The 2016 National Management of an Accounting Practice (MAP) Survey reveals that firms are showing solid gains in revenue and profitability, diversifying services, incorporating a greater mix of billing protocols and exploring diverse strategies for growth. The biennial survey, conducted by the AICPA’s Private Companies Practice Section (PCPS) and CPA.com is the profession’s largest benchmarking poll on practice management topics.
The survey gathers information on the financial results and practice management approaches of firms. The results are reported as medians and broken into seven size segments, from those with less than $200,000 in annual revenue to those with $10 million or more as well as by geographic region and sub-region. Responses were gathered from May to July of 2016 and reflect firms’ financial results for 2015.
“One of the most telling conclusions revealed in the survey this year is that you don’t have to be big to run a very profitable firm, and you don’t have to be small to be innovative and nimble,” says Mark Koziel, CPA, CGMA, the AICPA’s Executive Vice President of Firm Services and Global Alliances.
Firms are building on the successes of the last few years and making investments to overcome obstacles in their way – whether economic, regulatory, demographic, technological or entrepreneurial. The survey touches on numerous topics, including the following, to allow your firm to benchmark itself in many particularly meaningful areas.
- Median Profit Margin (fees minus expenses before owner salaries as a percent of net client fees) in participating firms over the last three cycles of the survey primarily show growth beginning in 2010, while this year’s survey indicated overall decreases in profit margin. The survey noted that a number of factors contributed to these results including strategic investments for the future following the recession and rising employee costs as a result of competition for talent.
- Billing rates for partners increased within all firm sizes. The increases ranged from less than 2% for firms in the middle revenue segments to 8% in the largest firms, with a significant increase of 20% for firms with the smallest revenue.
- Staffing is one of the biggest discussion topics within the profession today. As the economy improves around the country, staff turnover rates continue to inch upward. The 2016 MAP Survey takes a look at a number of staffing considerations including 150-hour graduates being hired at almost twice the rate of those who do not meet the requirement and the use of social media to recruit staff. This is an area of opportunity for smaller firms with less than one in five firms under $1M utilizing these tools.
- Results of the MAP Survey outline the median chargeable hours by staff position for each revenue band. Compared to the 2014 survey results, across all revenue segments the chargeable hours of partners has decreased an average of 2%, while the chargeable hours of associates has increased by an average of 4%. It’s important to consider how your firm compares in its specific revenue segment as the changes in billable hours for partners range from a decrease of 2% in larger firms to an increase of 10% in medium firms.
Firm owners and administrators are among the many interested audiences who can use the full survey results to analyze how their firms compare with others throughout the country as well as in their own size segments and geographic areas. The survey is a great reality check that spotlights where a firm stands in relation to other similar practices and which issues it may want to address. AICPA PCPS/CPA.com National MAP Survey results are available to PCPS firms at no charge. Participating firms have access to their free personalized reports on the survey platform.
For more information about the full survey results and PCPS, visit www.aicpa.org/mapsurvey.