Growth potential is a priority for all managing partners ­either the growth of fees, profits, client base, or all three.

But most firms face barriers to growth, as highlighted in the 2007 Kato survey. While there are some obstacles outside their control ­ such as legislation, which can add an extra layer of costs to clients ­ the solutions lie in their own hands.

Significantly, many practices are reluctant to move to specialist services. The range of services the business community now expects accountants to provide has increased greatly in recent years. As well as the more traditional assurance services and tax mitigation advice, clients look for guidance on wealth management, plus a whole range of business advisory services.

Unfortunately, many firms still have not reviewed the services they offer to determine if they are meeting the needs of their marketplace. A close examination of the client base often reveals opportunities for providing added-value services.

Adding to the range of services will both reduce the risk of losing existing clients and increase the chance of attracting new ones.

Another positive benefit will be an increased ability to attract good-quality staff who appreciate the opportunities to broaden their experience.

Traditional firms with inefficient working practices and old systems will have trouble recruiting the talent needed to take over the business in future. Those with the most potential will seek out practices that offer the best prospects in terms of career development and future earning power.

Other purely practical problems are also preventing many firms from moving forwards. In particular, insufficient investment in IT means there are missed opportunities for improving efficiencies and streamlining the business.

Undoubtedly, the speed at which technology is developing makes it hard for small practices to keep up. However, investing both time and resources into IT development and staff training will pay dividends ­ not simply in terms of speeding up the work process, but also in improving client services.

For some, the barriers to growth are too large to overcome on their own. Either they do not have the finances to compete effectively in the marketplace, or too many partners nearing retirement means they are running out of time. In some cases, there are too many owners for the business, thus diluting profits and making it less attractive to new partners. For such firms a sale or merger is the only option.

One of the biggest barriers to growth is also the easiest to overcome ­ improving the efficiency of the billing and fee-recovery process. A streamlined process will have an immediate effect on cash flow and lead to increased profitability. But none of this is new. The writing has been on the wall for many years and those firms that failed to heed those warnings are paying for it now.

Phil Shohet is a director of Kato Consultancy