To survive common growing pains, your business will need to innovate and develop new strategies. This is because the strategies that allowed you to grow to the level you are at today, are not the strategies that will work for you to progress forward. You constantly need to be reinventing yourself, because the strategies that win today won’t be the same tomorrow.
This requirement to innovate is one of nine key insights identified in Karbon’s recent report, The Business Ability of Accounting Firms, which reveals the core weaknesses and progress of 250 accounting firms across the globe that were assessed through our Practice Excellence Scorecard.https://karbonhq.wistia.com/medias/srt0o23h83
When firms are faced with new challenges and aren’t prepared, they can suffer. This is highlighted when looking at the average revenue per employee for accounting firms, broken down based on business tenure—the number of years a firm has existed.
There is a positive trend in staff effectiveness as these firms mature, with one exception—the 5-10 year period for a firm’s lifecycle.
To determine why a dip occurs, we can analyze how businesses are performing in specific competencies, based on their tenure.
A firm’s Practice Excellence score is influenced by its proficiency across different competencies. When looking at the results of firms in these competencies, a more detailed picture emerges that shows the specific areas businesses of certain tenures are facing.
Commonly, as a business matures it grows more proficient in most of these areas impacting their business ability. But there are three key exceptions where their proficiency actually declines: business processes, technology, and innovation.
Over time, as process become more ingrained and teams grow, it becomes harder and harder to make changes and innovate. The key for your business is to know that the strategies that are going to be successful for you from day one have a shelf life of up to about five or so years. They will not always be the same strategies that work.
To make a successful transition from 5-10 years, or even 10 and beyond, a different set of strategies are required. You will need to look at things differently and understand there will be an evolution in how things operate.
These findings highlight that there is a period that many businesses will thrive, or die. Many at this point of their lifecycle find that the strategies that worked so well for them previously are not going to be the same strategies that will continue to progress them forward. Firm owners must always be learning and re-inventing.
Download your copy of The Business Ability of Accounting Firms for all the insights from Karbon’s Practice Excellence Scorecard. You can also take the free Practice Excellence Assessment to receive your own personalized scorecard and see how your firm compares.