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Tips to Build a Firm of Tomorrow Today

Sep 24th 2015
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It's difficult to get into a conversation about the accounting profession without the terms “change” and “firm of the future” 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.

“I 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.”

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.

Necessary Steps

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.

“For us, what worked is we pruned audits, and we added business modeling. We pruned write-up work and added forecasting and business coaching,” said Simmons. “Tax 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.”

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 “natural evolution.”

“I 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,” said Simmons. “Knowledge 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.”

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.

“I 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,” said Simmons. “People 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.”

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 “when you change value propositions, the next one is not going to be right across the board for every client.”

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.

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By mikebarkcpa
Sep 25th 2015 09:36 EDT

I may not make a lot of friends with this, but is anyone else in the profession somewhat concerned that the thought leaders on how you need to build a firm are by and large people who have gone to work for their Dad and really haven't built a firm yet?

There are real problems in the profession right now. The "graying" of the profession has led to an unprecedented amount of consolidation in CPA firms. When I graduated in 1997 there was not only the Big 6 but there was also another 40 to 50 well established local firms that one could go and work for. That number has dwindled in the last 20 years.

We have some experience in building up a firm. We have gone from 4 people to 22 people in just over 3 years and here is what we have observed:

1) No one cares if you are on twitter

2) While we use the cloud we do so because it makes our life easier. Our clients just want the work done and could care less if I'm doing it on stone tablets so long as it's done.

3) Focusing on an industry niche is extremely helpful. With the consolidation that has happened in Accounting it's hard for us to say we can do everything as well as a big firm, but we can credibly say we are as good, if not better, than our larger peers in our niche.

4) Give something back to the niche you serve. We help people buy or start practices at little to no charge because we think it's the right thing to do, but it also has the benefit of creating a very loyal client and also exposing our expertise to other bankers, attorneys and others in the industry.

5) Your clients do not know or care who Ron Baker is. Clients do care about you being upfront in how much things are going to cost and whether you get there using a time sheet or "value billing" doesn't matter to them.

6) Consider launching complementary services. Everyone wants to be a "trusted business advisor" and in many ways we are as CPAs, but when the rubber meets the road clients don't want me providing services that are too far outside my expertise. So partner up with people who can offer value there and they will keep the clients happy and also help open additional doors.

7) Become a thought leader in your industry. We focus largely on Dental and as such we focus our efforts in that arena in terms of being published and such. We craft content that we hope is valuable to them. We aren't telling people how to run their firms and the reality is that the people telling you how to run your firms really want to be consultants in that area and aren't really that concerned about building up accounting/consulting firms.

I have a ton of respect for what a guy like Jason Blumer is bringing to the table encouraging CPAs to consider owning a firm and creating a network for people to bounce ideas off each other, but much of the rest of the stuff you hear is just noise.

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