How One Firm Came to Dominate the Not-So-Dull Government Sector
Reprinted with permission from Accounting Today
We tend to associate successful CPA firms with interesting clients that offer highvisibility products and innovative services. At least for me, that image has not typically included firms that handle government, (public-sector) work. That’s why I was so pleasantly surprised to make the acquaintance of Tucson-based Heinfeld, Meech & Co., P.C.
Founders Gary Heinfeld and Nancy Meech have brilliantly embraced and nurtured this sector. Their approach, and the success it has yielded, are an impressive profile in growth.
Nancy and Gary were colleagues in the office of the Arizona Auditor General during the years when that office had a virtual monopoly on audits of counties, state agencies, school districts and colleges. But a decision by the state legislature to release some work to the private sector sparked some entrepreneurial thinking on their part. That thinking turned into action, and the firm was founded in 1986 at Gary’s dining room table.
The partners’ intent was clear. They would become the market leader by concentrating on their specialty – public-sector audits – and by providing exceptional service. They also committed to a vision that included the following:
- Partners would not have individual books of business. A client of a partner would be a client of the firm.
- The firm would operate more like a corporation than a partnership, and would be professionally managed from the beginning.
- A growth rate of 15 percent per year was projected.
- Prices would be commensurate with exceptional service and results.
- A best-in-class work environment would be created. It would emphasize individual personal and professional growth. This climate would help attract talent to a firm doing work that many, especially young CPAs, considered less than desirable.
Entering the No-Glam Zone
The firm also operated under a basic, but essential principle: Government contract work is not glamorous, but can become a remunerative and satisfying niche. Heinfeld, Meech sought from the beginning to dominate its ecosystem, confident that clients would be attracted to a firm that consistently exhibited deep expertise and understanding of their business.
The more I learned about this firm, the more impressed I became. Heinfeld, Meech turned the “Who-wants-it?” attitude of many firms toward public-sector work completely on its head. They drilled down into a sector they knew well, leveraging changing conditions to their best advantage. For example, historically, the state had required audits of public entities every seven years. But the change to an annual audit requirement opened wide an unprecedented door of opportunity for entrepreneurial types like Nancy and Gary.
When school district audit work was let out to bid by the state, Heinfeld, Meech initially attracted 10 out of a possible 125 districts. Within several years, that number rose ten-fold. Although the firm retained its audit-only-no-tax focus, it did successfully move into consulting, which now accounts for about 25 percent of revenue. Where other firms believed an audit engagement with a public entity would conflict them out of other work, Heinfeld, Meech saw opportunities for expanding to other clients with consulting, calculating arbitrage rates and preparing financial statements.
They Nailed It
The firm led by Nancy and Gary achieved dramatic growth that averaged 18-25 percent per year over the last twenty years. The growth is thoughtfully pursued and meticulously managed, with the firm now turning down more work than it takes on. From two founding partners working at a dining room table, Heinfeld, Meech today employs over 70, with locations in Tucson, Flagstaff and Phoenix and plans to expand their business in New Mexico.
Counter to the conventional image of public sector work as low-fee, Heinfeld, Meech is the highest-priced bidder in about 90 percent of its engagements. Equally impressive is the fact that the firm’s realization rate is a stellar 99 percent.
About six years ago, Nancy and Gary began to think they might have saturated the Tucson market. But they continued to fire on all cylinders and, as a result, the term “saturation” no longer comes up. In 2007, the firm was named number four on the list “Best Small Companies to Work for in America,” an annual ranking by the Great Place to Work Institute and the Society for Human Resource Management.
One person’s trash is another persons’ treasure. Armed with experience, vision and determination, Gary Heinfeld and Nancy Meech transformed an industry niche that appeared dull and resistant to growth into a sector that’s delivered them solid success.
Unleash your inner Heinfeld, Meech and see where it leads!