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CPA Leadership Report
Expanding Your Knowledge While Conserving Your Time
Vol. 9 No. 5, May 2011
Here is your April issue of CPA Leadership Report, published monthly by CPA Leadership
Institute, Inc., 200 East Randolph, 24th Floor, Chicago, IL 60601. Editor-in-Chief: Joel Shiffrin,
CPA, MBA. [email protected], 888-406-0088.
Practice Management
1. Why Many CPA Firms are Underperforming
Tracking six key profit drivers can provide the answer.
CPA Practice Management Forum
2. Top Firms Pay Better, Charge More
Research shows the behind-the-scenes difference at top firms.
CPA Trendlines
3. New Understanding Equals New Outcomes
L. Gary Boomer challenges firm leaders to take a look at the environment within their
firms and how it affects firm results.
Accounting Today
4. Qualities of a Great Leader
Want to know what it takes to lead others well? Find out what CPAs in leadership have to
say on the subject.
Journal of Accountancy
5. Six Reasons to Abandon the Billable Hour The ABH (almighty billable hour) is not an ECE (extraordinary customer experience).
VeraSage Institute
6. Take a Look at the Future
Join the AICPA to create a vision for the future of the CPA profession.
CPA Success
7. Big Firms Continue Their Uphill Battle
A report reveals that revenue has declined at the nation‟s top firms for the second year in
a row.
CPA Trendlines
8. The Difference Your Mindset Makes
Tamera Loerzel shares her vision for building a team of healthy, positive, and productive
thinkers.
Convergence Coaching, LLC Inspired Ideas
9. Hiring the Disabled is Good for Business
For accounting firms, there are significant benefits to recruiting people with disabilities.
The CPA Journal
10. Rules Can be Counterproductive
Rules are a weak leader‟s first line of defense.
Solutions for CPA Firm Leaders
11. Technology That Can Save Your Firm Time and Money
Firms reveal how they‟re using technology to save time, improve client services, and
increase revenue.
Journal of Accountancy
12. Learn to Manage Your Time
Blogger Angie Grissom gives a brief, practical overview of Franklin Covey‟s simple time
management matrix.
The Rainmaker Academy
Succession Planning and M&A
13. Merging for All the Wrong Reasons
There are many good reasons to merge, but they‟re outnumbered by the many reasons not
to merge.
Public Practice
14. To Succeed in Succession You Need a Plan
The vast majority of CPA firm partners recognize the importance of succession planning,
but only 31 percent actually have a plan.
Accounting Today
15. The Merger-Mania Trend
Why are so many accounting firms merging? Should your firm join the merger-mania
trend?
CPA Success
Marketing
16. Business Development: A Changing Environment
Learn how your firm can improve its business development strategy.
Accounting Today
17. Measures for Success
Don‟t just measure your firm‟s accomplishments. Use your measurements to make your
team more successful.
RainToday
Niche Services
18. Cash In on the Hottest Litigation Sub-Niches A new study lists the top four litigation areas in which lawyers can earn top dollar from
corporate clients. And if lawyers can cash in, so can the CPAs who advise them.
CPA Trendlines
Surveys
19. Highlights From the MAP Survey
The AICPA‟s Private Companies Practice Section and Texas Society of CPAs recently
published results of their biennial National MAP Survey.
Journal of Accountancy
Risk Management
20. Closing the Gap Between Risk Management and Performance Management
Frequently, there‟s a gap between the objectives of these two processes.
AICPA CPA Insider
21. When Managing Risk, Get Your Priorities Straight
Traditional risk management approaches overlook one key factor: Management‟s ability
to influence or control either the impact or likelihood of a given risk.
AICPA CPA Insider
Books
22. 101 Marketing Strategies
In this month‟s issue we present Chapter 12 of 101 Marketing Strategies, by Troy
Waugh. The book – designed for senior associates and partners of accounting, legal,
consulting, and other professional business service firms – offers Waugh‟s proven
process model for selling professional services. We present one chapter per month, or
you can order the book now at 888-797-RAIN (7246) or via
Practice Management
Why Many CPA Firms are Underperforming
Source: CPA Practice Management Forum
According to consultant Shannon Vincent, many CPA firms recognize that they are
underperforming, but they don‟t understand the reasons. The solution, Vincent says, is to track
these six key profit drivers:
1. Productivity
2. Work-in-process (WIP)
3. Average hourly charge rate
4. Write-ups/write-downs
5. Accounts receivable
6. People leverage
Unfortunately, most firms fixate on productivity – or “utilization” – alone, which can backfire.
