Why Do We Accept Poor New Business Results?

5 critical steps to turn things around.

By Domenick J. Esposito
8 Steps to Great

The question to ask is why do so many firms accept poor performance from so many of their partners relative to growth and generating revenue?

MORE ON STRATEGIC PLANNING: Is It Time to Manage Your Receivables Like a Real Business? | Profitability Requires Discipline | Pitching Vs. Pursuing | The Top 11 Reasons CPA Firm Mergers Fail | Growth: The Difference between the Disruptor and the Disrupted? | M&A: Sometimes Bigger Is Better | What a Value Proposition Truly Is (and Isn’t)
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There isn’t a firm in existence that does not depend on constant growth to be successful and to generate enough profit to pay its staff and partners well.  Yet, so many firms accept the old bell-shaped curve argument that they are winning if just 20 percent of their partners are good at generating business.
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Is It Time to Manage Your Receivables Like a Real Business?

Consequences: Are there any?

By Domenick J. Esposito
8 Steps to Great

It never ceases to amaze me how lax many small and midsized CPA firms are when it comes to managing their work-in-process and accounts receivable and optimizing their cash flows.

MORE ON STRATEGIC PLANNING: Profitability Requires Discipline | The Link Between Strategy and Winning on Value | Focus On an Enhanced Client Experience | Solve the Partner Comp Problem | 6 Rocks in the Path to Growth | Use Compensation to Shape Partner Behavior | The Importance of M&A Culture Due Diligence
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Sloppy billing and collecting policies often result in lost billing opportunities (i.e., if you don’t bill it timely, clients forget the value you provided and resist receiving a bill 90 days after the work was performed) and for a need to have a relatively large line of credit. Sloppy policies also result in year-end fire drills with clients when partners “beg” clients for cash before the end of the firm’s fiscal year end.
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Profitability Requires Discipline

19 basic principles to improve operations ... but don't treat them like "flavor of the month."

By Domenick J. Esposito
8 Steps to Great

We all know that improving profitability on a sustained basis generally is a long-term play that requires significant planning, discipline, accountability, implementation and patience.

MORE ON STRATEGIC PLANNING: The Link Between Strategy and Winning on Value | Mine Vs. Yours Vs. Ours | 22 Things Leaders Must Do | 21 Questions to Help Unlock Accelerated Growth | Quality Work, Quality Service Not the Same Thing
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Unfortunately, the senior partners at many small and mid-sized CPA firms do not possess all of these attributes and therefore are unable to make significant strides in their bottom-line distributions to their partners. While it’s an uncomfortable scenario, it’s reality and almost understandable as many small and midsized CPA firms are thinly managed and do not have the leadership that is necessary to change the inevitable path of merging up.
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The Link Between Strategy and Winning on Value

One is a tool, not an end itself.

By Domenick J. Esposito
8 Steps to Great

There is a wide chasm between talking about value and making your firm a value-based-firm (“VBF”). The first step in transforming your firm from just another accounting firm to a VBF is to develop the strategic framework that will consistently deliver value to your clients.

MORE ON STRATEGIC PLANNING: Mine Vs. Yours Vs. Ours | Pitching Vs. Pursuing | The Top 11 Reasons CPA Firm Mergers Fail | Growth: The Difference between the Disruptor and the Disrupted? | M&A: Sometimes Bigger Is Better | What a Value Proposition Truly Is (and Isn’t) | Does Your Firm Need an Independent Executive Committee Member? | 10 Ways to Link Compensation and Strategy
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There have been tons of articles written about strategy, its importance and multiple “how-to” models. In many articles, the discussion focuses on creating that “killer” strategy that will propel your firm to stardom and unlimited profits.
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Mine Vs. Yours Vs. Ours

Businessman tightly holding briefcase with dollar sign on it15 ways to take an entrepreneurial approach instead.

By Domenick J. Esposito
8 Steps to Great

It is a very prevalent view that midsized law firms are not particularly well led and well managed.

MORE ON STRATEGIC PLANNING: Pitching Vs. Pursuing | Focus On an Enhanced Client Experience | New Year’s Resolution: Solve the Partner Comp Problem | 6 Rocks in the Path to Growth | Use Compensation to Shape Partner Behavior | The Importance of M&A Culture Due Diligence | Are You Attracting the New Breed of Equity Partners?
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Many of their partners operate as silos and refer to clients as “my clients” and my book of business.” Sure, they share space and other overheads but they do not institutionalize clients for the long-term benefit of the firm.
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Getting New Business: Pitching Vs. Pursuing

Businesspeople having a meeting over coffee sitting together at a table discussing a document, young man and two middle-aged women presentTo present, or not to present. That is the question.

By Domenick J. Esposito
8 Steps to Great

The firm’s business development plan is in place. Strategic targeting is complete. Contact with the first prospective client has been made. An impressive value proposition has been shared. Interest in an in-person meeting has been expressed by the prospect.

