Reprinted with permission from Accounting Today.
Ever run a race and immediately sense that you got off to an exceptionally fast start? It’s a good feeling but if your goal is to beat out the competition there’s really only one way to know for sure how you’re doing. And that’s by marking your progress toward the finish line relative to the other racers.
The same can be said of efforts to grow your firm. To gauge your progress you have to get outside your own four walls and see how you measure up to the competition.
This is going to take work
Learning all that you must about the space you want to occupy will require some effort. Let’s say your firm has concluded that there is a need for professional succession planning in your marketplace. Rather than strike out on your own to re-invent the wheel, find out which firms are leading in succession planning. Then find a way to talk to them.
I can hear you saying, “Gale, they would never talk to me,” and that’s probably true if you target a firm within or near your zip code. But if you find a firm across the country that’s going gangbusters in succession planning and is not an immediate competitor, it’s likely that they’ll not only take your call but will share meaningful insights.
Another proven growth strategy is to quit reading (and believing!) your own press. I asked one managing partner I was working with about his firm’s growth in recent years. “We’ve actually been doing pretty well,” he assured me. I asked what that means and he responded, “Well, we held our own despite the recession.”
I responded by whipping out an issue of Inside Public Accounting and showing him the facts. “While you were holding your own,” I informed him, “the leading firm in your market grew by 30 percent!” The benchmarks are out there. The problem is we don’t choose to use them. We look much better in our own eyes if we have no idea what Firm X or Y is doing.
Know your numbers
When I ask industry and service line leaders to compare their financial success and profitability with their equivalent peers around the country, I invariably get blank stares. Occasionally a partner will offer up a realization rate or other measure of profitability, but with little idea of what the number represents.
I’ll say something like, “So your realization rate is 72%. Is that good or bad? Are your peers at 62% or are they at 92%?” More blank stares. Undeterred I delve further, explaining that it’s not enough to know who’s ahead. You’ve also got to find out what they’re doing.
I only wish that we could obtain benchmarked data by industry and service line, but that frontier is yet to be conquered. Until then, segment leaders will need to rely on picking up the phone to get input from peers.
Chasing world-class growth requires that firms break out of their self-imposed bubbles and search the world for innovative offerings that clients want. They need to be developing, replicating and scaling products and services that drive large amounts of revenue – commercializing innovation and communicating those offerings to the world.
When Einstein discovered the theory of relativity, he surely did not start out by saying, “I think I’ll figure out why an apple falls off the tree and onto the ground.”
In order for Einstein to have moved physics – and civilization – forward as he did, he had to be fully aware of the scientific advances of all those who went before him in order to build on that knowledge.
Similarly, a CPA firm cannot achieve world-class status in growth unless it is fully aware of its competitors are and what they are doing.
Look for strategic partners to help you develop new services. Don’t be afraid of an innovator to teach you what they’ve learned, or perhaps license their methodology. Perhaps you pay them to mentor you, or bring them a shared client.
Ready to rock and roll?
I’m a huge fan of classic rock and what I’ve learned about the British Invasion of the 1960s has something to teach us about striving for world-class growth. The British musicians who revolutionized music did not operate independently, unaware of what their fellow music mates were up to.
Guys like Jeff Beck, Jimmy Page and Eric Clapton (who at one time were all members of the Yardbirds) were part of an exciting crop of musicians who fed off one another much like scientists and, through their collective brilliance, ushered in a new era in music.
Find out who’s on the leading edge and learn all that you can through collaboration and innovation. Take an honest assessment of where you are and project where you want to be. That’s the path to world-class growth.