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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Quality Work, Quality Service Not the Same Thing

Quality Work, Quality Service Not the Same ThingCompetence isn't enough.

By Domenick J. Esposito
8 Steps to Great

Over the years, I have enjoyed reading and internalizing the insights of David Maister, highly regarded author, speaker and practice management consultant.

MORE ON STRATEGIC PLANNING: Ineffective Partners and How to Address Them | Develop Home-Grown Future Leaders | How to Capitalize on the Trusted Business Advisor Opportunity | Leadership Must Be Persistent and Consistent | Using a High-Performance Business Framework | What a Client Service Plan Can Add | 36 Consulting Services You Might Be Overlooking | How to Drive Consistent Partner Behavior
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Many years ago (circa 1993), Maister wrote a professional service firms article titled “Quality Work Doesn’t Mean Quality Service.”
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The Struggles of Hitting Market Compensation … Fairly

Four empty metal bucketsAvoid the temptation to "sprinkle" among "buckets."

By Domenick J. Esposito
8 Steps to Great

For the most part, managing partners at a large number of the best-run Top 100 firms below the Giant Four do an excellent job in splitting up their compensation pies.

MORE ON STRATEGIC PLANNING: Ineffective Partners and How to Address Them | Develop Home-Grown Future Leaders | How to Capitalize on the Trusted Business Advisor Opportunity | Leadership Must Be Persistent and Consistent | Using a High-Performance Business Framework | What a Client Service Plan Can Add | 36 Consulting Services You Might Be Overlooking | How to Drive Consistent Partner Behavior | CPA Firm Partner Performance: Different Activities, Different Metrics
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Their partner compensation system rewards performance and, at the same time, nurtures rising stars with lots of potential.
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Ineffective Partners and How to Address Them

Three office workers glaring at cameraConsider not just the current impact, but the future.

By Domenick J. Esposito
8 Steps to Great

Most accounting, tax and advisory CPA firm professionals who have demonstrated that they can help perpetuate an organization become partners between the ages of 35 and 42. In many cases, these same professionals retire from their firms as they approach the age of 60, 65 and 70.

MORE ON STRATEGIC PLANNING: Develop Home-Grown Future Leaders | 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?
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Many emotional and physical changes happen to us humans over the course of 25, 30 or 35 years. Sometimes for the good and sometimes for the bad, our personal lives, energy levels and productivity at the age of 35 usually are different than our personal lives, energy levels and productivity at the age of 65.
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How to Develop Home-Grown Future Leaders

A development academy might be your answer.

By Domenick J. Esposito
8 Steps to Great

When it’s time to make decisions about new partner admissions, here is what senior leadership at many small and mid-sized CPA firms often hear:

  • “If Mary doesn’t make audit partner this year, she will leave the firm. We can’t afford to lose her as she gets all the work done at ABC Manufacturing Corporation, who pays us over $300,000 a year. Without Mary, this client will leave the firm” and
  • “We need to make Joe a tax partner this year because he is the only one in the firm who understands 'C.' Without him, we will have a big hole in our tax department capabilities. It could put a big hurt on the firm.”

MORE ON STRATEGIC PLANNING: Who Will Be the Next Category Killer? | 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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In their guts, these leaders know that, while both Mary and Joe are solid professionals, there is little chance that either of them will develop beyond client service partners.
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Who Will Be the Next Category Killer?

Man climbing upward arrowsThe opportunity is there.

By Domenick J. Esposito
8 Steps to Great

Going from a merely good firm to a mid-market sustainable brand requires a tremendous amount of discipline and leadership.

MORE ON STRATEGIC PLANNING: The Dangers of Low-Hanging Fruit | How to Capitalize on the Trusted Business Advisor Opportunity | Leadership Must Be Persistent and Consistent | Using a High-Performance Business Framework | What a Client Service Plan Can Add | 36 Consulting Services You Might Be Overlooking | How to Drive Consistent Partner Behavior
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The business, the basic governance and economic model, and its priorities are simple on the surface until the complexity of a partnership comes into play. Tried and true traditional business practices like strategy planning, performance management and compensation plans can take on unusual twists and turns when pulled out of shape by competitors and strong-willed partners.
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The Dangers of Low-Hanging Fruit

Pan of apples in woman's hands over green grassSeven questions to ask about new clients.

