To understate the situation, the rules governing opportunity development for CPA firms have changed dramatically. What’s different? Almost everything.
When the Sarbanes-Oxley Act of 2002 became law, we knew we were dealing with a set of rules that would guide how and what kinds of services CPA firms delivered. But what many CPAs didn’t anticipate is that the rules have created a regulatory environment that is significantly driving new marketplace dynamics. As a result the question is no longer simply,“What can we do and not do?” but “How will the market respond to our offerings?” And then, “How do we develop and close opportunities in this new and uncertain milieu?”
Here’s the challenge: In the past, we operated within a fairly predictable marketplace with a predictable client set, predictable scope of work, predictable competitors, predictable pricing schemes and predictable target markets. That’s been replaced by an all-new set of conditions that leaves us with two options: To proactively anticipate and develop opportunity, or to react, struggling to catch up to the changes.
Key Word: Cohabitate
How we seek and acquire business is fundamentally changing. Not so long ago, XYZ Firm would present itself before a prospective client, claiming to be the best firm in town. Now, XYZ is getting referrals from other CPA firms because these firms have been “conflicted out” of some services. This redistribution is leading firms to limit and restructure their offerings and to recommend others, including past competitors. The fittest firms, those most likely to survive and thrive, are responding by improving their cohabitation skills. Enhancing affiliations and alliances will be key to many firm’s future success.
This seismic shifting reminds me of the technological revolution of the 1980s, when IBM was lord and master over the burgeoning computer kingdom. Today, a wide variety of global vendors work together to determine solutions and package them for more sophisticated solution-oriented buyers. This highly evolved go-to-market strategy has benefited participants of all sizes. Similarly, in the CPA profession, our individual fiefdoms are evolving into a larger interdependent ecosystem, respectful of the new rules, and seeking to find ways to cohabitate without conflict of interest.
Another central change before us is in the way decisions are made at firms. In the past, operational management could be counted on to set and enforce policy. Now, boards of directors, audit committees and CEOs are evolving into more visible and proactive decision-makers, who have different objectives and represent more sophisticated organizational decision-making dynamics. By the way, these changes are not limited to public firms, but are in play in private settings as well, although they do not technically fall under Sarbanes-Oxley.
Opportunity Development Skill-building
Beyond cohabitation, I also recommend that firms optimize revenue by honing their ability to develop opportunities effectively with boards, audit committees and CEOs. Methods include external training and sharing of the firm’s rainmaking best practices. Through education, communication and interdependence, all ships will rise with the tide, optimizing opportunities within the constraints of the new rules.
Another key strategy is to proactively seek opportunities that correspond with your identified market niches. In order to optimize your revenue stream in the 21st century “Get out there and grab your share” just won’t cut it. Rather, get out your lead generation playbook and review your most successful plays. Mobilize small, specialty teams to respond to industry niches and needs. Identify your areas of influence and perfect them. Vertical (industry) niche development continues to be a much more efficient model than horizontal (community based) lead generation.
Is Our Ship Coming In?
This environment has driven a heightened awareness among business buyers that CPAs are much more than bean counters that audit and complete tax returns. We are increasingly – and rightly – perceived as high-visibility financial service providers. As a result, corporations are more receptive to leverage our problem-solving and counseling abilities.
Inside the profession, we’ve been preaching this gospel for years. Now the business-buying public has recently become more aware of the critical role played by CPAs in the financial and operating results of a business. We have an opportunity to capitalize on this new attitude, becoming the business advisors we have always wanted to be – counseling boards of directors and audit committees, and building operational and efficiency enhancements as never before. Yes, we are operating within a tighter rule-set. But the value is still enormous regardless of which set of offerings you chose to provide.
We are, in a sense, on a path of accelerated development of go-to-market strategies, caused by the almost sudden upheaval in predictable and long-standing market patterns. When CPAs speak in the post-Sarbanes-Oxley environment, CEOs and committees are listening like never before. And this is likely to continue to increase with time. And we must act promptly yet deliberately, taking measures to avoid squandering this historic opportunity. As large pieces of business change hands, and more opportunities are driven down from the high end to the middle of the market, those CPAs who focus on these fundamentals – cohabitation, developing skills with larger opportunities, effective vertical lead generation, and continuing to up-level business advisory skills – will be the revenue growth winners.