MORE ON STRATEGIC PLANNING: Focus On an Enhanced Client Experience | 22 Things Leaders Must Do | 21 Questions to Help Unlock Accelerated Growth | M&A Candidates: Valuations and Vetting | AI Likely to Accelerate Merger Mania | Get Your Money’s Worth from Non-Billable Time
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Et voila! It’s time to gear up for a “pitch meeting.”
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Focus On an Enhanced Client Experience

Young businesswoman using smartphone and tablet at outdoor cafeYou may be doing the opposite of what clients want.

By Domenick J. Esposito
8 Steps to Great

When choosing a mid-market CPA firm, many clients pay more attention to the ability to “connect” with the client service partner and staff than to the quality of the work performed as many clients are unable to distinguish between outstanding technical work and competent technical work. And even if clients are sufficiently sophisticated and able to distinguish between outstanding and competent work, their technical needs may simply require competency.

MORE ON STRATEGIC PLANNING: 22 Things Leaders Must Do | The Top 11 Reasons CPA Firm Mergers Fail | Growth: The Difference between the Disruptor and the Disrupted? | M&A: Sometimes Bigger Is Better | What a Value Proposition Truly Is (and Isn’t) | Does Your Firm Need an Independent Executive Committee Member?
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As a result, when it comes time for an evaluation of the firm, it’s my observation that many, if not most, clients place more emphasis on an enhanced client experience – including responsiveness, attitude and other non-technical “service" criteria – and not the quality of the technical work.
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22 Things Leaders Must Do

Businessman carrying elephant on his backBONUS: 4 ways NOT to choose a managing partner.

By Domenick J. Esposito
8 Steps to Great

In his 2008 book “Strategy and the Fat Smoker,” David Maister wrote that we often (or even usually) know what we should be doing in both our personal and professional life. We also know why we should be doing it and (often) how to do it.

MORE ON STRATEGIC PLANNING: The Top 11 Reasons CPA Firm Mergers Fail | New Year’s Resolution: Solve the Partner Comp Problem | 6 Rocks in the Path to Growth | Use Compensation to Shape Partner Behavior | The Importance of M&A Culture Due Diligence | Are You Attracting the New Breed of Equity Partners?
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Figuring all that out is not too difficult. What is very difficult is actually doing what you know to be good for you in the long run, despite short-run temptations.
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The Top 11 Reasons CPA Firm Mergers Fail

Four businesspeople, left handshakePlus: Four questions to self-assess your due-diligence efforts.

By Domenick J. Esposito
8 Steps to Great

Even as mergers and acquisitions among CPA firms are moving at a hectic pace, many, if not most, are falling short of expectations.

MORE: New Year’s Resolution: Solve the Partner Comp Problem | 21 Questions to Help Unlock Accelerated Growth | M&A Candidates: Valuations and Vetting | AI Likely to Accelerate Merger Mania | Get Your Money’s Worth from Non-Billable Time | Stay Independent But Keep Looking Upward
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Some are even winding up in divorce, with costly breakup costs as morale drops, go-to-market opportunities fail to materialize, and key partners and potential partners leave for other opportunities.

For every transaction that actually does happen, it is also apparent that handfuls of potential deals die at the altar.

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Solve the Partner Comp Problem

Dial with arrow pointing to word "strategy"Now is the time to take a hard look at your partners and your compensation model.

By Domenick J. Esposito
8 Steps to Great

Let's take a deep dive into both a firm’s partner mix and its compensation model.

MORE ON STRATEGIC PLANNING: 21 Questions to Help Unlock Accelerated Growth | Growth: The Difference between the Disruptor and the Disrupted? | Use Compensation to Shape Partner Behavior | The Importance of M&A Culture Due Diligence | Are You Attracting the New Breed of Equity Partners?
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In a "Good to Great" research study on high-performing organizations performed by Jim Collins, it was concluded that the method of compensation, as a causal factor for high and sustained performance, is largely irrelevant. The study concluded that whatever system is in use, it simply must be rational and equitably managed and that high sustained performance is largely the result of doing many things well.
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21 Questions to Help Unlock Accelerated Growth

Business hand holding hot chart in crystal ballThere's a downward spiral going on. Follow the traditional model and your firm could get stuck in it.

By Domenick J. Esposito
8 Steps to Great

When it comes to growth, two of my core beliefs are:

  • size matters, and
  • service line diversification (the professional services model) is better than the traditional accounting firm model.

MORE ON STRATEGIC PLANNING: Growth: The Difference between the Disruptor and the Disrupted? | 6 Rocks in the Path to Growth | What a Value Proposition Truly Is (and Isn’t) | Does Your Firm Need an Independent Executive Committee Member? | 10 Ways to Link Compensation and Strategy
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The proof is in the pudding.
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