Niche-Building in Professional Services Firms
Many professional service firms are creating specialty areas within their practices and in some cases whole new “offspring” companies to respond to the changing demands of clients and to create growth opportunities for associates and younger staff.
Among the three types of professional service firms, CPA firms are for once being viewed as exciting because they continue to experience the most change, which for junior staff in the midsize and smaller-sized firms is being translated into new opportunities.
At law and consulting firms, however, the lack of such growth is leading many of the younger staff to seek greener pastures. The popular term that has been applied to such defection: “brain drain.” Some lawyers looking for progression have found new possibilities by associating with CPA firms through the creation of “multi-disciplinary” practices.
Despite current challenges to the accounting industry as a whole--regulatory issues such as independence and the onset of the 150-hour rule (which raises education standards ever higher)-- accountants with a marketing flair continue to have considerable power to create and expand opportunities for their firms. For example, a popular solution has been the bifurcation of practices into accounting and consulting firms.
In Rancho Cucamonga, accounting firm GYL Decauwer recently acquired a separate consulting company, called RainMaker Pro, Inc. which rolls the services of a marketing consulting and training firm into their firm’s offerings. The acquisition is a way for the firm to expand its business consulting expertise to existing clients and other companies via an in-house services division.
"We believe the skills and services offered by the RainMaker Pro organization are services that clients are going outside to buy,” Dennis Decauwer, managing partner of GYL Decauwer, said. “We already assist our client companies with key operational and financial issues through our core accounting practice. It makes sense that as they seek direction in writing business plans, branding, improving sales presentations and skills, launching public relations and other marketing initiatives that we help them capitalize on these areas."
RainMaker Pro, Inc. is promoted as a “member company of” the parent company, GYL Decauwer, and the firm has in less than one month with the new arrangement been billing-out other team members’ time and giving them opportunities to contribute their talents to the new efforts.
In Houston, PKF Texas acquired the talents of former Big 5 consulting partner Gregory Price, CPA to form their Business Systems Consulting Services practice in order to be able to offer IT services to entrepreneurial-minded middle market companies and their owners.
“In previous attempts to create service alliances, we found that outsourcing type of arrangements just didn’t give our clients the service desired,” Karen Love, Vice President of Practice Development for PKF Texas said. “We decided to build our IT niche from within, and my advice to other firms is, if you decide to go this route, research it as if it is to be a marriage made in heaven because this is the most intimate kind of partnering…and it’s meant to work, and last.”
In less than 15 months, the Consulting Services team has grown from one to nine IT professionals. The firm built more than $1 million in sales primarily through relationship marketing and a targeted advertising and public relations campaign.
Senior Manager Brad Graves at Haskell & White in Irvine has had first-hand experience with merging or acquiring a new niche practice. Brad suggested a number of criteria that must exist in order to successfully incorporate a new entity into an existing core practice. He listed, from the firm’s experience, the following factors for success:
- The culture and ethics of the merging firms should be compatible.
- The level of professionalism from the new players should be consistent with the core practice.
- The new entity should basically be self-sustaining and add to the bottom-line or have an accountable plan for getting there.
- The new services should be able to sustain margins that are comparable to the core practice.
- The services should be “leverageable,” or able to create more work than will keep one or two people busy.
Despite challenges to the profession as a whole, individual firms have considerable power to create and expand opportunities for staff and provide significant “added value” to their loyal clients. Firms that are changing their structure to open new avenues of growth to staff, and to provide additional value to their clients, will find their staff and their clients more likely to stay.
Karen Bergh provides strategic marketing consulting services, skills training and business coaching for service and sales professionals who want to sell more. Senior Vice President of RainMaker Pro, Inc., a member company of GYL Decauwer, Bergh may be reached at (909) 276-0992, via email at Karen@rainmaker-pro.com or through her Web site at www.rainmaker-pro.com.