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Why growth is so hard for firms and how to fix it

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10 months ago

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Growth, on the surface, is what every firm leader wants. More revenue, more profits, more employees. That’s the dream, right?

Here’s the thing, though: not everyone’s dream looks the same. Growth, it turns out, is not a one-size-fits-all approach. Not only does the definition differ from business to business, but so do the strategies for reaching that goal. Growth is also complicated, particularly for small accounting firms.

A leader looking to level up from a small staff of less than 10, for instance, may find the systems and leadership approaches that worked before have suddenly stopped working. And that’s when growth stalls out.

This period between 8 and 20 employees is often a firm’s first scaling plateau. It’s the point at which the organization has maximized its potential within its current operational structure, team design, market focus, or leadership skills capabilities. It is a critical period of growth that can make or break any accounting firm. The key to breaking through is to:

  • Understand that this plateau exists.
  • Determine what you as a leader truly want from your firm.
  • Map out the organizational design of your future firm.
  • Build the necessary scaffolding to support that design as the firm moves through its growth phases.

Here’s how to anticipate and overcome the challenges of this frustrating first scaling plateau and to achieve the kind of growth that makes sense for you and your firm.

Hitting the wall: why it’s hard to scale beyond eight employees

I’ve worked with and studied a lot of small firms over the years. And despite all of the little differences among them — location, specializations, etc. — they all had one thing in common. Regardless of past success, when they went to scale up from about eight employees to double digits, things changed. And usually not for the better.

Key metrics like revenue per employee, productivity and profitability all seemed to drop as staff size grew. Sometimes this would cause them to put a hold on growth and shrink back down, and suddenly those metrics would pick up again. But they were always hitting a wall as they looked to move through that magic zone between 8 and 20 employees.

What was happening? The dynamics of the team were changing. Most firms with eight or fewer employees run as a very flat organizational structure. But as they move above that number, they probably need to bring in someone to help manage the staff, resulting in a kind of hybrid structure in the 8 – 12 employee range.

Get a little bigger than that and the new management layer can get more complicated. Maybe some of the new people aren’t as adept at leading, for example. Now a lot of time and energy is spent on managing the team and trying to find the right manager-to-staff ratio instead of focusing solely on business growth like in the old days.

Beyond 20 employees, an organization begins to look more naturally hierarchical. Responsibilities become clarified. Strong leaders emerge. Individual departments can function efficiently and productively both within themselves and as part of the larger whole. The firm no longer looks the way it used to, but the new way makes sense.

It’s in that 8 – 20 range where things get muddled. This is the scaling plateau that most growing firms tend to hit. It’s a time to really evaluate organizational strategy and design to find a purposeful and sustainable path forward. Unfortunately, many firms try to stick with what they’ve always done and plow through these challenges.

And that’s when they hit the wall and their growth trajectory gets derailed.    

Recognizing the signs: lower productivity, less visibility, falling profit margins

I’ve talked to plenty of firm leaders who have seen these things happen, and they all tend to express variations on the same general sentiment:

“The business I started doesn’t feel like the business I’m running today.”
“I used to have my hands across everything, and now I’m not sure where things are anymore.”
“The people on my team used to be a lot more productive than they are now.”

Undergirding these kinds of statements are a number of common questions they’re running into, such as:

  • Why are client issues happening and why am I not aware of them sooner?
  • Why is the profit margin dropping when it has been steadily increasing over the past few years?
  • Why does it seem like our team is getting lazier and less productive?
  • Why don’t I have enough time to work directly with clients?
  • Why do I feel like my staff is unhappy and looking to leave?
  • I’ve never experienced these problems before, so why is all of this happening now?

It becomes a point of disconnection that threatens the confidence of many firm leaders. The organization isn’t operating the way they expect it to and they don’t know what to do about it.

Righting the ship: defining growth, understanding how to get there, and pursuing it deliberately

The problem is twofold. On one side, most leaders never take the time to really examine what’s going on in their firms. They know something’s not working, but they just forge ahead and hope the issues will work themselves out. Those leaders who do opt for some reflection, on the other hand, often don’t have these types of epiphanies until their firm has already hit the wall.

