IN OUR OPINION, PERSPECTIVE #79 — MARCH 18, 2019
(A Continuing Series for Leading CPA Firms)
“ANOTHER FIRM BITES THE DUST”
| “ There are no secrets to success. It is the result of preparation, |
hard work, and learning from failure”. — Colin Powell
While there are lots of reasons why small and mid-sized CPA firms don’t realize their full potential and, in some situations, fail or bite the dust, we have found that the downward spiral of a firm usually starts with a Managing Partner (the heart and soul of any CPA firm — the shepherd, orchestra leader or quarterback, if you prefer, of the partner group) who didn’t fully understand the key objectives and day-to-day responsibilities of the role and therefore, failed to operate on all cylinders.
By way of background, a few points are worthy of note:
This is a very real concern and we have found many firms do not want to recognize its severity. Instead firms say, “trust us” and while that is easy to say, history has found that this trust has been misplaced. Our advice is that firms consider “protecting” the Managing Partner with an agreement, with compensation and severance provisions, that ensures employment for two or three years after the person steps down as Managing Partner. While this is rarely done in today’s world, we suggest that the absence of such an agreement could very well be one reason firms have difficulties in attracting effective managing partners and, as a result, are unable to achieve the next level of success.
In Our Opinion, Managing Partners at many small and mid-sized CPA firms would be much more successful if they went into the job with a better understanding of their key objectives and day-to-day responsibilities. To provide guidance and to help improve the success rate for new Managing Partners and for the firms that they lead, we are pleased to summarize the Top 100 firm best practices to maximize opportunities and minimize risk. Of course, one size does not fit all and the practicality of this guidance depends on the size of the firm, number of offices, geographic coverage and individual strengths of the professionals. This guidance should prove to be particularly helpful to Managing Partners responsible for multiple offices or for those with a single office consisting of 15 or more partners.
Firms need to be very careful in selecting and developing their Managing Partner. The goal should be to ensure a high probability of success. That’s not only good for the Managing Partner, it’s also good for the firm and for future managing partners.
Don’t short change the importance of the role; too many firms fail when the Managing Partner doesn’t have the capability to move the firm forward. We strongly encourage firms to make the necessary investment in an effective Managing Partner.
Dom Esposito, CPA, is the CEO of ESPOSITO CEO2CEO, LLC — a boutique advisory firm consulting to leading CPA and other professional services firms on strategy, succession planning and mergers, acquisitions and integration. Dom, voted as one of the most influential people in the profession for two consecutive years by Accounting Today, authored a book, published by www.CPATrendlines.com., entitled “8 Steps to Great” which is a primer for CEOs, managing partners and other senior partners. In Our Opinion, is a continuing series of perspectives for leading CPA firms where Dom shares insights, experiences and wisdom with firm leaders who want to “run with the big dogs” and develop their firms into sustainable brands. Dom welcomes questions and can be contacted at either firstname.lastname@example.org or 203.292.3277.