October 14, 2019

IN OUR OPINION,

(A Continuing Series for Leading CPA Firms)

PERSPECTIVE #94 — OCTOBER 14, 2019

THE ROAD TO BECOMING A STANDOUT PROFESSIONAL SERVICES FIRM

“You can’t do today’s job with yesterday’s methods

& be in business tomorrow.”               

                                                               —George W. Bush

It seems the main topic or strategy for many small and mid-sized CPA firms is shifting to a Professional Services Firm and changing partner mindsets from Accountants to Advisors. So easily said, not so easily achieved.

“So, let’s change our tag line from Accounting, Tax and Advisors to Advisors and … Or, let’s tell our partners that they have to become advisors to their clients.”

Picture this:

Managing partner communicates “Unless we become Advisors and start adding real value to our clients to help them be successful, we will lose clients.  Look at the top 10 clients you service, come back with a plan to change your client’s perspective – the goal being to have our clients rely on you and us for more than just compliance”

Partners listen and shake their heads in agreement but unnoticed is the shaking internally as they think “how am I going to do this?”

Why do so many think the transition to Advisor from compliance is easy?  Successfully changing the mindset and comfort zone of partners that have spent their lives reporting on the past and confidently shifting to advising clients on the future is a challenge.

There are five realities necessary for the successful transition to a firm and partner group that is future focused, true Advisors and a Standout Professional Services Firm that clients value to help them achieve greater success:

1. The reality that achieving success in this transformation is not optional.
2. The reality that not all partners can make the transition.
3. The reality that many firms are focused on transformation so how does your firm stand out.
4. The reality that there is a wide chasm between where your firm is and where it needs to go.
5. Finally, the reality that getting there is not about marketing – it’s transformational, hard work based on a sound plan, training/coaching, effective tools and finally,

In this first in a series of five Perspectives, we will focus on the first reality – not optional.

What exactly does “Professional Services Firm” mean?  After all, most CPA firms are “Professional”, and most have traditionally provided a number of different sServices.

At the risk of being overly simplistic, the difference is focus.  Traditional CPA firms are focused on the past – telling clients what they already know.  The Standout Professional Services Firm is focused on the future and helping clients create a successful roadmap for the achievement of their goals.  It’s not about the growth and success of the CPA firm. It is about the growth and success of the client.  Growth and profit in the CPA firm follows growth and profit of its clients – that is the mark of a truly Professional Service Firm that standout.

Today, CEOs and CFOs generally do not look to their CPA for advice on how to drive revenue and growth, how to build and execute strategy, how to achieve greater success. Most CPA firms did quite well within that expectation model. As partners age out, so do many of their client CEOs and CFOs.  As Millennial CEOs, CFOs and entrepreneurs take over, they will want strong relationships with their CPAs but one built on the entrepreneurial spirit of the CPA partner, the value-added partner that helps the client be more successful.

There are three mega-trends that small and mid-sized CPA firms need to adjust to.

First, clients of the future don’t need nor will they value their CPAs telling them what they already know.  They want their CPAs to be that Trusted Advisor – to most clients that will mean helping them to understand the past but only as it relates to helping them create a more successful future.

Secondly, technology will replace the drudge compliance work that generates 50% of a firm’s fees.  This trend will require new services, re-tooling how current services are provided and finally figuring out how to truly add value to the client if fees lost to technology are to be replaced.

Finally, talented people will want to be with a firm that stands out and is successful, profitable and winning in the technology driven economy –  firm that provides them with exciting work, great career paths and a strong sense that they make a difference with their clients.  Talented staff will not settle for good pay and promotions.

For firms that recognize these mega-trends and understand their implications, the reality that a move to a true Professional Services Firm is not optional becomes crystal clear.

Firms that only get partners to pay lip service to the phrase “We are a Professional Services Firm” will slowly decline in revenue, profit and partner compensation.  With the drop-in partner compensation, the other reality is that the truly talented partners will seek other firms where they can grow both in the clients they serve and the compensation they earn.

So, you are the Managing Partner, what do you do to get the message through?

1. Communicate why it is critical to shift mindset from “we are an accounting firm” to “we are a Professional Services Firm.”
2. Develop roadmap for the shift covering why, how as well as the implications for client service, marketing, compensation, recruiting.
3. Define and communicate the expectations of future partners in this new world of Professional Service Firms.
4. Establish accountability for the shift and coaching those who have difficulty.

IN CONCLUSION

Becoming a “Professional Services Firm” and successfully changing everyone’s mindset to Client Advisors versus Client Accountants takes focus, commitment, communication, training, accountability and dedication.

In Our Opinion, firms that cannot successfully drive this mindset shift throughout the firm will not succeed in the future technology-based, millennial driven market.

The Understanding, shared by all that the shift to a Professional service firm is not optional is the first step to becoming a truly stand out firm.  We will discuss the remaining four realities in future Perspectives.

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Tony Zecca (CPA and retired CohnReznick partner and National Director of the Advisory Group) is an ESPOSITO CEO2CEO consultant who is brought into client assignments when needed. 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 is actively led by Dom Esposito, CPA. 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 and his colleagues share 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 desposito@espositoceo2ceo.com or 203.292.3277.