Waxing and Waning Markets
Reprinted with permission from Accounting Today.
Business guru and former General Electric CEO Jack Welch wisely advises, “Change before you have to.” Adapting proactively to shifts in the marketplace is one of the most effective ways to grow your practice.
Today’s markets are undergoing dramatic realignment. Understanding the powerful elements at work is essential to bending these forces to your advantage.
For mid-market CPA firms, markets have traditionally been defined by local geography rather than by buyer group or industry. Until recently that place-based view (“We are a mid-sized firm serving businesses in Phoenix”) has fundamentally shaped a firm’s vision and strategy.
But local geographic identity is losing relevance due to a number of factors, starting with competition. It is estimated that there are over 700,000 CPAs on the planet, and some number of them are competing for your firm’s clients. There are multiple reasons, including the dynamics of supply and demand. In addition, technology has made it easier than ever for competitors to serve your clients, well out of their handshake range.
Another factor contributing to the (not so) mysteriously shrinking market is specialization, one of my constant drumbeats. A fast-food franchising company based in Boston may select an accounting firm out of Boise rather than a local provider because the Boise firm has carved out a successful niche in restaurants. Accountants can no longer assume that they will be considered just because they share an area code with a target business.
It is ironic, but if you have heeded my advice and developed one or more niches, you have by definition reduced the number of potential clients in your local geography. The good news is that you can use the same elements that are contracting markets to significantly expand your growth potential, redefining your market in a larger geographic footprint.
Ignore borders and innovate
So how do you go from aspiring to becoming a global force? Start by leveraging the same technology your competitors are using to encroach on your local market. Today it is possible to work in any location or time zone. Applications like email, cloud-based communications and Skype provide real time, shared access to colleagues, clients and documents.
Technology also delivers important benefits for staffing. In the old paradigm staff typically lived within a 20-mile radius of your office and planted themselves there for 8, 10 or more hours at a stretch.
Those days are history. My cousin, a Romanian engineer now living in Germany, is a case in point. She works remotely with a team of a dozen engineers around the world, most who have never met and do not hold the same passport. Despite disparate schedules and time zones there is plenty of collaboration through video conference calls and other real time interaction.
Another way to increase your market size is through innovation – bringing more unique, solution-based services to buyers nationally and worldwide. For example, a firm known in the local market for nonprofit financial statement audits has developed a new service – outsourced accounting services for nonprofits. Since the firm is conflicted out of doing outsourced accounting for its current client base and the nonprofit local market size is limited, one option is to find new clients for the service across the country.
Social media enables focused communications that precisely pinpoint clients who need what you have to sell, wherever they are. You can zero in on international real estate investors in need of tax services, maritime shippers who require IFRS translation services, Korean auto suppliers or global wine distributors.
New vision required
Holding on to a self-limiting geographic vision will restrict your scope and could diminish you to near invisibility. The key is to replace the vision of your firm as a local provider and recast yourself as a national or global player. By first expanding your firm’s vision, and then its reach and scope, you can dramatically reverse the effects of a shrinking market.
Use innovation and technology, along with the merger/acquisition approach that is taking our profession by storm, to grow your firm in ways never before imagined. Take Jack Welch’s advice to change before you have to. Because by the time you have to, it just might be too late.