Let’s take a closer look at the growth. The Fastest-Growing group ranges in size from $5 million to $100 million in revenues (average size is $35 million), and as a group grew organically by 20% last year. Where did that growth come from? It wasn’t from mergers. Only one merger was reported among those 15 firms, which added about 1% of that one firm’s current revenue.
As a group, they derive on average 26% of their total revenue from non-traditional sources, which is significantly higher than their peers (averaging 18% for a comparable group). Despite a larger focus on non-traditional services, audit revenues were up 17%, tax revenues up 16% and non-traditional service revenues were up 22%.
Charge hour growth averaged 12% for the group, and increased from last year for all but one firm. Only two of these firms have SEC clients, so the audit growth has come primarily from something other than publicly held companies.
Their marketing budget is about the same as others – roughly 2.5% of total revenues. But one of the biggest differentiators is a purposeful focus on growth. Half the firms have a business development director, about twice the average of their similar peer group. Two-thirds have created a strategic plan for each department in the firm and are managing to that plan. And two-thirds of the fastest-growing firms have a niche strategy that results in at least one market segment in each firm generating a minimum of 20% of all the firm’s revenues.