How can the smaller CPA and consulting firm compete against their larger competitors in the market? Many of the firms that I talk to feel that they can't. But as Henry Ford said, "Whether a man thinks he can or thinks he can't, he's probably right." The key is knowledge, and successfully managing and sharing that knowledge.



The ideal business model for a large consulting or accounting firm would look something like this: These firms generally have a cadre of generalist partners who are experts in a given niche such as health care, pension plans, real estate, etc., but also have some functional expertise, such as in tax (state and local tax, international, etc.), assurance, operations or technology, etc. They also have a group of dedicated niche and functional experts within the firm that can be on-call to help work with clients or potential clients wherever and whenever necessary.

The generalist partners usually meet with the prospects at the first meeting to uncover client needs. It's the generalist partner who coordinates the client service team. The generalist knows that they don't have to do everything themselves. Hence, if more specialized services are required, the generalist partner will bring in a functional or niche partner to work with the service team. There is no doubt that it takes a significant amount of human resources to be successful under this model, which is something that smaller firms don't have. But having this business model is only half of the equation. In order to provide excellent service to clients, large or small firms need a knowledge-sharing culture.



Culture has been defined in many different ways. I often say that it is the way things are done in a particular firm. Many times, this is unstated. When I have asked team members why they do certain things, a common answer is, "That's how we work." Culture can be reflected in the firm's shared values, its beliefs ("We are the most innovative"), and attitudes ("We do whatever it takes").

Knowledge-sharing is critical for the survival of almost all businesses, especially professional service firms, since our primary deliverables are information, processes and suggestions. It has often been said that the assets of a consulting or accounting firm walk out every evening. Those assets usually return the next day, but when someone leaves your firm, their knowledge leaves with them. In today's environment, where job turnover is the norm, we cannot continue to exist without a knowledge-sharing culture.

Yet most firms don't really know what they know. Clients often tell firms that they didn't know that the firm did x or y. Worse yet, team members in the firm often say the same thing. It's a sad fact that team members don't know it either. When this is the case, knowledge is not leveraged or brought to bear on client opportunities. Finally, think about what you know today versus what you knew five or 10 years ago. Knowledge erodes and we constantly need to replenish it, or we become obsolete just like old computers.



The quickest way to move into a knowledge-sharing culture is to work in teams. This encourages and perhaps forces people to share knowledge. The ultimate goal is to make knowledge-sharing the norm in the firm. You know you have achieved that goal when team members say, "That's how we work here," when asked why they share knowledge.

Don't think of knowledge-sharing as another touchy-feely activity. Its primary purpose is to help your firm meet its business and profitability objectives. Sharing knowledge geometrically improves the client outcome. Two or three people working on a problem ultimately develop a better solution than just one working on it alone. Sharing knowledge is a good first step, but that in itself is not enough to be successful. You need to apply the new knowledge that the team has learned to the client project at hand.

By sharing knowledge, we provide better service to clients and help our people do their jobs better. We also help them in their professional development and help them stay engaged in the firm. Knowledge-sharing is a top-down initiative. Unless it's supported and embraced by the managing partner, executive committees and the partners, it won't become part of your culture.

You don't need to wait to have a knowledge-capture system in place - just start a grassroots effort. Building a knowledge-sharing culture is about people, not about technology. If you are successful in building that culture, look into the technology to capture what you are learning.



Learn to crawl before you walk or run and make the commitment to knowledge-sharing. Start from the top of the organization and get your team members involved in client projects or just talking about existing clients. Once you have decided that knowledge-sharing is a worthwhile effort and your partners are on board, start using the following prompts to engage your team members:

  • Ask what they are thinking.
  • Ask how the firm could serve the client differently.
  • Ask them to work with you on the engagement.
  • Ask for help.
  • Ask for feedback.
  • Share why you are approaching the engagement the way you are.
  • Share your experience and expertise.

You may never be able to compete head to head against the larger players in your marketplace. You don't necessarily have to. What you need to do is develop a knowledge-sharing culture to provide clients with options in order to address their issues and let them select the one that serves them best.
August Aquila is CEO of Aquila Global Advisors and assists firms in developing effective compensation plans, creating winning market strategies, implementing internal succession plans, and finding merger and acquisition candidates. Reach him at (952) 930-1295.

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