By Domenick J. Esposito
8 Steps to Great

It’s 2017 (hard to believe).

MORE ON STRATEGIC PLANNING: How to Capitalize on the Trusted Business Advisor Opportunity | 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? | Is Your Pyramid Upside Down? | Taking a Balanced Scorecard to Your Partners
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Many mid-market firms are finalizing their numbers for 2016 and it appears to be shaping up to be a pretty good year with

  • organic growth averaging at 4 percent to 6 percent,
  • equity partner compensation seeing a modest increase principally through technology enhancements,
  • more and more work being shifted to India and
  • intense expense control.

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How to Capitalize on the Trusted Business Advisor Opportunity

Two businessmen talking in officeWhen to move past the lip service.

By Domenick J. Esposito
8 Steps to Great

Several of the Top 50 CPA firms, particularly the larger ones that derive a majority of their revenues by providing recurring attest services that add integrity to financial statements and reduce the cost of capital, emphasize that they are trusted business advisors providing forward-thinking solutions to their clients.

MORE ON STRATEGIC PLANNING: Why Is Strategy Execution So Difficult? | 10 Common Leadership Traps | Expand Your National and Global Geographic Reach | Show Clients How to Improve Working Capital | Do You Belong In Cybersecurity? | Why You Need Marquee Clients | Net Profits: How Much to Whom? | How to Drive Partner Performance with a Smart Compensation Plan | 3 Tools to Boost Your Metrics | Start with Sound Firm Governance, Economics
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As examples, here are excerpts found on the websites of four CPA firms:

  • “We are more than accountants, we are trusted business advisors”;
  • “Our role is to be trusted advisors….”; “
  • Our mission…serving as a trusted business advisor to our clients”; and
  • “We believe a true business advisor always protects a client’s vital interests.

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Why Is Strategy Execution So Difficult?

Maze with word "plan" at the center14 key components to actually executing your firm's strategic plan.

By Domenick J. Esposito
8 Steps to Great

Many CPA firms do not have a living, breathing strategic plan that enables them to successfully navigate through their next two or three years.

MORE ON STRATEGIC PLANNING: 10 Common Leadership Traps | Leadership Must Be Persistent and Consistent | Using a High-Performance Business Framework | What a Client Service Plan Can Add | 36 Consulting Services You Might Be Overlooking | How to Drive Consistent Partner Behavior
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That in and of itself is not very surprising since most CPA firms are basically small and mid-sized businesses with the same generational challenges faced by most small and mid-sized family and privately owned operating companies. After all, the 100th largest CPA firm in the United States is only about $35 million in annual volume.
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Common Leadership Traps

Businessman writing on paperAnd how the author led his own firm.

By Domenick J. Esposito
8 Steps to Great

Being a CPA firm leader requires you to “walk the talk,” make tough decisions and avoid common traps or errors that are attributable to a failure of providing persistent and consistent leadership.

MORE ON STRATEGIC PLANNING: Leadership Must Be Persistent and Consistent | Time Running Out for Succession Planning | The Benefits of a Client Situation Review | Capital Markets 101 | How to Implement Industry Practice Groups | 6 Measures of Partner Performance | Is Your Pyramid Upside Down?
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In addition to “walking the talk” personally, a CEO must drive action and change.
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Leadership Must Be Persistent and Consistent

Two businesswomen on sidewalk in a big city8 questions to check whether you walk the walk, or just talk the talk.

By Domenick J. Esposito
8 Steps to Great

To me, all of the planning to become a mid-market sustainable brand becomes a reality through persistent and consistent leadership. In the end this, arguably, is the hardest part of the equation, as mistakes are very costly.

MORE ON STRATEGIC PLANNING: Expand Your National and Global Geographic Reach | Show Clients How to Improve Working Capital | Do You Belong In Cybersecurity? | Why You Need Marquee Clients | Net Profits: How Much to Whom? | How to Drive Partner Performance with a Smart Compensation Plan | 3 Tools to Boost Your Metrics
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A leader in a CPA firm, be it the CEO, managing partner or a senior partner, is the quarterback. He or she is the one who has to set the tone at the top and has a very big impact on the firm’s culture, behavior and compensation of the other partners in the firm.
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