So the first step to righting the ship is simply taking the time to acknowledge the problems and understand what your firm is up against. From there, you can start to course correct by doing three things:

  1. Define what you want from your firm. How big do you want to be? What kind of culture are you trying to have? Is the sweet spot a lean-and-mean organization that sits comfortably between about 12 and 16 employees? Or are you looking to build a bigger firm with more people and more moving parts?
  2. Understand what’s needed for growth. If you’re really looking to grow, is your firm structured to support that goal? Do your resources and capacity match your forecasted revenue? Keep in mind that it’s not just about bringing in a bunch of new people; it’s about making sure the people you do bring in are filling the critical needs your growth is going to demand. 
  3. Be deliberate about operational management. A growing firm has a lot more bodies that need to start rowing the boat collectively. That means you need to be more thoughtful about things like the kind of work those people are trying to do, the processes they need to support that work, and the training they need to be successful.

Bridge the gap between goals and growth

Is bigger always better?

When it comes to facing the 8 – 20 employee wall, that’s the overriding question that firm leaders need to ask themselves. As an entrepreneur, you want to maximize your firm’s profitability. But are you viewing that goal through the proper lens? 

One of the things I’ve learned in talking with hundreds of leaders over the years is that growth and success look very different from firm to firm. For one owner, building a big team to handle more clients and offer more services might be the goal. For another, promoting a healthy work-life balance might be more important than adding more people.

In the end, the objective should be to build the right company based on your own parameters. That’s a unique thing for every business. And that’s what you need to figure out as a firm leader in order to determine where your ultimate happiness lies.

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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5 days ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

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1 week ago

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August 5, 2026

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Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

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Accounting

Automated Tax Compliance and Global Regulatory Harmonization in 2026

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1 week ago

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August 5, 2026

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Corporate tax accounting departments are navigating an era of unprecedented regulatory complexity as global tax harmonization frameworks take full effect alongside real-time digital tax reporting mandates. Tax directors and accounting teams are adopting cloud-based tax compliance automation tools to manage multi-jurisdictional tax liabilities and satisfy stringent reporting rules across international jurisdictions.

Implementation of Global Minimum Tax Provisions
The implementation of international tax reform agreements—notably the Pillar Two global minimum tax framework—has reshaped multinational corporate tax planning. Multinational enterprises with consolidated revenues exceeding established thresholds must ensure an effective tax rate of at least 15% across every jurisdiction in which they operate.

Accounting teams are implementing specialized tax calculation modules integrated directly into enterprise resource planning (ERP) platforms. These automated tools calculate effective tax rates per country, identify top-up tax liabilities, and generate standardized compliance documentation required by national tax authorities.

Real-Time Digital Invoicing and E-Reporting Mandates
Tax authorities across Europe, Latin America, and Asia-Pacific have enacted mandatory electronic invoicing (e-invoicing) and continuous transaction controls (CTC). Under these systems, corporate transaction data must be submitted electronically to government portals in real time at the point of sale or invoice issuance.

This shift toward continuous digital tax reporting eliminates traditional annual tax audits in favor of ongoing automated compliance monitoring. Accounting departments are upgrading invoicing software to ensure seamless XML data formatting, digital signature authentication, and real-time validation against tax authority databases.

Automation and Data Analytics in Corporate Tax Strategy
To keep pace with dynamic tax legislation, tax departments are transitioning from reactive compliance teams to proactive strategic advisors. Machine learning algorithms analyze corporate transactional data to identify tax credits, research and development (R&D) incentives, and cross-border transfer pricing adjustments.

By automating routine tax return filings and calculations, corporate tax directors can focus on long-term capital structuring, evaluating the tax implications of corporate mergers, and optimizing international supply chain networks.

Strategic Priorities for Tax Executives
1. ERP System Upgrades: Ensure enterprise software is capable of generating real-time, granular tax data required for global minimum tax compliance.
2. E-Invoicing Integration: Implement scalable e-invoicing platforms to satisfy regional continuous transaction control regulations.
3. Strategic Tax Analytics: Utilize predictive tax modeling tools to evaluate structural changes in corporate operations and cross-border trade.

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