It's difficult to get into a conversation about the accounting profession without the terms âchangeâ and âfirm of the futureâ being exchanged. For plenty of practitioners, that change, that future, is here now or at the least they are preparing to do so. The rest, well, they're either looking to find out more about how to adapt in some way, sell, or simply retire.
One of the more common paths toward being a future-leaning, change-making firm is simply starting from scratch by taking what you've learned at a mid- to larger-sized firm and doing things, well, differently. Then there's those like CPA Adrian Simmons who after spending a number of years at KPMG left to join his father's practice four years ago, effectively doubling the firm's staff to two.
But when Simmons joined up with his CPA dad, it was not to do things the way his father had been doing for years; he knew serving clients and the direction of the firm had to change. This shift was gradual, though, and many firms today are going through a similar transition, or are looking to, in order to better serve clients and sustain the practice for many years to come. This was not an easy task.
âI was fortunate that my dad gave me some rope to work with. I had to work to the point of where I needed some clarity on what to cut and what to add, but at the heart of it all, I simply didn't like being in a position of just helping to reduce costs," said Simmons. "We [as CPAs] have a skill set and that skill set can be applied in many ways, so instead of being backward-looking, we had to help clients create the future and not just report the past.â
Simmons isn't saying that every firm looking to transform or any CPA looking to start a new firm needs to go about things in this way, but he knows what worked for entirely revamping his father's practice over the past four years (which, is still in progress). They have re-emerged as Elements CPA and focuses more on business advisory and consulting work more than audit and write-up.
Once a general vision for the firm is established, Simmons recommends the following steps which helped get his revamped practice going:
- Look at new products.
- Look at new ways to price (not bill).
- Consider what service(s) to add and what to cut that would be of most value to clients/customers.
- Get your clients on the same page or prepare to let them go.
- Speak to clients more than a couple of times per year.
âFor us, what worked is we pruned audits, and we added business modeling. We pruned write-up work and added forecasting and business coaching,â said Simmons. âTax prep is still done, but it's pitched from a point of we're going to structure it a year beforehand, and so when April 15 comes, it's not a shock and it's not a crush leading up to it. If there's clients that don't need a tax projection, we're not the right fit and we have to have confidence in that. We meet and speak at different points of the year to help make that happen.â
Why Change, Why Now?
Firms these days are changing for numerous reasons, the most pressing being competition and the evolving needs of small businesses. Simmons simply sees this time as a ânatural evolution.â
âI just feel the profession is moving from a knowledge economy to a creative economy. Knowledge was once siloed and parceled out for money. Now it expands to the value we bring, and to me that is the ability to help businesses transform,â said Simmons. âKnowledge eventually gets embedded into systems, and we are finally seeing that happen in software coming out that automates our tasks. It also forces us to define the value proposition we bring to the table.â
To that end, Simmons sees no other way for new firms to charge for their service than value pricing (not billing). He calls it pricing because, essentially, that's what you are doing; giving a price and putting a value on that price rather than sending a bill.
âI think hourly billing is actually an impediment; it muddies the water and it is the smokescreen. When you have a dynamic marketplace, the tracking error increases and billing by the hour is another blot on the windshield, impeding your vision,â said Simmons. âPeople value results; they don't value time. Hours aren't irrelevant, but they are not a driver of value. It's more respectful to yourself and to your clients to value price.â
Simmons also noted that he is inspired by seeing more firms than ever come up with new ways to serve their market and allowing themselves to think more freely. He does caution that âwhen you change value propositions, the next one is not going to be right across the board for every client.â
There is more that Simmons wants to share about building a firm for the future today, and he plans to do so at the upcoming SleeterCon Accounting Solutions Conference, hosted Nov. 17-19 by The Sleeter Group at The Bellagio Hotel in Las Vegas.