Reprinted with permission from Accounting Today.
Charles Darwin may not have lived through a pandemic, but he certainly knew a thing or two about adaptation. “It is not the strongest or the most intelligent who will survive,” wrote Darwin, “but those who can best manage change.”
In the accounting space, I know of no firm that has done a better job of managing changing conditions than Grassi, which opened its doors on Long Island in the 1980’s. As the story goes, its only assets were an empty file cabinet, a desk and a savvy businessman named Lou Grassi. Many years later, the firm is in the top 70 in the U.S. In a wide-ranging conversation with Lou, we spoke a great deal about strategic pivoting, one of the most prized skills in today’s environment.
Market upheavals typically result from one of four thunderbolts: technology, regulation, competition or a shift in economic conditions. While one could make the case that all are currently in play, economic upheaval resulting from the pandemic is arguably the leading factor today, as it was in 2008.
Going on Offense
Thanks to a clear vision and skillful execution, Grassi enjoyed a post-recession boom that set the stage for extraordinary future growth. As the market roiled in 2008 and the Chicken Little doomsayers took cover, Lou Grassi decided not to participate in the downturn. Instead, he devised an offensive strategy aimed at meeting clients where they were, solving their most pressing problems.
For most clients, what was most pressing was not a scheduled audit, but issues like cash flow, accounts receivable and responding to plummeting value. So Grassi provided that kind of assistance, with some creative twists. Like deferred payment, which was offered with a caveat. Clients who took advantage of the offer committed to contacting one or more friends or associates, and letting them know how Grassi was meeting their needs.
The tactic was golden. One client in the lumber distribution business introduced an industry colleague to Grassi in 2008, touching off a burst of interest that resulted in many new clients in the sector, including a $380 million company.
I was facilitating a Grassi retreat centered around growth, where Lou rallied team members to his vision by announcing that the firm would grow 15% from 2008-2009. From that year forward, 15% has been the norm for the firm’s annual growth.
Another winning tactic was getting bankers involved in client turnarounds. Grassi accountants helped bankers understand that an audit was not necessarily in their borrowers’ best interest. Struggling businesses needed help with future projections more than a historical record of past activity. Lou concluded that it was wiser to get banks involved early, rather than surprise them with dramatically reduced revenues.
The pivot to projections involved preparing clients with detailed financial forecasting. An internal ranking of risk helped Grassi triage clients and their need for assistance. As a consultant to the firm, I suggested weaving the data into a managed pipeline to drive and manage revenue growth.
Here for You
One of the most valuable services the firm provided was peace of mind. Lou recalls talking with one distraught business owner—not a Grassi client—concerned about his company’s future in 2008.
When Lou asked what his current firm advised, the owner responded, “I don’t know, I haven’t heard from them.” That told Lou everything he needed to know about the need to be present and solution-driven. The business switched to Grassi and remains a loyal client.
Just as Lou’s firm did back in 2008, consider how you navigate this new environment, focus on how you can adapt to provide the services that will help your clients, and your firm, emerge strong.