Many CPAs and firms are thriving and growing despite bad business conditions. Whatâ€™s yourÂ personal economic plan?
by Rick Telberg
Accountants and accounting firms are struggling, like most business people, to get a clear reading on the state of the economy and the outlook for business conditions ahead. Unfortunately, very little is clear at the moment, except that caution is called for, an over-reaction could become a competitively fatal error and a little bit of optimism can't hurt.
In listening to CPAs from around the nation, a few trends are clear:
- Certain regions and business sectors are hard-hit, especially real estate, housing, construction and finance.
- The businesses and firms tied to those ailing segments of the economy are feeling the most acute pain.
- And, despite all the bad news, some firms and businesses are doing all right, even expanding through the economic contraction.
Good news is coming from surprising places.
What's your personal economic recovery plan?
In Clearwater, Fla., Wilber Van Scoik is expanding his small tax-and-accounting practice. He's looking to add another part-time staffer to his existing two part-timers. "Clients are tightening their belts," he says, "but they're hanging on."
In Lafayette, La., Chasity Hooks at Hooks & Associates says the local economy "is actually expanding somewhat." Her firm is hiring and her customers "are holding on and prospering."
Pam Gaines, at Gaines Financial Services in Nashville, says her business grew 10 percent last year in a contracting economy, and, "Clients need advice now more than ever to weather the storm."
To be sure, many other accountants and firms are not so lucky.
At one large firm, a mid-level staffer is already one of the casualties. "The firm I worked for already fired 20 percent of staff and managers, and may expand that slightly in the coming months." Another accountant tells me he got laid off at the height of busy season after his firm's over-expansion combined with the economic downturn to create "a perfect storm" for layoffs.
A senior at a third firm says his region has been hard hit not just by the current economic crisis but by a changing global economy. "Our area has relied heavily on furniture manufacturing and textiles in the past. Those industries have begun and will continue to outsource to China and other countries. Our workforce needs to be retrained and re-educated, and some older workers will fall through the cracks. Our corporate clients will weather the storm, but many workers will not return to work in the same industries."
Daniel Polachek, who owns his own practice in Northampton, Mass., sees a trend. First, he notes that small-business contractors are doing "extremely well" in his region. But "restaurants are dying" and "doctors are doing better than ever as self-employed."
Polachek's conclusion: "The larger the business, the more difficult time they are having." He figures that large business failed to react to the slowdown that others saw coming in the last few years, and now, he says, they "have to make drastic changes to their expenses."
Across the country, in Santa Rosa, Calif., Dave Dillwood, of Dillwood Burkel & Sully, expects more Chapter 11s among local businesses. "Collections will continue to be slower than in past years and will be a cause of concern." Nevertheless, some clients are actually expanding and his firm is staying
CPA Henry Karpf in Morganville, N.J., sees the economy contracting around him. But, for now, his clients' incomes are holding steady, even if their retirement portfolios and real estate values have dropped.
From Aurora, Ill., Ralph Mooney at Mooney & Thomas reports that the economic contraction seems to be slowing down - which is a good thing. And he's still looking to hire a few good people.
From St. Louis, Joe Eckelkamp reports that economy seems to be coming to a halt, because it had been sliding downward. He's "just starting to see light at the end of the tunnel." His customers are hanging on and he's holding staff levels at his firm steady.
In Winter Park, Fla., Gary Kane, of Kane & Associates, sees the economy "drifting slowly south," which is something better than the crash of late last year. Although most of his clients are hurting, Kane is considering making a push for expansion in his firm.
"I feel like the economic bottom is around here somewhere," says Steve Odem, owner of KATAX in Lakeland, Fla., "A year from now, looking back, it will be apparent. The bottom must be close, even if we don't see it."
Jim Curry, at Scanlan & Leo in Oak Brook, Ill., is counting on the economy recovering somewhat before the year is out, with his firm holding steady.
"We always run lean and mean," Curry says. "It seems that we continually do more work with the same number of people, which is great for the owners, not so much for the employees."
Still, it may be firms like Curry's that can weather this economic storm