[IMGCAP(1)]The months immediately following the end of tax season are strategically important. Management allows their focus to briefly turn inward, as opportunities for organizational improvement take center stage.
Everything is under the microscope, including human resources, tax compliance processes, quality control, technology, education and staff development. While specific pain points may vary from year to year, one remains nearly constant. Firms are almost always looking for ways to increase revenue and profitability, especially over the summer months. New client acquisition and improved service delivery are always on the menu. Every so often, new practice development takes center stage.
For large regional and national firms, building and launching a new practice is a normal part of doing business. Many have highly developed processes in place for market opportunity analysis, service development, risk mitigation and go-to-market strategy.
For smaller regional and local firms, launching a new service crosses into more uncharted territory. They are often torn between sticking with the fundamentals and evolving their organization. The critical data point that guides decisions tends to be an opportunity versus risk analysis. In many instances, probably too many, the argument for risk wins out, and firms move ahead with the same service offerings from year to year, missing opportunities to expand revenue and strengthen relationships with clients.
Why does the balance shift in favor of risk more than opportunity? It’s seldom due to a lack of opportunity. It’s not usually even excessive market risk related to the service. Most of the time, unknown risks related to effectively selling the service and bringing it to market are the deciding factors.
These risks can often be overcome with the right process, experience and approach. With a proven strategic practice development process and a go-to-market strategy in place, the scale for new practice launch evaluation can tip decidedly in favor of opportunity. When this happens, growth and opportunity can be rapid.
As a growth advisory and marketing advisor, I have the opportunity to see firms bring new products to market pretty consistently. What separates success from failure? People and processes. There’s no replacement for good people. You either have them or you don’t. If you have them, you know it. If you don’t know, you don’t have them.
Involve your creative, entrepreneurial, fearless and energetic team members in new product launches. They will go a long way toward ensuring success by pure force of will and unwavering effort. Once you know who will lead the charge, a proven process is essential to achieving consistent success.
Here’s a five-step process to launching a new practice. Having good people following a process with enough room for innovation almost always leads to success.
1. Start with a Market-based Approach
Starting with a market-based approach is the first step toward risk mitigation and successful service launch. Developing a new product or service based simply on an idea, while hoping there is a market, is a recipe for failure. Within an accounting firm, this is especially true. For established firms, the first step is to identify opportunities within your own client base. Do sufficient opportunities exist within your own client base to justify the service? How will opportunities within your client base provide for profitable work, and when and how will your marketing and sales efforts exceed your client base? Does the service align with other specialties and niches within your firm? Will existing sales efforts lead to opportunities for your new service?
Generally, if an identifiable opportunity within your own client base will allow you to breakeven or do better, you have a low risk opportunity. The size and potential outside your client base, along with any existing synergies with existing practices or services, should also be considered in your market analysis. Before proceeding past the market analysis, make a convincing financial argument for the service.
2. Develop Your Expertise. Build or Buy?
Once you have identified a substantial market opportunity, the second big question to answer is whether you will build or buy the expertise needed to offer your service. There are pros and cons that come along with each that should be carefully considered. Building expertise allows for greater control, often the potential for greater profit and the ability to ensure quality and culture fits. If you have the manpower and available time internally to build the expertise and manage and promote the practice in a reasonable timeframe, internal development might be the right answer.
On the other hand, buying the expertise can often provide a quick influx of experience and knowledge and provide a much quicker path to market. Buying could include the actual acquisition of a practice, hiring a specialist from another firm, or partnering with another provider. Choosing to partner with another provider can actually tip the scales of your market analysis. In situations when your client base can’t support a practice or the time and money required to build internal expertise is lacking, opportunity can still exist.
If you do choose to acquire expertise through a hire or an organizational acquisition, be careful to consider all factors including culture compatibility. Successful integration will require collaboration, and there isn’t a quicker path to failure than personality conflicts and misaligned core values.
3. Develop Pricing and Profitability Models
As an accountant, here’s an area where you should feel right at home. Understanding the key financial indicators of your new practice will help guide your marketing, sales and management activities. With the results of your first two processes, you should have the ability to determine both your startup and ongoing costs of the practice. If not included in your original market analysis, extend your analysis to determine both the value of your service and the fee structure and fee tolerance for your service in the market.
If you don’t have firsthand experience with your new service, consult others who do. Look to peers within your firm’s association and use their experience as a resource. If that opportunity does not exist, significant information can often be obtained through competitive analysis.
When you understand both your startup and ongoing costs of operation, including fixed and variable, along with your fee structure, you can put together a profit/loss model including breakeven analysis.
This will guide your go-to-market and sales strategies.
4. Develop Your Go-to-Market Strategy
Go-to-market planning is an often overlooked area of project launch. Many firms spend all of their time developing service and practice profitability models and leave go-to-market as an afterthought. Your go-to-market planning should include the following:
a. Identification of primary and secondary sales teams
b. Development of marketing and sales materials
c. Internal service education
d. Expected pipeline and sales process
e. Identification of primary influencers and potential referral sources
f. PR and launch communications
g. Marketing plan
h. Sales plan
The right go-to-market strategy depends on your firm, your new service and your market. If you don’t have experience developing strategic go-to-market plans, working with someone experienced in all phases of bringing a new service to market is highly recommended.
5. Coordinate Internal and External Launch
For professional service firms, your professionals are often your front-line sales team. You will rely on them to identify opportunities and start the sales process with your sales or service teams. Educating your entire firm, from first-year staff to the partner group, is highly recommended. Education should be experience based, focus on the basics of the service, value delivery, methods of communication, opportunity identification and internal sales processes.
To maximize value, you want your entire team to understand how your service provides value, who can benefit, what key indicators to look for, and exactly what to do if they see an opportunity. Activating your entire sales team will maximize results. A little incentive never hurts either, if your compensation structure allows for it. Key partners and practice leaders inside your firm should schedule rollout meetings that clearly specify sales objectives.
While educating and motivating your sales team is essential and valuable, there are still opportunities that could slip through the cracks. Plan a strategic communication program with your clients and prospects, including education, explanation of value and demonstration of results. Be careful not to get too technical with this, as clients focus on value and opportunity. Too many details can put the brakes on opportunity faster than anything.
Stephen Brunson is the managing director of Catalyst CPA Marketing, a full-service growth consultancy and marketing agency serving CPA firms. Steve and Catalyst help leading local and regional accounting firms across the country achieve their true growth potential by providing marketing and business development strategy and implementation.
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