Topic: Specializing and Innovating
Reprinted with permission from Accounting Today
Avoid These Mistakes!
Over the past decade or so, I’ve worked with clients on the strategic growth of accounting and advisory services (CAS/CAAS). Though its initial focus was on moving bookkeeping to the cloud, many of those clients have expanded their offerings to include consulting services to the corporate CFO suite. My general observation of our profession has yielded a couple of common mistakes that should be avoided by firms looking to the potential of CAS/CAAS to contribute to firm growth.
Driving Demand vs. Fulfilling Demand
A concern I had early on, and one I addressed as a speaker at the AICPA Digital CPA conference back in 2015, is the failure to recognize the difference between driving demand and fulfilling demand. The overarching issue is that for many, the term ‘growth’ in CAAS is really used for the fulfilling demand side of the house and does not refer to driving demand. The prevailing belief has been that if you build it (offer CAAS services), they (the buyers) will come. Panels, webinars, and articles dwell on the importance of fulfilling demand, that is, ensuring you have something that people want to buy. Far less attention is paid to how to get buyers to want what you have to sell. That, my friends, is creating demand. And without it, there can be no meaningful growth. There are two distinct operational elements in running a successful practice, or any business or business unit for that matter. Driving demand is the strategic identification and pursuit of market segments and prospects who will buy your offering, be it accounting, tax or CAAS/consulting. Fulfilling demand is operating the business in a way that enables you to deliver what the demand created. Too often, CPA firms spend 95 percent of their time and resources on fulfilling demand, building and falling in love with their robot. They create a black model with pincers and four fingers, failing to realize that the ideal market needs a red one with four fingers and a thumb! They confuse the effort of creating this offering with seeking a market for it! There are countless examples of initiatives which fail because of this important concept. I counsel firm leaders to strike a more even 33/33/33% balance between building the robot, figuring out who wants it, and discovering where to find a great numbers of buyers in a market. In this context, the service itself is only 1/3 of a successful strategy!
Client vs. Market
A second common mistake among CAAS leaders is focusing on finding the ideal client (tactical growth), rather than finding the ideal market (strategic growth). The ideal client has specific attributes, for example the resources, decision‐making authority and sufficient pain to acquire what you have to sell. Or perhaps an attribute is the size of the prospect. However, focusing on these attributes first could deliver a nonprofit, a manufacturing enterprise or a tech company. It flies in the face of 1/3 of a successful strategy ‐ finding the best market. The ideal market, for example the wire cable manufacturers, has buyers in sufficient quantities, and some of those buyers represent the ideal client attributes. Turning to the fishing analogy I often use, concentrating on attributes is like fishing in a big pond where many species congregate. You bait your line with whatever you find in your tackle box and hope to attract whatever large fish swims by. It’s tactical in nature and produces sub‐optimal results. The strategic approach involves finding the right market first. That means fishing only where your desired species, let’s call it tuna, and using a net, rather than a pole, to attract many of them, not just a few. The concept is that fish swim together in schools, they don’t swim together based upon attributes (for example, size). Once you get into the school, then you focus on the ones which have the attributes (example ‐ they are yellowfin, they are large) and throw the others back in the ocean. Going after the right market, not just any fish in the sea, you can expect greater profitability and a faster and more sustainable growth. By narrowing your search and fishing in the right place, you will spend the same amount of time efficiently catching 50 fish, as you would to catch just a couple in that big, multi‐species pond. And who has extra time to spare anyway? The days of hanging out a shingle and welcoming all comers to your offering are over. It’s a market‐centric world out there.
Do This, Not That
In summary avoid these common mistakes to successfully grow your CAAS practice. (1) Invest time, energy and resources equally between creating and fulfilling demand, (2) focus your growth strategy 33/33/33% on the perfect service, the best distribution channel (where buyers are found in great quantities) and the market with the best fishing conditions, and (3) pursue the ideal market first, then start pursuing the ideal clients in that market.
Copyright ® 2023 by Crosley+Company
Gale Crosley, CPA, CGMA, consults with accounting firms on revenue growth. She was awarded the Advisory Board Hall of Fame, has been selected one of the Most Recommended Consultants in the Inside Public Accounting BEST OF THE BEST Annual Survey of Firms for 16 years, and one of the Top 100 Most Influential People in Accounting by Accounting Today for 16 years. She has helped almost 500 mid-market CPA firms achieve exceptional revenue growth over the past 20+ years. Gale is an honors accounting graduate from the University of Akron, Ohio, winner of the Simonetti Distinguished Business Alumni Award, and is an Editorial Advisor for the Journal of Accountancy. She can be reached at gcrosley@crosleycompany.com.