For example, if a firm sets a utilization goal, employees may focus on easier (though not
necessarily more profitable) jobs to “get their time on the clock” and may be more concerned
with time than effectiveness. As a result, there‟s no incentive to complete jobs, which can lead to
long turnaround times, dissatisfied clients, and hefty write-offs.
Vincent emphasizes that his solution works only if firms track all six profit drivers and
implement them at the same time. He offers tips on how to get started, explains the key role
pricing plays in improving firm performance, and provides a case study to illustrate the tracking
process.
Tracking key profit drivers can produce significant performance improvements. “In most firms,”
Vincent says, “even if they had to hire someone to do only tracking of their numbers, they would
see returns.”
For the complete article, read “Track Your Key Profit Drivers.” – http://bit.ly/hDFdOE
From CPA Practice Management Forum, CCH Incorporated, 800-449-8114, May 2011, p. 5.
Top Firms Pay Better, Charge More
Source: CPA Trendlines
The following includes excerpts, reproduced with permission, from an article in CPA Trendlines.
The best firms, according to INSIDE Public Accounting, start paying more from the first day and
from the bottom up. For instance, IPA‟s Best of the Best pay new graduates about $55,000,
compared to $50,000 paid by their competitors – a 10 percent advantage that generally carries
through every job level.
But the best also bill for the difference, starting with administrators, who get billed out at $102
per hour, compared with $85 at average firms – a 36 percent difference. Now that‟s leverage.
The best operate differently in other ways, too:
They provide more benefits options,
They budget 35 percent more for training, and
They‟re raising rates about 3.9 percent, which is about 40 percent more aggressive
than competitors.
For the complete article, read “No Surprise: The Best Firms Pay More.” – http://goo.gl/TneIB
From CPA Trendlines, http://cpatrendlines.com, April 3, 2011.
New Understanding Equals New Outcomes
Source: Accounting Today
This article by L. Gary Boomer challenges firm leaders with the idea that their business
outcomes are directly linked to the environment fostered within their firms. Boomer identifies
change management, accountability, and the need to increase revenue as some of the top
challenges facing firm leaders.
Boomer says that to improve outcomes leaders need to look at the beliefs behind their team
members‟ actions. According to Boomer, addressing beliefs rather than actions will produce
more lasting results.
In order to change beliefs, education is a must. Investing in team members by giving them
learning and teaching opportunities leads to more desirable business outcomes and, as a bonus,
increases your firm‟s rate of retention.
As for the role of accountability in improving your firm‟s environment and outcomes, Boomer
encourages leaders to offer simple, clearly stated expectations so that firm members know what
they need to accomplish. Boomer provides a recommended list of expectations and suggests that
expectations and compensation be closely tied to one another.
If firm leaders want or need help improving the environment within their firms, Boomer
encourages them to get it, acknowledging that it can be difficult to make such major changes to
your own work environment.
For the complete article, read “Want to change your results? Change culture.” –
http://goo.gl/sfuqn
From Accounting Today, March 1, 2011, SourceMedia Inc., One State Street Plaza, 27th Floor,
New York, NY 10004, 800-221-1809.
Qualities of a Great Leader
Source: Journal of Accountancy
Alexandra DeFelice interviewed CPAs who have risen to roles of considerable leadership and
responsibility about the qualities required to become a successful leader. Following are
highlights from those interviews.
According to the CPAs interviewed, good leadership requires:
A strong ability to communicate, including the ability to respond to questions or clearly
explain an idea in the moment and to inspire others in the midst of challenging
circumstances.
Sensitivity toward the emotional aspects of a situation and the people involved – that is,
having emotional intelligence. Emotional intelligence includes understanding your own
strengths and weaknesses, addressing those areas in which you need growth, relating well
to others, and the ability to see a situation from another person‟s perspective.
