It’s been a long slog, but we are finally seeing the light at the end of the tunnel known as the Great Recession. Both job creation and the gross domestic product are robust. Interest rates remain low and the stock market is showing solid gains.
While these bright spots are welcome, I urge firm leaders not to be lured into believing that it’s back to business as usual. The light at the end of the tunnel may look like, well, light. But the market conditions illuminated by that light are substantially different from those of the pre-recession environment.
What’s changed? Nearly everything, from an upsurge in globalization to stiffer competition, increased standards and regulations, more specialization and a growing reliance on technology. Today, clients can engage CPA firms around the corner or around the globe. Just because you’re in the neighborhood doesn’t mean you’re in the running.
Pumping toward prosperity
In order to compete in this environment CPA firms will need to step up their level of sophistication when it comes to growth. To illustrate, we’ll use the fictitious Firm Atlas. Picture the firm as a weightlifter in a traditional “muscleman” pose. The firm’s well-developed right bicep—rounded and firm— represents delivery. The left bicep, which represents growth, is flat and fairly anemic looking.
We have strengthened our delivery muscle by way of resource deployment, training, metrics, quality control and efficiency. But our growth muscle is atrophied. We’re using dated approaches that simply are not up to the task. In keynotes I often ask audiences to rate public accounting in terms of sophistication of growth. On a scale of one to 10, the average response is about 3.5. Not an impressive rating.
So how can we pump it up? How do we become more savvy and strategic in our approach to growth? Move away from the partner-book-of-business approach to a team based, leader-driven approach that involves everyone in the firm.
This might strike you as fairly intuitive and you might even be nodding your head. But when I present my ideas to firms entrenched in the old business model I often hear, “Sounds good Gale. But I think we’ll keep going as we have and leave these kinds of changes for the next generation.”
It’s no surprise. Many senior partners are interested in reaping their rewards from long years of work and getting out the door, not in leading their firms to be prepared for the future. However, expecting the younger generation to make such changes without direction is just not practical.
Start exercising your growth muscle
The answer to ensuring growth in this new environment is to change the traditional business model to an entirely new model for growth. For example, our approach has been to consume our way to new business by relying on banker breakfasts, lawyer lunches and client cocktails. Instead we need to be conducting Research Calls℠ and discovering strategy combinations for each of our services in pinpointed buyer groups.
Traditional business-building efforts have had three primary characteristics. They have (1) been individual/partner driven. They have (2) been tactical, one off efforts (think shiny brochure) to make us more visible to bankers and lawyers and other referral sources. And they have (3) been general in nature rather than specialist-oriented.
Here’s what it’s going to take to get and stay strong:
- Move away from the individual effort approach and toward a leader-driven team. Stop playing golf (it’s just about me) and start playing football (it’s all about the team).
- Learn more about strategic firm growth. Discovering the connection of the 3 elements of strategy – services – distribution channels – targets – is a very powerful combination. It focuses on channels and finding buyers in great quantities rather than one at a time. And it takes you from tactical referrals to sustainable alignment of interests with your best channels.
- Achieve a serious commitment to specialization by tasking segment leaders with strategic direction and financial health, not just becoming known in the market.
- Have a talk with your partner group. Get buy-in on the idea of pursuing a new growth model that will create sustainable growth and ensure your firm’s future.
As we move toward the light at the end of the tunnel, be ready to burst out with strength and purpose. It’s a whole new world out there and if you’re serious about growth, you need a business model that’s up to the task.