is today the right time to invest in new processes and grab some good talent?
while some accounting firms struggle in the economic downturn, others are finding new opportunity for growth, profit and investment, according to teresa mackintosh, senior vice president in charge of the tax and accounting software unit at thomson reuters.
[youtube]kzsotgwmbmo[/youtube]
local accounting firms, she says, are “the fabric of america.” they’ve been through as much uncertainty and turmoil as many of their clients.
but mackintosh says some savvy firms can seize this period as “an opportunity to double down on process and to hire staff.”
more video from mackintosh:
local accounting firm redefines “r&d” for client retention and business development. how to keep clients happy and build your business.
by rick telberg
at most companies, “r&d” means “research and development.” but at dugan & lopatka cpas in wheaton, ill., every staffer knows it means client “retention and development,” as in business development.
like many firms faced a couple years ago with the credit crash and ensuing great recession, dugan & lopatka’s attention was wrenched from landing new clients to serving the clients they already had. “we started a renewed focus on client retention and business development,” according to managing principal jerry lopatka, who dropped me a line in response to “do you know the secrets of happy clients?”
dugan & lopatka has 45 people, including nine principals. it specializes in the usual small- and medium-size business lines — manufacturing, distribution, real estate and construction. this tax season, they’ll probably do about 750 returns.
today, what the firm abbreviates as “biz r&d” “is a daily focus for all of us,” lopatka says.
the firm’s “biz r&d” program contains six building blocks, which may be intuitive for many and familiar to anyone who has studied relationship marketing or consultative selling:
1. going the extra mile on the current engagement.
- conducting extra analysis using business-intelligence tools like bizbench.
- bring the project in earlier than promised.
- or hand-deliver reports and discuss in person.
2. increasing the amount of client contact.
- visit at every opportunity.
- schedule business meetings near mealtimes to grab some extra quality time over a nice meal.
- invite the client into the firm’s office.
3. building the business relationship.
- help the client network with your other clients.
- offer free seminars for the client’s staff.
- refer new business to the client.
4. building the personal relationship.
- understand their goals in life and business.
- get hard-to-find tickets to big games or shows.
- remember birthdays and anniversaries.
5. increasing knowledge of the client’s industry.
- read the same trade journals they do.
- learn all you can about their competitors.
- join them at trade shows.
6. increasing knowledge of the client’s company.
- spend time with the junior managers.
- understand the company’s power structure.
- meet the boss.
of course, the firm’s leadership knows that the “r&d” plan would mean nothing without support from the staff. so they launched it at a firm-wide meeting, tied it into training consultant troy waugh’s five star client service model.
on top of that, lopatka nudges them with an early-morning daily e-mail. by the time you read this, the firm may be posting those notes on a blog, open to clients and prospects. check their web site.
is all the effort worth it? what’s the roi, every cpa asks. “i can’t quantify it,” lopatka admits. “but i’m afraid what to think if we didn’t have the program.”
“we try, but we can always do better,” he says. “as i often tell our employees — our good clients are on our competitor’s radar screen.”
let that be fair warning to dugan & lopatka’s competitors, as well.
are they on the right track? dugan & lopatka is one of many firms pioneering new techniques and strategies for successful cpa firm management. what’s working at your firm? tell me and we’ll share the best ideas.
demographics shifts aren’t just about staffing. clients are changing too.
[youtube]s1twrphnimy[/youtube]
when it comes to bridging the generation gap, most accounting firms focus on what it means for their staff and their own firms.
but there’s another dimension to the demographic shifts that are bringing gen x’ers and millennials into positions of influence — the shifting client base.
in this 3:28-minute clip, teresa mackintosh, senior vice president and general manager for workflow and service solutions in the americas professional division of thomson reuters’ tax and accounting unit, explains how those demographic trends are changing the client of the future.
today, she notes, the workforce is made up of 48% gen x’ers, 38% baby boomers, 10% millennials, and a few traditionalists. but that’s not at all the client base for today’s cpa firms.
according to data from thomson reuters, the aging client base is much more pronounced than the aging workforce.
| generation |
% of workforce
|
% of client base
|
| traditionalists (62+) |
4%
|
7%
|
| baby boomers (44-61) |
38%
|
87%
|
| generation x (28-43) |
48%
|
6%
|
| millennials (under 28) |
10%
|
0%
|
“as a whole,” she says, “firms are not successfully serving that layer of younger demographic.” if firms don’t try to capture that generation today, she wonders, will they be there as a market in the future? “we really need to worry today about what clients will need tomorrow?”
more from mackintosh here:
see more videos at the youtube 卡塔尔世界杯常规比赛时间 channel here.