Considering other‟s needs before your own.
An ability to manage time well, including balancing work and personal responsibilities.
That may require keeping a basic “to-do” list, creating work boundaries to protect
employees from logging too many hours, or literally scheduling time for your own family
to keep from consistently working too much.
For the complete article, read “What Does It Take to Lead?” – http://goo.gl/VoI4Z
From Journal of Accountancy, American Institute of Certified Public Accountants, April 2011,
http://www.journalofaccountancy.com/Issues/2011/Apr.
Six Reasons to Abandon the Billable Hour Source: VeraSage Institute
The following includes excerpts, reproduced with permission, from a blog post by Ed Kless.
The majority of professionals I encounter still bill their customers by the hour. Some have even
twisted the idea into thinking it is the right thing for a customer. “You will only pay for what you
need,” they claim.
I am here to tell you using the ABH (almighty billable hour) is not an ECE (extraordinary
customer experience). Sage partner Sonia Grey once told me that after she switched to fixed-
price agreements, one customer told her, “I am so glad you price this way now. I always thought
the billable hour was a license to steal.” Wow!
Here is a list of just the customer experience reasons to abandon the ABH, based on Chapter 7 of
Ron Baker‟s treatise Professional’s Guide to Value Pricing: – http://goo.gl/tqByj
1. It creates a conflict of interest between the consultant and the customer.
2. It focuses on efforts, not on results.
3. It shifts the risk of the engagement back to the customer.
4. It creates a corporate welfare system (subsidizing your C and D customers by taking
more from your A and B customers).
5. It makes you a lazy project manager. (The customer is “paying for what it needs,” so
scoping and change requests become non-issues).
6. It does not set your price up front.
For the complete post, read “The ABH is not an ECE.” – http://goo.gl/9CbUX
From VeraSage Institute, http://www.verasage.com/index.php/community, April 1, 2011.
Take a Look at the Future
Source: CPA Success
The following includes experts, reproduced with permission, from a blog entry by Tom Hood.
What is over the horizon? What are the trends and issues that will have an impact on the CPA
profession as a whole?
What if we crowd-sourced the answers to all of us? That is what CPA Horizons 2025 is about.
High-tech surveys, high touch, randomly selected members for in-person future forums and
focus groups, getting to the answer of what our vision is for the CPA profession in 2025.
One of my career highlights was being a volunteer on the first CPA Vision Project
(http://goo.gl/BcZMy), where we worked on a vision for the year 2011. We got almost 3,500
CPAs in future forums along with students, regulators, and thought leaders to help come up with
a vision, a purpose, core values, core competencies, and core services. The top five issues facing
CPAs came out as follows:
The future success of the CPA profession relies a great deal upon public perceptions of
CPAs‟ abilities and roles.
CPAs must become market-driven and not dependent upon regulations to keep them in
business.
The market demands less audit and accounting and more value-adding consulting
services.
Specialization is critical for the future of the CPA profession.
The marketplace demands that CPAs be conversant in global business practices and
strategies.
Well, it is 2011 and time to renew that vision.
The AICPA has some great resources. Start by scanning the research and background
(http://goo.gl/AcKf7) assembled from its work with several “futurists” and published reports
about the world in 2025. The Global Forces video (http://bcove.me/6gxfhz25) put together by the
AICPA video team is a must see! Then take the survey (http://goo.gl/4CNVj) and join the
conversation (http://goo.gl/RGpoK) to help create the vision for 2025.
For the complete article, read “What‟s over the horizon for the CPA profession?” –
http://goo.gl/kvZhC
From CPA Success, the blog of the Maryland Association of CPAs, www.cpasuccess.com,
March 28, 2011.
Big Firms Continue Their Uphill Battle
Source: CPA Trendlines
The following includes excerpts, reproduced with permission, from an article in CPA Trendlines.
So, when‟s the rebound?
The revenue decline is the second in a row for the profession‟s largest firms. Although the top-
line shrinkage is slowing, firms continue to cut back partners and staff.
The bigger the firm, the tougher the year:
Only Deloitte, No. 1 in the rankings, with $10.9 billion in revenue, could boast of
revenue gains – up 2 percent.
