This article provided by Gary Boomer, CPA, of Boomer Consulting.
Vision is important if your firm plans to grow and prosper. The large firms spend considerable resources on visioning and strategic planning. Building consensus and gaining input from staff, managers, and owners is important. Perhaps your firm is smaller and doesn't feel it can spend the resources on strategic planning. Based upon what the well-managed firms do, at a minimum, your firm should have a one-page strategic plan with measurable goals. I didn't say this was the optimum, but it can be done quickly and has the potential of producing significant results by directing your resources toward firm priorities. There is an old saying that you have to think it and then ink it if you expect it to become a reality. The processes of developing the plan and then implementing it are generally more valuable than the plan itself. Continual follow-up and revision are also necessary. The updating is typically an annual event.
Several factors weigh heavily on the visioning process of a multiple owner firm:
- Age of the owner
- Practice area
- Personal goals and objectives
- Attitude toward change
None of these factors is insignificant, nor should they be ignored during the visioning process. Visioning requires time, cooperation of the owners, participation of staff and an outside facilitator. Personnel and technology are key factors to consider. Recruitment and retention of staff are concerns to the majority of your competitors. Many are also investing heavily in technology and training of personnel in order to differentiate themselves from the firms of the 90s. Forty hours of CPE each year are no longer enough to maintain a competent staff and retain top quality personnel. These numbers apply to owners as well as staff. The requirement is closer to 2-3 times that amount.
To start the process, ask yourself and others in your firm two questions:
- What will our firm look like three years from today if we continue operating as we are today?
- What will our firm look like three years from today if we develop a strategic plan and commit the necessary resources to accomplish the plan?
The answers to both questions are unknowns to those firms that don't plan. However, experience shows that firms that do plan and document the plan tend to grow at a much faster rate than those firms that are reactive. Everyone in the firm has an opinion, however, sometimes those with the strongest opinions have the least amount of knowledge. Change and the unknown will bring out opinions often based upon emotions rather than facts. Your firm cannot expect significant changes in results without significant changes in behavior.
The recent SEC rulings and activities have the potential of changing every firm, not just those providing services to public companies. The Internet is rapidly changing how firms provide services and the type of services provided. Smaller firms now have opportunities to compete with larger firms. Technology has leveled the playing field for those willing to learn and invest in new services.
Goal setting is an important part of the process. The goals normally fall into at least three categories:
- Service and product goals (Revenues)
- Resource goals (Capital requirements)
- Organizational goals (Governance)
Marketing and technology strategy can then be incorporated into the basic categories. Too many firms attempt to develop marketing plans without a good strategic and technology plan. The three plans must be integrated in order to produce extraordinary results.
Examples of typical goals from the visioning process with regard to the above goal categories are:
- Revenues will increase by _____% over the three-year period.
- Owner income will increase by _____% over the three-year period.
- Revenues from consulting and financial services will be over _____% of total revenues by ______(date).
- Owner X will retire by _____(date).
- _____additional owner(s) will be added by (date).
- Owners will reduce total average annual hours to ______.
- The firm will need _____additional full-time equivalent employees.
- The firm plans to acquire $_____ of annual revenue through mergers and acquisitions.
- The firm will increase revenue per full-time equivalent to $_____. This will be done through value billing and the use of a technology surcharge.
- The firm will implement a training program to attract, develop and retain top quality personnel.
- The firm will implement an incentive compensation plan for all qualified employees.
- The firm will have access to debt and equity totaling _____% of annual net fees.
- The firm will implement a program allowing ownership of _____% of the firm by non-CPAs.
- The profits of the firm will exceed peer group averages by a minimum of _____%.
Some of your owner group may view visioning and strategic planning as a waste of time. They are too busy working in the business rather than working on the business. This doesn't mean they are right or wrong. This is their perception and we all know what perception is in marketing. It is real to the person who has the perception. The process can be done efficiently. the process normally requires an outside facilitator in order to get the proper attention of all parties. If the process is properly planned, it will require a minimum investment of 2-3 hours per participant. Some firms find more time is required for executive education and try to include strategic planning as part of the annual retreat.
Don't get caught in the trap of thinking your firm is different. Our experience shows that firms of all sizes are faced with similar challenges and opportunities. The differentiation comes from how firms utilize their resources to profit from the opportunities.