the surprising thing about aomar’s cpa firm practice management survey 2010 is that there were so few surprises. the study turned up very few significant changes between 2009 and 2010.
of course, it’s possible that the major metrics could lag a year and show up in next year’s survey. or, it could mean that firms have been more resilient than many would care to boast about.
one good sign you can’t ignore: net income per partner increased by over 16 percent. (what recession?)
| 2010 | 2009 | |
| leverage | 6.6 | 6.8 |
| utilization | 1,164 | 1,108 |
| billing rate | $135 | $132 |
| realization | 91.3% | 92.1% |
| profit margin | 36.5% | 34.8% |
| net income per partner | $330,723 | $283,364 |
source: accounting office management & administration report, february 2010. subscribe here: subserve@ioma.com.
even in a down economy…
even when you don’t think you need the staff, great talent can attract new business you never expected.
here’s a tip from sandra wiley’s presentation “moving human capital from paralysis to growth,” recorded aug. 16, 2009, at the pre-conference session of the boomer technology circles™ all-circle summit.
so says the tax foundation
via the tax foundation
citing significant budget shortfalls and the inability to collect sales taxes on many internet-based transactions, a number of states are considering the adoption of “amazon taxes.” such laws, nicknamed after their most visible target, require retailers that have contracts with “affiliates”—independent persons within the state who post a link to an out-of-state business on their website and get a share of revenues from the out-of-state business—to collect the state’s sales tax.
contrary to the claims of supporters, amazon taxes do not provide easy revenue. in fact, the nation’s first few amazon taxes have not produced any revenue at all, and there is some evidence of lost revenue. for instance, rhode island has seen no additional sales tax revenue from its amazon tax, and because amazon reacted by discontinuing its affiliate program, rhode islanders are earning less income and paying less income tax.
amazon taxes also do not “level the playing field” between brick-and-mortar and online businesses; the laws actually mandate disparate burdens on online businesses. litigation over the constitutionality of amazon taxes is ongoing, with scholars on the left and right disputing their wisdom and legality.
enacting an amazon tax law also sends a signal of hostility to businesses engaged in interstate commerce, runs the serious risk of retaliation from other states and from affected businesses, and undermines efforts to improve the uniformity of state sales taxes.
key findings
unconstitutionally expansive nexus standards like the amazon tax undermine legal certainty, burden interstate commerce, and harm economic growth.
get the full report – free download from the tax foundation
no fee growth across all sizes of firm
by marc rosenberg, cpa
the mantra in 2009 was “flat is up,” which meant that cpa firms would gladly settle for 2009 revenues that simply held firm at the 2008 level, given the full brunt of the recession. according to a survey we conducted of cpa firms across the country, firms got their wish: the surveyed firms showed a 0.6% increase in annual net fees in 2009 vs. 2008 – about as flat as it gets.
for the past 10 years, we have maintained what we call our “national e-mail managing partner roundtable.” it consists of roughly 100 accomplished managing partners of cpa firms across the country. 54 firms responded in january and early february to a series of questions regarding the impact of the recession on their firms.
interestingly, there was very little variation in responses between the three different size groups.
2009 vs. 2008
fees were flat across all size ranges. the good news is that the ability of cpa firms to be somewhat recession-proof prevented the dreadful losses experienced by many industries due to the world economic crisis. the bad news is cpa firms aren’t used to flat growth, having experienced double-digit growth rates for most of the post-enron/andersen years. yes, they got their wish to stay even with 2008 but it did little to ease the pain of laying off staff, cutting costs and dealing with clients who suffered enormously from the recession, the latter of which took its toll on firms’ accounts receivable, work-in-process and billing rates.
income per partner was down 2.5% in 2009 vs. 2008. most of this income decline was due to the late start most firms got in right-sizing their firms to the current year’s fee volume. because the majority of layoffs and cost cutting moves were made toward the end of the 2009 tax season and soon after april 15, firms were over-staffed during a portion of the revenue year. somewhat offsetting this was the fact that the tax season is the busiest time of the year, so being overstaffed didn’t hurt as much as being overstaffed outside of the tax season.