You need to go to the 14th spot on the list to find the next firm with positive results –
Marcum, up 7 percent, to $251 million. Then skip a few rungs to LarsonAllen at 18th,
Reznick at 21st, and Eide Bailly at 24th.
In all, 43 of the top 100 suffered revenue declines; 19 of them were among the top 25.
37 firms cut partners; 16 of them were among the top 25 firms.
54 firms cut professionals; 19 in the top 25.
The biggest losers:
1. UHY Advisors, down 13 percent, to $205 million.
2. Mohler, Nixon & Williams, down 10 percent, to $33 million.
3. Anchin, Block & Anchin, down 8 percent, to $89 million.
4. Baker Tilly Virchow Krause, down 8 percent, to $238 million.
5. Ernst & Young, down 7 percent, to $7.1 billion.
6. Aronson, down 7 percent, to $57 million.
7. SVA, down 7 percent, to $45 million.
8. Holtz Rubinstein & Reminick, down 7 percent, to $33 million.
9. Joseph Decosimo & Co., down 6 percent, to $38 million.
10. Kaufman Rossin & Co., down 6 percent, to $44 million.
Overall, the top 100 firms garnered $42.6 billion in revenue, down 2 percent from the year
before; and total employment sank about 1 percent, to 184,429 partners and professionals.
For the complete article, read “Revenues Sink 2% at Top 100 Firms.” – http://goo.gl/t6cIH
From CPA Trendlines, http://cpatrendlines.com, March 15, 2011.
The Difference Your Mindset Makes
Source: ConvergenceCoaching, LLC Inspired Ideas
The following includes excerpts, reproduced with permission, from a blog entry by Tamera
Loerzel.
My partner, Jennifer, just wrote a great article, “Harness the Power of Team,” for CPA Insider
(http://goo.gl/wdRev). In her article, Jennifer expressed, “It saddens me to see how little
teamwork exists anymore… Instead, we focus on ourselves or our microcosm, competing
internally for people, clients, recognition, money and more to ensure that our goals are met and
our turf is protected.” Jennifer goes on to explore eight “rules of engagement” for teams, and I
want to offer a possible context in which to build on these eight rules, and that is the context of
abundance.
If you were to build a team that comes from abundance, how would your team members think if
they were abundant thinkers?
Abundant thinkers give selflessly – As a result, abundant thinkers attract positive, fulfilling,
and reciprocal relationships in their life and work teams, where both parties help contribute
positively to one another‟s lives – or in the case of a team, contributing positively to the
individual team members and the greater good of the team.
Abundant thinkers are more positive and happier – Abundant thinkers focus on what is
possible while striving towards both personal and team goals. And, in the process, abundant
thinkers do identify areas that need improvement, but from the perspective that the glass is half
full.
Abundant thinkers focus on the future – If you keep focusing on the past – what‟s not
working, what you don‟t have, or the way you wish things could be – how are you ever going to
make change happen? Instead of looking backwards all of the time, focus your energy on the
future and how you can change your situation.
For the complete article, read “Abundant Teams.” – http://goo.gl/KERLu
From Convergence Coaching, LLC Inspired Ideas, http://blog.convergencecoaching.com, March
30, 2011.
Hiring the Disabled is Good for Business
Source: The CPA Journal
Twenty-one years after the Americans with Disabilities Act (ADA) became law, society is doing
a better job of accommodating disabled persons, and predictions of prohibitive compliance costs
have not materialized. For accounting firms, there are several significant benefits to recruiting
people with disabilities, including:
Tax incentives that reduce the cost of accommodating disabled employees
Expanding the pool of talented workers and sending a positive message to potential
employees
Tapping the wisdom of “seasoned accounting veterans” who happen to have physical
disabilities
Attracting clients who are disabled, have disabled employees, or simply appreciate a firm
with a diverse work force
Often, the modifications needed to accommodate disabled workers are very simple, such as
raising or lowering a desk, installing a ramp, purchasing an ergonomic chair, or making an
exception to the firm‟s dress code.
