Sink or swim: Why bigger isn't always better for accounting firms

When you think about growing your accounting firm, what comes to mind? For many, growing is about increasing the size of the team. But in reality, bigger is not always better.

A painted wall with a think salmon-colored line trending down.

According to the 2022 Practice Excellence Report, when accounting firms reach a certain size, they experience significant dips in two key areas of business proficiency:

  1. Strategy: business strategy, strategy adoption, technology strategy and innovation strategy

  2. Management: change management, talent management, organization management and client management

What’s size got to do with it?

The Practice Excellence Report data breaks accounting firms down into six sizes:

  • Solo: 1 staff member

  • Small: 2-3 staff

  • Small boutique: 6-10 staff

  • Large boutique: 11-25 staff

  • Regional: 26-50 staff

  • Medium: 51-99 staff

When a firm progresses through each size, they face additional challenges that they must contend with. Generally, firms are able to maintain or increase their Practice Excellence scores across each of the four key areas.

But when a firm tips over into the medium category, they take a hit.

A line graph from the 2022 Practice Excellence Report illustrating that bigger isn't always better. Accounting firms decrease in all areas of Practice Excellence when they reach 51+ team members.
Accounting firms become less proficient in Practice Excellence when they reach 51+ employees

The biggest challenges accounting firms face when growing

A potential explanation for the decline in Practice Excellence for medium-sized firms is the unique challenges they may have faced as a result of the pandemic. 

Implementing organizational change and overcoming barriers to innovation, such as what’s required to transition to remote work, is difficult for firms of all sizes.

But it’s especially difficult for medium-sized firms due to:

  • Their increasingly hierarchical structure

  • The number of staff

  • The strategic coordination required to navigate change

Simply put, there comes a time in an accounting firm’s life cycle when certain changes need to take place to manage a certain number of people. Often, this is described as the firm ‘growing up’.

Like when a person grows up, there are learning curves, experiments to make and challenges to overcome.

How to overcome challenges when your firm is ‘growing up’

One of the single greatest ways to successfully manage a growing accounting firm is to embed a love of change into the very fabric of your firm’s culture.

Encourage your team to seek new and innovative ways to improve their workflows to maximize efficiency. Be excited about introducing new tech that will make your lives easier in the long run.

Remember: you are the leader and your team will take inspiration from you. If you’re not enthusiastic about change, you can’t expect them to be.

Bigger is not always better—sustaining high levels of Practice Excellence depends on how nimbly a firm can cope in response to change.

Recommended reading: How to implement change when you don’t know where to start

Other things to remember to safeguard your firm through the challenges of growth:


About Practice Excellence 

What is Practice Excellence?

Practice Excellence is the measurement of an accounting firm’s business proficiency across four major areas:

  • Strategy

  • Growth

  • Efficiency

  • Management

How is Practice Excellence measured?

Practice Excellence is measured using a 20-minute online survey. There are 35 questions covering demographics, operations, usage and confidence. 

After completing the survey, you will receive your Practice Excellence Scorecard, which outlines your firm’s results and how you stack up against the other 1,000+ firms that have completed it.

How can you find your firm’s Practice Excellence score?

To find your firm’s Practice Excellence score, complete the free Practice Excellence Assessment.