2010 vs. 2009
fees are projected to increase in 2010 by 3.0% across all size ranges. 3% is certainly better than flat growth, but it’s a far cry from the golden age that typified the years since the enron/andersen fiasco. so clearly, firms are coming out of the slowdown and seeing light at the end of the tunnel. but the tunnel is long, and 2010 will be a sluggish year. income per partner is projected to increase 5.8%, with the $10+m firms expecting a 7.5% increase. the right-sizing done by firms, both at the staff and cost control fronts, will pay off in 2010.
lay-offs in 2009
our 54 firms were perfectly split on this: 50% laid off staff in 2009 and 50% did not. but when we look at the results by size of firm, we get a different picture:
smaller firms had the most difficult time finding staff, so they were less over-staffed when the recession hit. the larger firms enjoyed a bigger boom than the smaller firms from 2002 to 2008 and hired as many qualified staff as they could because they were confident of getting new revenue to keep them busy. when the recession hit, the larger firms were more exposed than the smaller firms.
have firms seen a meaningful increase in the quality (not quantity) of staff available in the market?
this is one of the most curious issues i have seen during the past 18 months. for the first time in 15 years, there is a bountiful supply of experienced staff available for hire. some firms claim that these are the weak people who were let go by firms and, therefore, are not worthy of being hired. but more firms found the opposite, according to our survey: overall, 65% saw an increase in the quality of available staff and 35% did not. a breakdown of these results by size range is revealing:
so, the larger the firm, the less likely it was to see a meaningful increase in the quality of staff available for hire. this makes sense because, generally speaking, the performance bar is set higher at larger firms than at smaller firms.
did the firms hire these newly available staff?
60% said yes and 40% said no. this is pretty amazing: despite the fact that firms were reeling from the recession’s impact, as they were laying off staff, they were hiring new people. the combination of the recession and the industry’s staff layoffs enabled many firms to do something they had wanted to do for years: upgrade the quality of their staff. until the fall of 2008, practically all firms were forced to lower their standards for hiring and retaining staff because they were desperate for labor, any labor.
hiring plans for 2010
clearly, the smaller firms are more conservative. the larger firms are more aggressive.
only 9% of the 54 surveyed firms plan to lay off staff in 2010. this compares to 50% in 2009.
spending marketing dollars in the recession years
conventional wisdom says that in down years, firms need to increase their marketing commitment because they have to work harder to grow. 2009 was such a tough year that a lot of firms did not increase their marketing expenditures. but with the recession showing signs of ending, 2010 looks like the year firms will commit to marketing in a more conclusive way.
| 2010 | 2009 | |
| firms increasing their marketing expenditures | 62% | 44% |
| firms decreasing their marketing expenditures | 2% | 26% |
| firms reporting this the same for both years | 36% | 30% |
.
recession’s impact on firms’ strategy for merging in smaller firms
some industry pundits opined that with a recession, the intense merger market would cool off. the thinking was that buyers were hunkering down to focus on their own problems and sellers were temporarily pulling out of the merger market until they could post stronger profit numbers to drive a better bargain.
based on our survey, the above didn’t happen. only 4% of all firms held off on mergers. 32% said they were continuing to pursue mergers as in the past and 64% reported no change from the prior year. the “no change” could be that those who were pursuing mergers continued to do so, and firms that were not pursuing mergers continued to stay out of the merger market.
tactics and strategies to weather the storm
the following actions were being taken by firms (the number in parenthesis is the number of firms citing the same response):
the following were only cited by one firm, but they are excellent ideas nonetheless:
marc rosenberg, cpa, is a management consultant to cpa firms nationwide. for the past six years in a row, accounting today magazine has acknowledged marc rosenberg as one of the 100 most influential people in the cpa profession. inside public accounting recognized marc as one of the most recommended cpa firm consultants in the country. rosenberg is a widely published consultant. his articles regularly appear in all the industry’s leading journals. he works with firms in partner compensation, retirement and succession planning, mergers, facilitating retreats, strategic planning and practice management reviews. his firm, the rosenberg associates, is based in wilmette, il. you can reach him at (847) 251-7100 and at marc@rosenbergassoc.com.
you may already be violating some new regulations.
new rules went into place march 1 requiring firms with customers in the state to follow a formal security plan against id theft.
do you hold key info about them like name and social security number? then you may need a written security plan.
don’t know what such a plan looks like? susan bradley (the cpa tech “diva”) outlines the 16 steps you need to know in massachusetts. and, as she says, you needed to know it march 1st.
get the details at her always useful and entertaining “the official blog of the sbs “diva.”
if you ask your clients, you might be surprised.
how do accountants define success? join the survey, get the results.
accountants often define success in terms of revenue, net income, or maybe client service. but the enterprise council on small business surprisingly found that “satisfaction” was the primary way that they defined success, followed by “growth.” they asked business owners to define what satisfaction means to them. business owners said maintaining a healthy work/life balance was the single biggest factor in their definition of success.
keep that in mind when you’re considering how to help your clients achieve their goals. their goals may not be what you think.
“also,” the researchers say, “give some thought to the types of promotions or contests you are running for small business owners. not all rewards need to be business oriented, and for those looking to achieve more work/life balance, giving them rewards for their personal life can be a strong indicator of your commitment to helping them achieve this.”
how do accountants define success? join the survey, get the results.