For the complete article, read “Recruiting the Disabled: Hidden Assets.” – http://goo.gl/5HU6n
From The CPA Journal, A Publication of the New York State Society of CPAs, April 2011.
Rules Can be Counterproductive
Source: Solutions for CPA Firm Leaders
The following includes excerpts, reproduced with permission, from an article by Rita Keller.
Do you sometimes feel like you have TOO MANY rules inside your firm?
While I am a huge advocate of processes, procedures, and systems to streamline repeatable tasks
inside your firm, I also believe that being too rigid crushes creativity, continual improvement,
and, sometimes, fun.
Do you use rules to hide behind and to avoid much-needed change inside your firm?
Dan Rockwell, on his blog – Leadership Freak (http://leadershipfreak.wordpress.com) – has a
great post about How to Rule Out Rules (http://goo.gl/iT0ca).
In the CPA profession, you must work with a certain amount of rules. But you don‟t have to
stifle your people and yourselves with rules, especially if you find that you are using rules
because you are a weak leader.
Think about this comment from Rockwell:
Rules are a weak leader’s first line of defense. Every time something goes wrong, weak leaders
create new rules to prevent failures. Writing rules is a backward-facing attempt at solving past
problems.
Organizations that rely on rules suggest weak leadership, organizational confusion, poor
communication, and disengaged employees. Rules drain joy, quench motivation, stifle creativity,
and choke productivity. Worse yet, rules create the wrong kind of work.
I find that some firms have not invested in the kind of training and coaching that helps their
managers and partners set the proper example and become inspirational leaders. Many of the
firm‟s highly productive, knowledgeable technicians, who have been promoted to manager or
even partner, are actually poor leaders, and simply great enforcers (“Do it my way, the way we
have always done it.”).
In conclusion, I urge you not to delay examining the inside health of your firm. If you identify a
weakness, seek a solution.
For the complete article, read “Are You Over-Ruled?” – http://goo.gl/UwKhB
From Solutions for CPA Firm Leaders, Rita Keller‟s CPA Management Newsletter,
www.ritakeller.com, April 13, 2011.
Technology That Can Save Your Firm Time and Money
Source: Journal of Accountancy
Based on results of the 2010 PCPS/TSCPA National MAP Survey, Alexandra DeFelice reports
on how firms are using technology to serve clients better and faster, ultimately increasing their
own revenue.
According to the survey, the most-utilized technology is time and billing software, followed by
use of multiple computer screens and actively maintained websites. DeFelice interviewed firms
to find out how they are using these and other technologies to increase their speed and level of
client service.
For example, 52 percent of firms said they used a paperless system, a technology that can be
used to save time tracking workflow and finding files. One firm reported that its digital system
enabled each of its seasonal employees to use the same process for tax preparation. Another firm
said it saved 15 percent to 20 percent in time no longer spent searching for paper files. Another
implemented a paperless reporting system with a major client that saved the firm money and
saved the client approximately $41,000 in mailing costs! Firms also said that paperless systems
eliminate the need for paper storage and increase available space in the office for other needs.
One firm went from 20 filing cabinets to three, using the space for a computer training lab and
work areas for employees who usually work remotely.
Other ways that firms reported benefitting from technology include the following:
Portals for fast and secure exchange of information with clients.
Multiple computer screens – in some cases as many as three or four screens per desk –
for increased efficiency, allowing for simultaneous viewing of multiple documents or
programs.
Time and billing software used to determine whether projects are time- and cost-efficient.
For the complete article, read “Survey Highlights Emerging Tools for Firms of All Sizes.” –
http://goo.gl/TYsxI
From Journal of Accountancy, American Institute of Certified Public Accountants, April 2011,
http://www.journalofaccountancy.com/Issues/2011/Apr.
Learn to Manage Your Time
Source: The Rainmaker Academy
The following includes excerpts, reproduced with permission, from a blog entry by Angie
Grissom.
Franklin Covey‟s time matrix tool is a matrix comprised of four quadrants. It is designed to
reveal how you are spending your time and to show you how it may benefit you if you
redistributed your time in other quadrants.
