Most accounting firm owners hit a point where something feels off. The work keeps coming. The hours might keep climbing. But the profit doesn't match the effort. Paul Latham lived this. His UK firm looked fine from the outside. Clients were happy. Revenue was growing.
However, they were doing too much work for what they charged. They had no clear direction. Their best people weren't pulling together as a team. That was 1993. Over the next eight years, they stopped ignoring these warning signs and rebuilt how the firm operated. By 2001, the firm was sold for $45 million.
The problems fixed aren't unique to them. Most growing accounting firms hit the same 8 walls they hit.
Wall #1: The Accounting Firm Pricing Problem
Here's what Latham figured out about hourly billing: it punishes competence. Think about it. If you're slow and sloppy, you bill more hours. If you're fast and skilled, you bill fewer. The math is backwards.
But the real damage runs deeper. Without fixed scope, Lathams found themselves "never quite sure when to stop." They'd finish a project, look at the hours, and realize they'd done $8,000 worth of work for $5,000.
Clients hate hourly billing too. They hate the surprise invoices. They hate the meter running every time they pick up the phone. They hate not knowing what this is going to cost.
So why do many firms still do it? Habit. Fear. The uncomfortable truth that fixing pricing means defining exactly what you deliver.
Wall #2: Accounting Firm Growth Without Direction
Most accounting firms don't have a vision. They have momentum. New client walks in? Take them. New service opportunity? Add it. New hire available? Grab them before the competition does.
Then one day you wake up serving 200+ clients across 15 service lines with a team of 12 people who all report to you. And nothing fits together. Lathams hit this wall. Their problems got louder as they grew. Small inefficiencies that were tolerable at $500K became disasters at $2M.
The fix started with three questions:
Simple questions. Uncomfortable answers.
Wall #3: Your Best Accountants Make Terrible Managers
A pattern that destroys growing firms is promoting your best technical person to partner, then wondering why everything falls apart.
Technical skill and management ability have almost nothing in common. The accountant who can untangle a complex tax situation may have zero capacity to coach a junior staff member, run a productive meeting, or hold someone accountable for missing a deadline.
Lathams was "over-reliant on the skills of individual partners." Sound familiar? They eventually hired someone who functioned like a COO. Not another accountant. Someone whose job was running operations, measuring performance, driving efficiency.
Most firms think they can skip this. "We're accountants. We can manage ourselves." That's almost always a false economy.
Wall #4: No Consistent Accounting Firm Sales Message
Ask your partners what makes your firm different. Go ahead. Ask them separately. Write down what each one says. You'll probably get 3-5 different answers. At Lathams, the partners had no consistent message. No clear value proposition. Just hoping clients would figure out why to hire them.
When you can't articulate your value, you compete on price. And competing on price is a race to exhaustion.
Wall #5: Great Accounting Firm Employees, but Not a Team
Talented people don't automatically work well together. Lathams had skilled accountants, smart tax specialists, experienced advisors. But they operated like solo practitioners sharing office space. No coordination. No handoffs. No leverage.
The breakthrough came when they built what they called "virtual client service teams." Different specialists were brought together based on what each client actually needed. Not org-chart thinking. Client-need thinking.
The insight was simple: serving clients well isn't an individual race. It's about "passing the baton to the right team member with the right skills at the right time."
Wall #6: Accounting Firms Need New Skills
What got you here won't get you there. The skills that built a $500K practice don't build a $2M practice. The skills that work at $2M fail at $5M. Growth exposes gaps you didn't know you had.
Lathams realized they needed marketing expertise they didn't have. Operations expertise they didn't have. Specialized advisory capabilities they couldn't build internally.
Today's firms have an advantage Lathams didn't: access to external specialists through a Virtual Family Office model. Tax planning, wealth management, risk mitigation, legal services, business advisory. Specialists you can tap without putting them on payroll.
Wall #7: Firms Have Trouble Following Through
How many strategic initiatives has your firm started in the last 3 years? How many did you finish? This is the shiny object problem. Everyone agrees change is needed. Ideas flow. Projects launch. Then tax season hits and the initiative quietly dies.
Lathams learned that transformation requires sustained focus. Not occasional bursts of enthusiasm. Not quarterly retreats that generate action items nobody follows up on. Structure and accountability. That's what finishes initiatives.
Wall #8: Accounting Firm Inefficiencies
A bad growth problem many firms eventually hit: revenue grows and profit stays almost flat. Or worse, revenue grows and profit shrinks. This happens when you're adding complexity faster than you're adding efficiency.
But no improvement in how work actually gets done.
Lathams solved this by admitting they had "two businesses under one roof." A compliance factory that needed systems, processes, and rigorous measurement. And a planning boutique that needed relationship development and specialized expertise. Trying to run both the same way was making them inefficient at everything.