What a Value Proposition Truly Is (and Isn’t)

Words "customer" and "value" on interlocking gearsDo it right and win in 4 key areas.

By Domenick J. Esposito

It is a myth that pricing is the main reason a CPA firm loses clients or proposals.

MORE ON STRATEGIC PLANNING: The Importance of M&A Culture Due Diligence | Get Your Money’s Worth from Non-Billable Time | Stay Independent But Keep Looking Upward | Ineffective Partners and How to Address Them | The Dangers of Low-Hanging Fruit | 10 Common Leadership Traps | Expand Your National and Global Geographic Reach
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Price is a one-dimensional sales pitch – your firm is either the lowest price or you’re not – end of the story and end of the sales pitch.
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The Importance of M&A Culture Due Diligence

Woman and man shaking hands in office conference roomA 6-point blueprint.

By Domenick J. Esposito

Over the last several years, there have been over 200 merger, acquisition, alliance and joint venture announcements by the Top 100 and other fast-growing CPA firms. Every indication is that these combinations will continue at a very rapid rate as CPA firms are:

  • Facing an aging partner group that usually includes the most effective relationship and business development partners. Baby boomers have been a home run for CPA firms.
  • Finding organic growth very difficult to attain with little prospect that business is going to dramatically improve in the foreseeable future.
  • Realizing an inability to attract an adequate supply of high-quality talent to help perpetuate the firm.

MORE ON STRATEGIC PLANNING: Get Your Money’s Worth from Non-Billable Time | Stay Independent But Keep Looking Upward | Ineffective Partners and How to Address Them
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CPA firm CEOs and other senior management are very effective at financial and operational due diligence, tracking results and holding partners accountable for hitting timely targets. On its face, an observer would tend to conclude that these 200+ combinations are very accretive to partner profitability after an integration period of 18 to 24 months.
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Get Your Money’s Worth from Non-Billable Time

Time is money : clock hands on $100 billsBusiness development must be part of the firm DNA.

By Domenick J. Esposito

Today, at many smaller firms, client service partners (defined as partners who devote 100 percent of their time on clients with no firm administration responsibilities), generate, on average, about 1,500 to 1,600 billable hours per annum.

MORE ON STRATEGIC PLANNING: Does Your Firm Need an Independent Executive Committee Member? | Are You Attracting the New Breed of Equity Partners? | Quality Work, Quality Service Not the Same Thing | Who Will Be the Next Category Killer? | Why Is Strategy Execution So Difficult? | Time Running Out for Succession Planning | The Benefits of a Client Situation Review | Capital Markets 101 | How to Implement Industry Practice Groups
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At most of the Top 100 CPA firms, client service partners generate about 1,200 billable hours per annum. That should be the absolute minimum at the Top 100 firms. Without breaking much of a sweat, client service partner billable hours at the Top 100 could and should easily reach 1,300 to 1,400 billable hours per annum.
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Does Your Firm Need an Independent Executive Committee Member?

Handshake at an office meeting7 benefits of an outside perspective.

By Domenick J. Esposito
8 Steps to Great

Managing partners and other senior management at small and mid-sized CPA firms are known for their entrepreneurial spirit, independent thinking and their desire to call their own shots. At the same time, firm leadership recognizes that they have developed their leadership and management skills from the school of hard knocks and their experiences at firms a good number of them joined directly upon graduation from college.

MORE ON STRATEGIC PLANNING: Are You Attracting the New Breed of Equity Partners? | Stay Independent But Keep Looking Upward | Ineffective Partners and How to Address Them | The Dangers of Low-Hanging Fruit | 10 Common Leadership Traps | Expand Your National and Global Geographic Reach | Show Clients How to Improve Working Capital
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While these skills are critically important, they are, in fact, limiting as they draw upon a very narrow knowledge base and don’t draw upon a much broader universe of knowledge that is out there. How often do you hear “I wonder how other firms do this or do that?”
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Are You Attracting the New Breed of Equity Partners?

Businesswoman shaking hands with someone out of view7 tactics to address the "new normal."

By Domenick J. Esposito
8 Steps to Great

There’s no argument within the accounting profession that today’s economy is anemic, margins are squeezed and talent, particularly tax talent, is very scarce.

MORE ON STRATEGIC PLANNING: Stay Independent But Keep Looking Upward | 10 Ways to Link Compensation and Strategy | Develop Home-Grown Future Leaders | How to Capitalize on the Trusted Business Advisor Opportunity | Leadership Must Be Persistent and Consistent
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On top of that:

  • The philosophies of: (a) finders, minders, grinders and (b) an accounting firm model (principally low-margin compliance services) are no longer sufficient and probably are counterproductive to the perpetuation of a firm.
  • Clients have the upper hand in their accounting firm relationships.
  • Technology will continue to create a lesser demand on lower-level staff.
  • It is widely believed that Google and Microsoft will soon become fierce competitors for certain compliance services.

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Stay Independent But Keep Looking Upward

Businesswoman walking up stairs14 questions to ask.

By Domenick J. Esposito
8 Steps to Great

Your firm was knocking the cover off the ball pre-financial crisis (circa 2007 and 2008) with a strategy of getting bigger with quality growth, stronger with quality talent, and more profitable but it is increasingly obvious that it has become difficult competing in today’s mid-market space.

MORE ON STRATEGIC PLANNING: 10 Ways to Link Compensation and Strategy | Quality Work, Quality Service Not the Same Thing | Who Will Be the Next Category Killer? | Why Is Strategy Execution So Difficult? | Time Running Out for Succession Planning | The Benefits of a Client Situation Review | Capital Markets 101 | How to Implement Industry Practice Groups | What Is ‘Acceptable’ Performance? | 6 Measures of Partner Performance | Is HR Ready for Your Partner Pipeline?
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The business environment is anemic and organic growth is hard to come by. Your challenge is exacerbated when you see an insufficient number of young superstars and rainmakers and your senior partners, mostly baby boomers, don’t have an awful lot of “golf course” left to play.
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10 Ways to Link Compensation and Strategy

Consider disclosing the executive committee's compensation – but no one else's.

By Domenick J. Esposito
8 Steps to Great

If a CPA firm has a partner performance management and compensation plan (and many don’t), rarely is it used as a means of driving strategy and running the firm. Instead partner goal setting and evaluations are used merely as a means of rewarding partner compensation – one of the greatest challenges for senior management and executive committee.

MORE ON STRATEGIC PLANNING: Quality Work, Quality Service Not the Same Thing | Ineffective Partners and How to Address Them | The Dangers of Low-Hanging Fruit | 10 Common Leadership Traps | Expand Your National and Global Geographic Reach | Show Clients How to Improve Working Capital | Do You Belong In Cybersecurity?
GoProCPA.comExclusively for PRO Members. Log in here or upgrade to PRO today.

As important as the annual goal setting, evaluation and compensation adjustment are leadership’s direct and indirect messages communicated during the process as these messages affect firm culture, how partners choose to spend their time and the firm’s ability to implement its strategic plan.
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