Quadrant 1 is both urgent and important. An example is a top client showing up at your office
with a big problem. You better not put this one off. There is no escaping Quadrant 1 time. If you
spend all of your time in Quadrant 1, chances are you are stressed out and in crisis mode much of
the time.
Quadrant 2 is the quadrant that I adore. This is the important but not urgent quadrant. Spending
your time working on preparing for client meetings, and writing plans and presentations is what
this quadrant is made of. If you schedule adequate time in Quadrant 2, you will find yourself
calmer, more collected and very well prepared for your responsibilities.
Quadrant 3 is the quadrant that is urgent but not important. Things that fall here are phone calls
from potential vendors. They are urgent because they are on the phone right now, but they are
not necessarily important to what you are doing. We must try to control the amount of time spent
in this quadrant.
Quadrant 4 is the not urgent and not important category. Activities that fall here may be
browsing the Internet or playing a game on the computer. The danger comes when you spend too
much time here.
The key to effective time management is to control how much time you spend in each quadrant.
For the complete blog entry, read “Quadrant Two Time.” – http://goo.gl/oA7PB
From The Rainmaker Academy, http://www.therainmakeracademy.com, February 28, 2011.
Succession Planning and M&A
Merging for All the Wrong Reasons
Source: Public Practice
According to consultant Bill Reeb, there are many good reasons to merge, but they‟re
outnumbered by the many reasons not to merge. Common reasons cited by firms looking to be
merged into another firm include getting more for their retirement benefit, a lack of leadership
ability on the part of the remaining partners, a shortage of talent, or unimpressive financial
performance. The first reason, Reeb says, usually isn‟t the case. The others involve merging so
that the other firm can “save us from ourselves.”
Firms looking to acquire another firm often have legitimate objectives, such as building market
share, adding services, or expanding geographically. But in many cases their goal is to cure a
shortage of talent or partners with leadership potential, or to deal with partners who refuse to be
held accountable.
“In the end,” Reeb admonishes, “stop looking to other firms to fix what you have broken. There
are a lot of good reasons to merge, but none of them starts with „the other firm can fix our
shortcomings.‟”
In his next article, Reeb will discuss merger execution and how to optimize your chances for a
successful transaction.
For the complete article, read “Merger – To be or Not to Be, that is a Good question” –
http://bit.ly/idKmWc
From Public Practice, Texas Society of CPAs, April 2011, www.tscpa.org.
To Succeed in Succession You Need a Plan
Source: Accounting Today
Statistics show that the vast majority of CPA firm partners recognize the importance of
succession planning, but only 31 percent actually have a plan. In this article, several accounting
industry consultants emphasize the need to start developing potential successors as early as
possible.
That means developing a culture (including annual reviews and appropriate compensation) that
nurtures “key behavioral characteristics” needed to lead a firm. It‟s also critical to “engage
younger staff” and to use mentoring and other techniques to guide them along the leadership
path.
It‟s equally important to develop successors when using mergers and acquisitions to bring in
potential leaders. To do this, you should focus on the talent and due diligence aspects of a
transaction.
For the complete article, read “Filling your shoes: Succession planning requires creating your
own successors.” – http://goo.gl/sykaL
From Accounting Today, March 1, 2011, SourceMedia Inc., One State Street Plaza, 27th Floor,
New York, NY 10004, 800-221-1809.
The Merger-Mania Trend
Source: CPA Success
The following includes experts, reproduced with permission, from a blog entry by Tom Hood.
In 2009 there were 67 CPA firm mergers (in the Top 100 firms) totaling $821 million, and
the AICPA estimates that the number of firms nationally will shrink from 47,000 to 40,000 over
the next five years.
There are several major trends converging.
1. The Great Recession of 2008 (2009 and 2010) is receding and firms are seeing growth.
2. Baby Boomer partners are now thinking about retiring again.
3. Globalization is real.
4. Standards overload.
5. Lack of succession planning among CPA firms despite the many “wake-up” calls over
past five years.
6. Lack of leadership.
These are major trends by themselves. Taken together, you get merger-mania at all levels.
Here is what I am seeing:
1. Top 100 firms are working to build national and international footprints.
2. Regional firms are looking to strengthen secondary metro markets and broaden their
service lines and talent thru acquisitions/mergers.
