Surge Pricing: What Works for Uber Could Work for CPA Firms

Limited supply puts you in the driver’s seat.

By Bill Penczak

The Serenity Prayer states, “Grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.” Keep that in mind for a moment.

MORE: Four Considerations for Effective Client Culling | Partner Accountability: The Only Two Things That Really Matter | Chase Birky: Overcoming Paralysis by Analysis | O.D. Lanier: Stepping into Advisory | Are You Too Generous with Your Write-Offs?
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When preparing tax returns and financial statement audits, one of the biggest challenges CPA firms face is either late or incomplete client information.

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Four Considerations for Effective Client Culling

2023: The year “cull” was no longer a four-letter word for CPA firms.

By Bill Penczak

It finally happened.

For at least the past dozen years, I’ve heard CPA firm partners’ bold talk about culling their clients in order to ease staffing issues, focus on larger, more profitable engagements, or rid the firm of the PITA clients, which has nothing to do with animal rights and more about protecting their people from those who are a Pain ____  _____  _____ (complete the next three words on your own, and you can skip Wordle for today).

MORE: Partner Accountability: The Only Two Things That Really Matter | How to Boost Profits by (OMG) Sharing the Upside | Dustin Verity: Keep an Open Mind and Constantly Learn | Secret to Success? A Growth and Abundance Mindset | The Six Essential KPIs for Managing Partners | Your Marketing Sucks: Six Reasons Why | Nine Smooth Moves to Build Client Satisfaction
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A recent study was published that indicated only 1 percent of CPA firms could adequately staff their engagements. And while more firms are migrating to offshore models to get work done, more are actually culling clients, but without a measured process for doing so.  

Here are some suggestions for successful extrication of clients who are wearing down the profitability and the morale of firms: 

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Partner Accountability: The Only Two Things That Really Matter

Both tax and audit partners can achieve margin goals, but in different ways.

By Bill Penczak

I was leading a midyear review of the 2023 strategic plan for one of my CPA firm clients, one that has experienced exponential growth (you’re welcome) in the past few years but simultaneously is facing the positives and negatives that accompany rapid growth. As we delved into the goals and objectives in the six strategic areas, it dawned on me that partner focus – and the ensuing measurement and related compensation – should be narrowed to just two things, which I will address in a bit.

MORE BILL PENCZAK: How to Boost Profits by (OMG) Sharing the Upside | Bill Penczak: Stop Forcing Smart People to Do Stupid Work | Chase Birky: Overcoming Paralysis by Analysis | Dustin Verity: Keep an Open Mind and Constantly Learn | Five Ways to Put Success into Succession Planning | O.D. Lanier: Stepping into Advisory | Secret to Success? A Growth and Abundance Mindset | From Tax to Transformation | Five Steps to Building Advisory Work | The Six Essential KPIs for Managing Partners | The Great Resignation: Five Reasons Accountants Are Quitting | Five Tips for Better Decision-Making | Your Marketing Sucks: Six Reasons Why | Five Global CPA Leaders: Four Survival Strategies | Are You Too Generous with Your Write-Offs? | Nine Smooth Moves to Build Client Satisfaction | Planning for Success in 2021 | Re-Thinking Today’s Firm with Five Global Leaders | 5 Things Your Firm Should Do Differently This Summer | Do You Have the Guts to Beat the Covid Crisis? | How to Inoculate Your Firm against Covid Competition | ‘Found Money’ Delights Clients | Don’t Buy a Rolodex, Buy a Process | The Three R’s for Beating the Corona Crisis | 6 Reasons Why Your Marketing Sucks
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The polar opposite of this KISS approach was the managing partner of a $100 million-plus firm that wound up being gobbled up by one of the supernationals almost 10 years ago. He was brilliant – he could look at an Excel spreadsheet and, in “Rain Man” fashion, immediately identify wrong entries or formulas. (For those readers on the younger age spectrum, “Rain Man” was an Academy Award-winning film from 1988 starring Dustin Hoffman and Tom Cruise.) Being the king of Excel, this managing partner had created a 20-column rating sheet for each partner to measure their performance. In the words of one partner at the time, “There was so much detail, we didn’t even know what to focus on.”

Time for Wapner, indeed.

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How to Boost Profits by (OMG) Sharing the Upside

Workers of the world unite.

By Bill Penczak

About a decade ago, the managing partner of our $100 million firm and I were discussing compensation and commission for our five business development professionals. He and I were in complete agreement that there should be no cap on commission or compensation – even if that compensation level with their base and commission was at par with or even exceeded that of the partner group.

MORE: 12 Points of a Good Compensation PlanRate Managing Partners in Six Areas | Eight Ways Managing Partners Make a Real Difference | Five Reasons That Leaders Fail | Eleven Things Partners Must Do | Seven Keys to Becoming an Equity Partner | How to Achieve Partner Unity | The Seven Building Blocks of a Great Partnership
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“If they’re making money, we’re making money,” he said. “Why would I want to limit that?”

Anyone who agrees with that premise should continue to read below. If not, feel free to move on to the next CPA Trendlines article or the NY Times short crossword.

