsistent and frustrating. 3. Strategy is not a priority for many smaller firms which are often reactive and backward-looking. CPAs are trained to analyze the past, not to design the future and see around the corners. This short-sighted mindset seems especially prevalent at smaller firms, which are consumed with just getting the work done. They don’t feel they have the luxury of thinking about the big picture. 4. Advisory services may be discussed at smaller firms, but they’re rarely implemented as a scalable, repeatable, and consistently priced offering. At these firms, compliance work is still the top priority and checklist-minded accountants are reluctant to provide services characterized by ”outside the box” thinking. As a CPA, I’m proud of our profession’s commitment to technical excellence and strong ethics. We document, we reconcile, and we validate the past activities of our clients. We’re very good at operating in hindsight, but that mindset can also hold us back from strategic thinking and from being agile in a changing market environment. The shift our profession is being asked to make is not cosmetic — it’s foundational. Becoming a modern accounting firm requires new systems, new models, new ways of thinking, and new leadership behaviors. Our firm advocates for strong governance infrastructure at firms — not as a form of control, but as a driver of clarity around three critical areas that impact daily operations: 1. Roles & Responsibilities — what gets done, by whom, and when. 2. Policies & Procedures that prevent the firm from having to “reinvent the wheel” every year. 3. Metrics & Goals that drive performance and accountability across the entire team. Once that clarity has been established, we build strategy through the business structure of the firm, breaking the organization into five manageable parts: 1. Owner Initiatives – succession, personal financial goals, and exit readiness. 2. Sales & Marketing – positioning and new business development. 3. People, HR, and Personnel Development – recruiting, training, and team alignment. 4. Business Administration – systems, financial controls, and internal reporting. 5. Client Service Delivery – offering the right services consistently and with a high level of quality. We don’t see culture as a series of inspirational posters on the wall. We define it by what’s rewarded and by what’s tolerated. We allow the firm’s values to define the guardrails that guide how employees and partners interact on a day-to-day basis. If you want to protect and grow your firm’s culture, you need governance systems that support it. You need leadership that will do its job to ensure that the firm is functioning systematically. This is no easy task and it must be constantly reviewed and updated. When it comes to governance, you cannot simply set it and forget it. When it comes to service offerings, the future of our profession depends on being able to deliver proactive advisory services — not just compliance work. Many firms talk about this vision, but few have built the pricing structure, staffing, and delivery models to make it real. Fewer still have staff that are comfortable operating from a blank whiteboard. The AICPA has started an important conversation. But for small to mid-sized firms, transformation doesn’t just happen by knowing the five pillars — it evolves by taking action to align the pillars through an effectively designed and operating governance infrastructure that deploys periodic strategic planning iterations and that adheres to cultural clarity. That’s the shift we’re helping independently operated firms make. It’s not easy and we agree wholeheartedly with the AICPA that this transition is necessary if our profession hopes to survive and thrive. The upside of maintaining an independently owned and operated firm is worth it to partnerships that wish to avoid being assimilated into a culture they cannot control and where the profits inure to a corporate entity. As Charles Darwin said: “It is not the strongest or the most intelligent that survive, but those that can best manage change.” Even back in Darwin’s time, before there was a CPA profession and professional society, he realized the importance of adaptability and the willingness to embrace change.  Will your firm look back on this transformational period of change fondly, or will you be one of its victims? The ball is in your court.

Let’s get one thing straight: CEOs don’t suffer from a shortage of ideas. They suffer from a shortage of focus. It’s not always a strategy issue. It’s not always a talent issue. It’s oftentimes a focus issue. A recent study by Harvard Business Review tracked large-company CEOs over a 13-week period and found that the average leader spends 36% of their time reacting to unexpected issues, with only 11% on routine duties tasks that could typically be delegated. I talk to business owners every day who are stuck. Not because their companies aren’t growing, many are. They’re feeling stuck because they’re adding work, not value. The business is expanding, but they’re more exhausted than ever, buried in distractions, unsure if their time is making the impact that it should. If that sounds familiar, here’s the hard truth: your business can’t outgrow your lack of clarity. Growth is a Focus Problem, Not a Capacity Problem Many leaders think the answer to growth is more: more marketing, more meetings, more tools, more talent, more money. But the real answer the one that actually works is less. Less noise. Less chaos. Less doing. You scale not by doing more, but by doing less better. And it starts at the top. If the CEO isn’t focused, no one else will be. Compartmentalize to Multiply We help leaders grow by helping them focus. And the key to helping them focus is breaking the business into five essential parts: 1. Sales & Marketing 2. People & HR 3. Admin & Finance 4. Client Delivery 5. Owner Initiatives Everything that happens in your company lives inside one of these five areas above. Once you compartmentalize, you can prioritize. Once you prioritize, you can delegate. And once you delegate, you can finally do what only you can do: drive the strategies and tactics that will make your business a success in the minds of its stakeholders. That's the essence of what we call *highest and best use* getting you, your team, and your systems aligned with the work that drives real value. Clarity is a System, Not a Slogan Once your business is broken into these parts, it becomes easier to implement clarity across three crucial dimensions: 1- Roles & Responsibilities – Is everyone clear on what they own? 2- Policies & Procedures – Are there repeatable systems in place? 3- Metrics & Goals – Is performance defined, measured, and aligned? When those elements are murky, teams spin. When they’re clear, the machine runs. The Real CEO Job Too many business owners are still in the weeds, wearing too many hats, babysitting every decision. That’s not leadership it’s firefighting disguised as hard work. Your real job as CEO isn’t to run every department and put out every fire. It’s to *create focus*. Focus for yourself. Focus for your team. Focus on the right things, at the right time, with the right people. So What’s the Next Step? If you feel like your growth is costing you clarity, or your role is expanding while your impact shrinks we have a tool that might help. It’s called the Growth & Value Assessment . It’s completely free and takes only 15 minutes to complete. The assessment will help you identify areas where your business may be scattered… and where you need to improve your focus. Because once you fix your focus, everything else will fall into place.

