Consider These Approaches to Build the Firm of Tomorrow
You’ve made the strategic decision to continue to grow your firm. Now you need to figure out how. While growing a CPA firm is a multi-faceted process, here are 4 key ideas that are especially relevant in today’s environment.
#1: Consider Hiring a Business Development Professional
For years, the Big Four have used business development professionals. Now, Sarbanes/Oxley and other environmental changes make it a wise best practice for mid-size firms, as well. Although smaller firms have greater potential to pursue larger, more sophisticated clients, they may lack the needed large opportunity development skills.
But it’s more complex than simply hiring the right person. It’s a matter of properly integrating this business development professional into your environment, and educating partners about the potential impact of the decision. For example, business development pros are often accustomed to being paid on commission. What happens if he or she earns more than a partner?
Consider, too, the reaction of your current chief rainmaker if the new person outperforms him or her in attracting new business. Of course, scoring big is why you hired a business development professional. But it’s up to you and others leading the growth charge to assure that the individual has the support to succeed.
Here, the technology sector offers a useful template. Tech types have long understood that integrating business development into their client delivery expertise is a growth formula that creates value for all, without threatening anyone’s turf. I believe within 2 – 5 years a significant number of midsized firms will have full time business development pros. Those who are able to successfully integrate business developers into the practice will be miles ahead competitively.
#2: Enhance the Role of Your Director of Marketing
In your efforts to grow, an excellent, though frequently underutilized resource is your director of marketing. The challenge is that in many firms, this person plays a tactical role limited to communications. Consider transforming the position into a strategic resource that will provide high-value guidance and direction.
By attracting the right person with the right experience, you bring to the table not just someone who can create brochures, but someone who can create business opportunities. Foster an environment in which a marketing director can contribute as much (or in some cases more) as partners in the planning and implementation of a growth plan.
Again, it’s not just about whom you hire, but about giving that person the opportunity to contribute fully. This integration may require some re-education of your partners, but it’s well worth the effort.
#3: Leverage Large Opportunities
As mid-size firms seek to get their arms around increasingly large opportunities (including those shaken loose by Sarbanes/Oxley), the most solid advice I can offer is to operate as a team. Think football, not golf.
Leveraging your large opportunities is all about managing your pipeline. Orient your team to working these large pieces of business in a collaborative way. By understanding and managing your various revenue segments, especially large ones, you’ve broken the code that will lead to solid growth.
Large clients should be perceived as assets of the firm, not as assets of an individual partner’s book of business.
Consider this: For the average mid-size firm, 39% of revenue is generated by 39 clients, with an average of 2 – 4 service offerings per client. As a significant source of revenue, managing this top tier must become a top, team priority. Identify these clients (perhaps it’s 19 or 49 at your firm) and manage them just as you manage the assets of your balance sheet. Regularly assess your efforts with them by holding internal reviews on ¼ of your large clients each quarter, and include all members of the team who can contribute ideas about optimizing service and uncovering additional opportunities.
#4: Nurture Your Niche
The evolution and sophistication of niches is a telling market trend. In many CPA firms, the first niches were delivery-oriented. Then niches started evolving on the business development side as well. In order to compete effectively against non-CPA firm specialty companies, firms need to seriously develop themselves around their chosen niches. The term multiple-boutique firm best describes this environment.
By that, I mean a firm that not only offers dedicated professionals around dedicated service offerings, but includes all the other elements of a boutique – assigned revenue goals, compensation incentives, specialized marketing communications, focused lead generation, inventive thought leadership, specialized knowledge, customized delivery methodologies, and an evolving reputation of specialization. Can’t multiple boutiques operate under one, well-managed roof to compete effectively against single boutique businesses? I think so, and I believe CPA firms will look like this one day.
Finally – Don’t Grow it Alone
As you tackle the elephant that is revenue growth, your best foot forward is a collective one. Yes, you do give up some individual independence. But consider the benefits – an exciting growth environment which attracts top candidates and secures the firm’s financial future. Ultimately, there’s very little room for prima donnas in the business of business development. Just dedicated team members who shine brightest when they shine together.