New Rules for the Next Generation Accounting Firm
Blumer, from his Twitter page
If you could re-invent the accounting firm, how would it look?Jason Blumer has a few ideas for you.
by Rick Telberg
A new generation of entrepreneurial CPA is rewriting the rules for tax and accounting firms.
They are embracing change as an ever-present constant (not a sometime disruption), inventing new business models (not necessarily built on partner-to-staff leverage or the billable hour) and pushing the leading edges of technology (not always based on PCs but into the cloud and onto the smartphone).
Meet Jason M. Blumer, CPA, age 38, president and managing shareholder of Blumer & Associates, a small tax and accounting firm in Greenville, S.C. Blumer is a second-generation accountant in a second-generation firm that he has taken over from his father. But this is decidedly not his father’s CPA firm. Blumer’s father, 63, owns only 25 percent of the firm and was out hiking the day I called.
Blumer’s firm, in fact the whole idea of the firm, may be nothing but a big, rolling experiment. Blumer (pronounced like “plumber”) is attempting to create what he calls “the next generation CPA firm.”
“I want my firm to be the testing ground of new ideas,” says Blumer. His is not a big firm. They do about 350 tax returns per season, with two administration assistants — one of whom runs payroll services — and three other CPAs, one of whom works remotely and focuses on software. They specialize in professional services, specifically doctors’ practices and graphic designers. In all that, they are not unlike many other accounting shops.
But if a new generation firm is to be born, it most likely will start among small firms, which can be more agile and entrepreneurial than larger firms simply because they are easier to change, and faster. “I wouldn’t be surprised if in 10 years or 15 years you find that CPA firms operating under today’s business models become extinct,” Blumer says.
For Blumer, the theory of “next generation CPA firm” starts with the client, as it should. Looking around at the next generation of client, Blumer sees business owners who want more from their accountant than an annual tax return or a monthly compilation. “They want real relationships,” he says. “They want crazy-good customer service, real insights into their businesses, how they work, which of their processes make money and which don’t.”
Blumer talks in terms of the four “foundational changes” needed in a professional services firm: management, marketing, processes and technology.
Blumer’s “new management” theories, for example, mean a ruthlessly honest kind of client focus, including three essential hallmarks:
- a sharply defined niche focus,
- a “clean” client list and
- innovation “to create new services as awareness of client needs grows.”
“Firms must lead their clients to the service they need,” Blumer says, “not the other way around.”
For the staff, Blumer says firms need to treat staffers like the knowledge workers they are. “It’s no longer command-and-control, but collaborate-and-lead,” he says. You will know you’re succeeding when your staffers are learning what they need to know and teaching you new things.
At the end of the day, will Blumer’s ideas build enterprise value? Only time will tell. But according to Blumer, time is running out.
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Copyright 2010 AICPA.
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http://www.hooksandassociatescpa.com
Rick,
This was a great article. My small firm focuses solely on building those relationships with small to midsized business, especially focusing on those who are just starting out or looking to go into business for themselves. We try to help from the beginning and hold their hand the entire time. It has had a tremendous impact and helped me to double my business in 2009 and 2010 is looking to be even better.
http://www.ritakeller.com
Now we’re talking. I absolutely agree that in the next 10 to 15 years (probably even sooner) we will not recognize the CPA firm of today.
CPA firms have, and continue to, evolve – especially in the use of technology. However, it has been a fairly slow and methodical change. The progressive partners often have to drag the old timers along and that’s hard work. The least the slow-adapters could do would be to pick up their feet (not drag them in the dust to slow things down).
It will take better, smarter, more proactive management from all owners, not just the managing partner. While CPA leaders are indeed very smart and caring human beings and great advisors to business owners, most of them have never received advanced education or even CPE in advanced people skills (soft skills, like listening, coaching, motivating and mentoring). A big factor, just my opinion, is that they absolutely LOVE the numbers, the tax work and auditing. They do not LOVE dealing with “green” new hires.
As the Boomers retire, the next generation of leaders will create organizations that are more nimble and open to continual change and new ideas. They will not get new clients at a Chamber networking event, they’ll get them from Facebook and from blogging. They will keep in touch with referral sources on-line, not at lunch.
To play upon your comment about Blumer’s father, the evolution will occur naturally and rather slowly and the current model will become extinct when some current owners take a hike (no disrespect intended).
As you can tell, I feel strongly about this. I’m going to blog about it today.
http://www.verasage.com
Rick,
Great post.
Congratulations to Jason for acknowledging that CPAs are knowledge workers, not factory or union workers who are paid for time put in.
I hope he’s stopped billing by the hour and trashed his timesheets, as that is going to be a big part of the new business model for the Firm of the Future.
If you continue to do things the old way, you’ll never get the benefit of the new way!
Regards,
Ron Baker, Founder
VeraSage Institute
http://www.verasage.com
Twitter @ronaldbaker
http://www.prohorizons.com
These are some great ideas, as well as observations on the changes occurring in the industry, albeit slowly. I think most firms may be doing some form of marketing, but do not have a dedicated business development plan to execute on those strategies.
To expand on these suggestions, the successful firms will be astute at one to one relational marketing. They will take advantage of the technology available to collaborate, not only within the firm, but externally with the clients.
We’ve done an extensive survey of firms nationwide. The need for these changes is present in many. Several are moving in that direction. I believe that the next few years will prove Jason correct.
http://www.taxqueries.com
Rick,
A very good article about a very important change taking place in many industries.
There are a lot of CPAs out there who still believe in time sheets, hourly billing, etc but I think that we’re slowly beginning to see a shift in basic thinking.
I can tell you from personal experience that I have seen a shift in thinking just on our TaxQueries.com website alone in just the past few months.
We used to have CPAs making statements such as, “Why would I share knowledge in public? Why would I share knowledge with my competition? This is what *I* am PAID to do. Am I missing something here?”
…only to have a younger partner (or even competitor) join in, participate, and establish a reputation for themselves.
The next thing we see is the old timers signing up… even if it just to “watch” for a while…
As technology evolves and access to knowledge becomes easier and faster, CPA firms will be forced to evolve.
It won’t happen over night… but it will happen… slowly but surely.
I feel that those who stick to the “old way” will eventually find themselves in the very same position that newspaper companies are in today. Sitting around and wondering, “What the heck happened?”
Andrew Smith
andrew@taxqueries.com
http://www.taxqueries.com
Twitter @taxqueries
http://www.deepskyaccounting.com
Fantastic write. Jason Blumer can definitely be considered as an innovator in our industry and I am excited to see all the changes that is about to happen because of people like him.
http://THRIVEal.com
These are great comments!
Thanks for the vote of confidence, Michael. You are doing those innovative things too!
#GeeksUnite