Adam Feld has carved out an unusual yet profitable niche for the Barnes Dennig accounting firm in Cincinnati. Feld, who came aboard the locally based firm in 1991, leads its profit improvement practice and concentrates on audits and management advisory services for manufacturers, distributors and service companies. In that role, he has become an expert in activity-based costing, a rare accounting technique that allows an organization to determine the actual cost associated with each product and service without regard to the organizational structure.
"Typically, accounting firms don't use it," Feld said. "Very large firms have well-established practices, but they're very costly. It's a relatively specialized field."
Robert Kaplan, a professor of leadership development at the Harvard Business School, introduced activity-based costing, known in the industry as ABC, in the 1980s. The method since has been widely embraced by manufacturers and even has made its way to the U.S. government, including the Marine Corps.
Feld has introduced the ABC method to more than 50 companies and currently is working with three manufacturers, three service companies and a distributor. While Big Four and second-tier firms might charge $200,000 to $1 million for ABC services, Barnes Dennig's fee never approached the six-figure mark, Feld said. The practice is a valuable asset, nonetheless, to the firm and its clients whose annual revenue can range anywhere from between $5 million and $200 million.
Feld's practice is a "hybrid" comprising traditional accounting and tax clients sprinkled among his profit-improvement work. Although his clients are smaller than publicly held companies, he performs duties for divisions of the corporations, which are mostly heavy manufacturers. In that realm, his work has extended to include Sarbanes-Oxley compliance for those divisions of public companies.
Besides Feld's focus on activity-based costing, his
profit-improvement practice includes more typical ways to either save clients money or bring them more cash flow. Those might include simply increasing prices or creating more value for the customer by convincing them to buy 10,000 units at a time instead of 5,000, to cut down on his customers' costs. The most savings can be obtained, however, in labor costs, due to the advances in technology, he said.
Feld first will focus on what he refers to as the "low-hanging fruit," or what are the simplest ways to realize savings. He will explore whether a company needs to sell a particular product and whether it is considered a loss leader, and whether the business needs to continue producing the product to keep a customer.
"Once you build that maze, you pour in the costs and the revenue, and it's fairly simple to update," Feld said. "It's a fascinating process."
Working in the profit-improvement arena has given Feld a
"wonderful" opportunity to learn the many facets of business, he said. His advice to accounting students who might be interested in building a career in profit improvement is to seek job opportunities with mid-size firms, where they are likely to get the necessary experience quicker.
His most important advice: "You can't be afraid to fail. You have to be willing to step off the cliff."