In Part 1 of this article (Sept. 22-Oct. 5, 2008, page 27), I mentioned that I would discuss the changes that accounting firms need to embrace today. Here they are:1. Customize services - one size does not fit all. To meet the challenge of running smarter, firms must learn - as product companies have - that one size does not fit all. Firms today are offering customized services to their diverse client base. Even all clients in the same niche will not require the same level and type of service.
To provide this customized service, firms needs to understand the segments that make up that base. Go into any magazine store and you will find countless publications aimed at targeted segments. If you are an auto buff, you will find magazines for classic cars, luxury, exotics, hot rods, sport cars, foreign, vans, SUVs, etc.
Think of tax preparation. You could offer clients the options of:
* Face-to-face interviews;
* Mailing in tax information to your office;
* Sending information via e-mail; or,
* Doing their own tax return with minimal review.
Which segment do you want to focus on, specialize in? Specialization drives quality and pricing. Buyers know this, but sellers often forget. Learn the needs and wants of your clients.
2. Continuous improvement and innovation. The second change that firms need to embrace is the adoption of continuous improvement.
Whether you offer a product or a service, life cycles today are getting shorter and shorter. No firm can rest on its laurels. Similar to the best-in-class manufacturing firms that have embraced a culture of continuous improvement, CPA firms must realize that long-term success is dependent upon a culture of continuous improvement in their processes and their service capabilities.
3. Knowledge workers. Third, firms don't have a lot of tangible assets. More than ever, firms are realizing that what really differentiates one firm from another is their people. Not only do our assets go home every evening - all of the firm's knowledge goes with them. When we lose people to competitors, that knowledge also goes.
Knowledge workers want to make a solid contribution to the firms that they work for. Too many partners stop these people from making contributions. They get frustrated and leave. Today's professional, whether a partner or non-partner, needs to be part of the overall strategic initiative of the practice. Firms need to build an infrastructure to create long-term growth and improvement. This is accomplished in part by investing heavily in people, systems and processes.
4. Client satisfaction. Client satisfaction measurements are rapidly changing. Firms have been measuring client satisfaction since the mid-1980s, but just sending out the questionnaire to determine client satisfaction is no longer enough to stay competitive. Unless your clients are responding with a 90 percent or better, they are at risk of leaving your practice.
Client loyalty is more important than client satisfaction. There isn't a day that goes by where one of your clients does not have contact, either directly or indirectly, with one of your competitors.
5. Traditional financial measures are no longer sufficient. Finally, financial measures by themselves are no longer sufficient for the competitive firm of the 21st century. CPA firms have traditionally focused on short-term results. That's how partners traditionally get paid. "As long as there is cash in the check book, why should we worry?" is a common response that I have gotten from accounting professionals. There have been too many firms that have imploded because of this belief. Firms that operate under this premise never know until it is too late how inefficiently they may be operating.
I'm not at all implying that financial measures are not important. Rather, they should not be the be-all and end-all of what gets measured in your firm. Things that are measured should really increase the value of the firm.
Competitive firms today focus on leading indicators such as client retention, mentoring and training staff, and developing new services and niches, as well as the traditional financial measures. They are constantly measuring the results of their efforts in these areas.
Now, you may be asking yourself, "Where will I find the time to do all of this?"
The better question may be, "What happens if I don't?"
August Aquila is CEO of Aquila Global Advisors and Chantrey Capital Advisors. Reach him at aaquila@aquilaadvisors.com or (952) 930-1295.
