Periodically, the partners of all accounting firms should pause and assess the strategic direction of the firm. Strategy and tactics are easily confused, and I've worked with many firms that hold a strategic advance only to get bogged down in tactical detail. So what's the difference?Strategy deals with direction. It deals with "what we are about." It deals with "What will we look like in three or five years?" Tactics are those necessary action steps that we must take every day, week or month that will get us to that future state.

Over the last 15 years, in working with hundreds of accounting firms, we have developed a strategic assessment tool that we use.

All strategy begins with the market. What services is our market passionate about receiving? Which services will grow in demand? Which will decline? If there are particular services that we are passionate about delivering, we must ask ourselves candidly, is the market demand substantial? What about the industries we serve?

Do we love our clients and their businesses, or are we just filling out forms?

An important part of the market is understanding our competition. Which services are they providing, and which are growing and profitable? We probably don't want to copy our competitors and become another "me too." But, in studying them, we can see opportunities in areas that they are not serving well. There is a great deal of information available about your competitors. Of course, you can check their Web site and obtain their marketing materials. But you should also talk to some of their clients and employees and try to obtain one of their proposals. Use your creativity.

During your strategic assessment, think about the compatibility of all your clients with your firm. Are there clients who cause you headaches or losses without whom you'd be better off? Do you have too much work during one time period and not enough during other time periods? Are there things you can do to re-order this phenomenon?


Talk to your largest clients. I mean really talk with them - face to face and live. Ask them why they use you, why they chose you in the first place, if they would choose you again, and if they'd refer you. Talk to some of your newest clients and ask them why they changed and if they are getting what they weren't getting before.

Then talk to and listen to the five largest clients who've left your firm in the last few years. Find out why they really left. Get behind the claim that you were too expensive. That phrase is a put-off phrase for, "I really don't want to tell you."

Evaluate your firm's staff members. From top to bottom, are you employing excellent or mediocre people? How can you hire a few more excellent professionals and outplace a few of the low performers? Do you have an 800-pound gorilla? In other words, do you have an owner who attracts a big book of business, but will not support a healthy culture for growth?

Evaluate your firm's financial data (pricing, utilization, yield, margins, realization, etc.) in comparison to national averages. Lastly, compare your communications materials, such as brochures, newsletters, proposals, with those of other firms.

Most of the time, when you perform a strategic assessment of your firm you will find areas for dramatic improvement. You will discover hidden opportunities to meet market demand with passion.

Troy Waugh, CPA, MBA, is a consultant to CPA firms and CEO of Five Star LLC in Nashville, Tenn. Reach him at (615) 373-9880.

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