Most firms don’t fail at M&A because of bad intentions. They fail because they didn’t know what they didn’t know. If you're a CPA firm leader thinking about buying or selling a firm but you're not sure where to start or what traps to avoid you're not alone. M&A gets talked about as a strategic growth lever or a retirement solution. But when it shows up in real life, it’s rarely smooth or simple. Deals stall. Cultures clash. Clients leave. Partners second-guess each other. Whether you're considering selling your firm or acquiring another, there’s a good chance you’ve already felt some of the friction. Below are a few of the most common concerns we see and a way to gauge how prepared you really are. If You’re Considering Selling, How True Are These Statements? I have no idea what my firm is actually worth. What if my clients or staff leave when I start to step back? I don’t have a clear successor and I’m getting tired. I’m too busy running the firm to even think about selling it. If you nodded to two or more, your firm may not be sale-ready yet. But you’re asking the right questions. If You’re Considering Buying, How True Are These? We want to grow, but the right deals just aren’t out there. The last firm we bought was chaos to integrate. I’m worried we’ll overpay and lose clients anyway. Our partners can’t agree if we should even be doing this. If your head nodded on a few of those, you might have the desire but not the alignment, strategy, or infrastructure to move forward confidently. And Then There’s the Universal Stuff Buyer or Seller: We don’t have a real M&A process we’re just winging it. We’re afraid of making a bad deal that messes up the culture. We don’t have anyone we trust to guide us through this. Even one or two “yes” answers here should prompt a deeper pause. The stakes are too high to fake your way through this. So, What Now? Try this quick self-check: Count how many of the above statements you answered “yes” to. 0–2: You may be in good shape, but a second opinion never hurts. 3–5: There are likely gaps worth addressing before you proceed. 6+: You’re not alone. Many firms start here. Now is a great time to step back and build a clearer roadmap. You don’t need to have all the answers. But you do need to ask the right questions before signing a letter of intent. If this helped you think through things more clearly even a little then it’s done its job. If you'd like a simple checklist to evaluate your M&A readiness, just reach out to me at dlandrum@integratedgrowthadvisors.com. We’ve built one specifically for CPA firms to help avoid the common pitfalls. It's our mission to support CPAs in making better decisions and it's my pleasure to provide the checklist with no strings attached.

Key Takeaway

If you think being a great CPA or business advisor in the AI era is about learning to code or installing some new software, think again. Soft skills are increasingly valued over technical skills. I will share 10 of the most important ones with you shortly.  In many ways this transformation in our profession reminds me of the early settlers who stepped off the boat at Jamestown in 1607—unfamiliar land, unknown threats, and zero guarantees. The ones who survived weren’t the smartest or most educated. They were the most adaptable. They reinvented themselves or they didn’t make it. That’s where we are today in the CPA profession.

A few days ago, I stepped onto a stage for the first time as a stand-up comedian. I’ve spent years doing improv, but stand-up is different. Stand-up isn’t about reacting in the moment; it’s about crafting, refining, and delivering material in a way that resonates (hopefully) with an audience that wants to be entertained. I learned a ton from my stand-up classes and first performance and a great deal of what I learned can be applied directly to business leadership. Here are the three biggest lessons that business leaders can learn from stand-up comedy:

With the college football playoffs set and the NFL season coming down the home stretch, there have been countless close games going down to the final seconds. The difference between winning and losing often has more to do with a team’s culture and preparation than it does with their pure talent. In the same way, most accounting firms have smart, conscientious, talented people at all levels of the organization. The difference between high performing firms and mediocre firms is that the high performers have the ability to stay in alignment and hold their composure when the pressure is on. While it’s easy to put your organization’s core values on the wall of your lobby or locker room, you don’t find out who has really bought into those values until the you-know-what hits the fan. Like elite sports teams and military units, high-performing firms stay together and stick to the game plan when faced with a big client loss, departure of a key employee, or busy season fire drills. Under the same circumstances, lesser firms throw in the towel, point fingers, and watch staff head for the exits. Sound familiar? Sun Tsu, the legendary general and philosopher of ancient times said, “Every battle is won before it’s ever fought.” In the heat of battle, I’ve found, you must think like a triage unit in combat. Casualties are all around you and coming in fast; you must treat the most serious life-threatening injuries before the ones that are merely painful – no matter how anguished the victim. In the heat of battle, you’re not going to get perfection. You must do the best you can with the people, resources and time you have to work with. As a leadership coach, I’ve noticed that firms with a strong culture and governance model are particularly well equipped to handle “battlefield” conditions. They tend to have four characteristics in common:

December 4 2024 | 10 am PST / 1 pm EST

Dan McMahon contributed to the following article in Illinois CPA Society's Insight Magazine summer issue on the topic CPA firm M&A.