Clint Eastwood in The Rookie said, "If you want a
guarantee, buy a toaster.” There is no
question that many CPA firms are conservative, but are they so conservative
they are missing value added opportunities?
It is my opinion that firms need to be thinking differently about client
services and the entire menu of services they offer. Technology is rapidly changing client
requirements and the way business is done.
The following ten strategies are listed to make you think and
communicate with your partners, managers, staff and clients. By doing so, your firm can develop strategies
that address key firm dangers: lack of
growth, lack of succession and lack of talent development. The list is not ranked by level of
importance, but rather a list to help you think and develop beneficial
#1 - Independence or Advocacy
The rules of independence have long driven the
profession in the core services of tax and accounting, however, this is also a
limiting factor when it comes to the breadth and depth of services a firm can
offer its clients. We refer to these
services as adjacent (new to the firm or expanding existing business) and
transformational (new services and breakthroughs). Knowing where to play in the market and how
to win are extremely important. Would your firm be better off to choose
advocacy and increase the number of services offered? What percent of your current revenues are
from core services? What services do
your existing clients need?
#2 - Menu and Service Levels
Develop a list of services
that small business and not for profit organizations need. Yes, accounting and tax compliance are
included in this offering. But there are
many services that may be valued higher and are more important to the
leadership of the company or organization.
Some of the high-level services such as strategic planning,
accountability, talent development, team building, technology, web strategy,
cash flow projections, and budgeting are often overlooked due to the focus on
L-1 services. The attached service level
graphic demonstrates how to offer both core and higher value added services. Is
your firm capable of offering these services?
Do you ask for L-2 and L-3 business and referrals?
#3 - Service Delivery Team
In order to expand client accounting services, firms
should use the delivery team approach rather than the "rugged individual”
approach. This provides better services
to the client, allows for the utilization of unique abilities and assists in
succession planning. Not all of these
services require a CPA license, so it is possible for firms to build broader
skill based teams. Does your firm use client service delivery teams? Have you utilized testing like the Kolbe
Index to determine each team members’ unique abilities and team synergy?
#4 - Champions/Leaders
Each team needs a champion in order to insure
success. The characteristics of a
champion are; they have a purpose greater than themselves, team builder, access
to resources, politically connected, proven track record and passion. By knowing peoples’ unique abilities it is
much easier to identify champions. In
too many firms, client accounting services have been assigned to people without
these characteristics and they have been left without resources to meet the
challenges. Who are the champions in
your firm? Do you have champions who are
passionate about client accounting services?
#5 - Unique Processes
Every firm has or should have unique processes. These processes should be documented in order
to maintain consistency and train others.
By naming the process, you own the process and can differentiate. Start by listing the processes your firm
currently utilizes in client accounting services. Define the processes you need to meet client
requirements. Think like a lean startup
company in order to reduce the risks associated with leadership, staffing,
platform, service, pricing, capabilities, technology, opportunities, complexity
and regulations. What unique processes
do you currently have? What unique
processes do you need to develop? Who
will be responsible for the development of those processes and by what date?
#6 - Platform & Business
Trying to utilize old platforms and the effort based
economy tactics (hours times dollars) will not work. Firms need a platform that fosters
collaboration among the client, members of the client accounting services team
and other advisors (internal and external).
Cloud-based solutions meet this requirement and are rapidly being
deployed by the leading firms.
Transferring of files, reconciliations and data entry are tasks that can
be eliminated with the new cloud-based platforms. Value is determined by the client, not by the
hours invested in the project! What will it cost the client to
provide these services internally? What
value will the client receive from utilizing the firm’s platform and processes? Do we utilize a value creation agreement that
protects the client and the firm? Does
the value creation agreement allow for change orders? Is the value creation agreement reviewed and
discussed with the client at least annually?
#7 - Entrepreneurship and
Firms need both entrepreneurship and management to
be successful. With both
entrepreneurship and management firms reduce risk and waste, increase
innovation and learning, and provide clients with a new kind of accounting
services. Management is often viewed as
serious, dull and bland while entrepreneurship is cool, innovative and
exciting. Success requires both. Who are the entrepreneurs in your firm? Who are the managers? Can they work together? Who else will be on the team?
#8 - Pricing
Pricing is extremely important and requires thought,
upfront communication with the client and sales skills. Frankly, many accountants are not good at
pricing and should only be focused on the delivery processes. People with value creation skills should be
responsible for pricing and placed in conversations with clients prior to the
delivery of services that carefully define scope and terms of the
engagement. Change orders should also be
part of the pricing strategy. Spending
the time to define scope and ask clients questions related to their dangers,
opportunities and strengths will provide increased opportunities and improve margins. Packaging multiple services together results
in happy clients and increased margins.
Who is responsible for pricing in your firm? Do you use value creation agreements? What percent of your revenues would you like
to come from value creation agreements within 1 year, 2 years and 3 years? Who is going to be your pricing leader? Who are the top 10 clients in your firm to
discuss value creation agreements with?
#9 - Trusted Business Advisor
CPAs have earned the reputation as most trusted
business advisor but most do not take the role seriously enough and provide
clients with as many services as their client’s desire. CPAs too often focus on Level 1 services,
while clients value Level 2 and Level 3 services (See diagram above). Why aren’t you offering clients Level 2 and
Level 3 services? If you are, why aren’t
you offering those services to more clients?
Who are your top 10 prospects?
#10 - Resources to Insure
As stated in the introduction, most firms are risk
adverse, yet with the following resources the rewards are high and the risk is
extremely low. In fact the risk is
probably much lower under the client accounting services model that many
existing models of only providing tax and accounting and auditing
services. The required resources are:
- Existing client base
- Unique ability team
Leadership and a shared vision are keys to successful
firms. Do you have a collaborative
platform? Do you utilize unique ability
teams? Do you have a client base that
can utilize Level 2 and Level 3 services?
Change is constant. Results are
determined by experiences that drive beliefs, beliefs that drive actions, and
actions that drive results. The fastest
way to improve results is through goal setting and accountability. To improve results you must focus on the
belief systems of your partners and staff.
This requires leadership, vision and a written plan. Even more important is the business model and
platform firms utilize. New technology
and innovative solutions are changing the way clients do business? Is your firm changing and are you prepared to
continue as The Trusted Business Advisor?