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Chase Birky: Overcoming Paralysis by Analysis

Be the author of your own story and chart a path not subject to the control and opinions of others.

^ Click to play video | > Play the podcast and follow CPA Trendlines Podcasts on Apple Podcasts here or grab the RSS feed here.

Transformation Talks
With Bill Penczak
Center for Accounting Transformation

Center for Accounting Transformation
Center for Accounting Transformation

Entrepreneurs in the accounting profession are rare, according to Chase Birky, president and CEO of Dark Horse CPAs. And he should know.

He had to take an uncomfortable step outside of his own comfort zone to become one.

MORE: Secret to Success? A Growth and Abundance Mindset | O.D. Lanier: Stepping Into Advisory | From Tax to Transformation | Early Adopters Gain an Edge in Audit | Why the Future is in Risk Advisory | Four Strategies for a Future Ready Firm
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After starting out in audit at a Big 4 right out of college, he decided it was no longer what he wanted to do.

“I started an audit specifically, you know, not really having a great idea of what audit truly was, you know, because you take the courses in your undergrad, and you know, you have a section of it on the CPA exam,” Birky explained. “But what that material is versus what the job is, you know, are two very different things.”

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Dustin Verity: Keep an Open Mind and Constantly Learn

Tech allows small to mid-size firms to provide better CAS.

^ Click to play video | > Play the podcast and follow CPA Trendlines Podcasts on Apple Podcasts here or grab the RSS feed here.

Transformation Talks
With Bill Penczak
Center for Accounting Transformation

Center for Accounting Transformation
Center for Accounting Transformation

Dustin Verity admits to being cautious. He also admits to being a technophile.

In the latest episode of Transformation Talks, the CPA explained being conflicted between his obsession with playing with the latest technology and finding the right fit for his firm.

MORE: Secret to Success? A Growth and Abundance Mindset | O.D. Lanier: Stepping Into Advisory | From Tax to Transformation | Early Adopters Gain an Edge in Audit | Why the Future is in Risk Advisory | Four Strategies for a Future Ready Firm
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I’ve always been interested in technology and, and you know, efficiencies,” Verity said, always wanting to know how his firm could produce more and work more efficiently. “That means less hours that we have to spend in the office ourselves.”  READ MORE →

Five Ways to Put Success into Succession Planning

A robust mentoring program can be critical.

Three climbers helping each other up a hill

By Bill Penczak

Legendary General Electric CEO Jack Welch is reported to have lamented the choice he’d made in his successor, choosing someone based on their personality and ability to navigate the politics of the position instead of someone who could successfully lead the company into a brighter future. Welch was correct. Today, GE is a shell of its former self because of its leadership choice.

MORE: O.D. Lanier: Stepping Into Advisory | Secret to Success? A Growth and Abundance Mindset | Future Firm Growth Requires a Mindshift |The Great Resignation: Five Reasons Accountants Are Quitting | Five Global CPA Leaders: Four Survival Strategies | Planning for Success in 2021 | Do You Have the Guts to Beat the Covid Crisis?
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Welch’s one gaping failure as an otherwise stellar executive started me thinking about the current state of baby boomer-led and owned CPA firms, and how many of them are likely to commit the succession errors of GE. Or worse, do nothing at all in terms of creating and sustaining a CPA firm into its next iteration.

As firms are giddy with the prospect of a new year and with COVID in our rear-view mirrors, here are five considerations for generational succession of a middle market firm:

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O.D. Lanier: Stepping into Advisory

Transformation Talks: A leader at one of the fastest growing firms in the country describes transforming his career, pros and cons of building versus buying and the four (or five) steps to becoming a consulting firm.

 


Transformation Talks
With Bill Penczak
Center for Accounting Transformation

Center for Accounting Transformation

How does an accounting expert journey from audit and Big Four to starting his own firm and becoming a consultant? Odysseus (O.D.) Lanier, a founding partner of one of the fastest growing firms in the country, describes his start, why he left “boring” auditing (but why it is critical experience), as well as what he sees as pros and cons in building a consulting firm versus buying a consulting firm.

MORE on McConnell Jones: Five Global CPA Leaders: Four Survival Strategies

MORE VIDEOS & PODCASTS:  Why Doing Nothing Is Not an OptionBlake Oliver: Why Tax Work Yearns To Be FreePrivate Equity Explodes in U.K. | Brannon Poe: The Status Quo Must Go  |  Accounting Nerds, Unlock Your Super Powers  | Private Equity vs. the CPA Firm Partnership The FinTech Flood: Accounting Will Never Be the Same  |  Think Small to Think Big with Matt Wilkinson | Your Sales Tax Headaches Are Only Just Beginning | When Financial Statements Go Extinct with Corey Schmidt  |  Can Geraldine Carter Save Accountants from Themselves? |  Re-Inventing Accounting with Tyler Anderson |  Turning Client Service into New Revenue

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Why are CPAs moving from tax and audit to get into consulting? Lanier said the bottom line is that consulting is lower risk with a higher margin.

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