3. Local firms struggling to keep up with proliferation of standards and regulations are
looking to economies of scale, new services, and talent as they acquire smaller practices.
So what should you do about this?
It all starts with your vision, purpose, strategy. Does it fit your strategic plan?
Second, will it fit your culture? This is probably the most significant factor. Despite the focus on
compatible systems and structures, none of these matter if the people cannot work well together.
Once you make the decision, I suggest a major collaborative planning session to reestablish the
new collective vision, values and strategy that will reestablish your intentional culture. The costs
of not doing this can be significant.
For the complete blog post, read “Do you have the urge to merge?” – http://goo.gl/U1wgt
From CPA Success, the blog of the Maryland Association of CPAs, http://www.cpasuccess.com,
March 29, 2011.
Marketing
Business Development: A Changing Environment
Source: Accounting Today
In this article, Bill Carlino offers insights about the changing role of business development
within accounting firms. Here are a few ideas Carlino gathered from industry insiders:
1. Partners must stand together on the firm‟s plan for business development, and their
business decisions need to reflect their commitment to that plan.
2. Firms need to merge their marketing and business development efforts.
3. Firms should pursue opportunities to serve as consultants on smaller issues in order to
develop relationships with clients. The consulting brings in additional revenue, and the
foundational relationship with the client may lead to larger engagements such as taxes
and audits.
4. Hire salespeople, perhaps according to niche specialties, to coordinate development
efforts with partners. Utilizing salespeople enables partners to focus more on their areas
of expertise and decrease their nonbillable hours previously spent on business
development.
For the complete article, read “If you want sales, hire a salesman.” – http://goo.gl/OvhSi
From Accounting Today, March 1, 2011, SourceMedia Inc., One State Street Plaza, 27th Floor,
New York, NY 10004, 800-221-1809.
Measures for Success
Source: RainToday
In this article, Ken Thoreson explains how companies can improve sales by keeping a close eye
on their sales strategies and paying attention to how they are being executed. According to
Thoreson, successful companies look carefully at every aspect of their sales process (that is, the
expense of a sale, amount of market share, individual sales success, etc.) to uncover problem
areas and make necessary changes.
Thoreson suggests that a company establish clear guidelines and goals, and that its salespeople
align their goals with the company‟s bigger picture – an effort that will not only help a company
be more successful, but that will also make it easier to measure each individual‟s
accomplishments. Specific areas to measure are listed in detail for both the company and its sales
team, including actual sales vs. goals, win-loss rate per salesperson, salesperson profits compared
to overall profits, and new sales compared to total sales.
In addition to tracking accomplishments, Thoreson recommends looking at indicators to predict
future outcomes. This way, companies can be proactive about establishing patterns that will most
likely lead to success – measurable patterns such as the number of new prospects contacted each
week by phone, and the number of in-person sales calls made each week.
For the complete article, read “Pay Attention to the Numbers: Using Metrics to Improve Sales
Results.” – http://bit.ly/hLRhbC
From RainToday, www.raintoday.com, March 9, 2011.
Surveys
Highlights From the MAP Survey
Source: Journal of Accountancy
The AICPA‟s Private Companies Practice Section and the Texas Society of CPAs recently
published results of their biennial PCPS/TSCPA National MAP Survey. Here are some of the
highlights:
In 2010, turnover rates for all staff were 12.8 percent, down from 13.5 percent in 2008.
In 2010, partner billing rates increased by an average of 4.7 percent from 2008.
In firms with $5 million to $10 million in revenue, 36 percent reported modest growth
(up to five percent), and more than one-third reported a decrease in gross fees from 2008,
although revenue per partner increased.
For firms overall, 55 percent experienced some growth in gross fees from fiscal 2008 to
fiscal 2009. This broke down to 22 percent with growth between one percent and five
percent, 13 percent with growth between six percent and nine percent, and 12 percent
with growth between 10 percent and 19 percent. In 30 percent of firms, gross fees
dropped, while 15 percent experienced no change.
Overall, net remaining per owner – that is, net income per owner after paying benefits,
retirement, and certain other expenses – increased from $245,103 to $273,140 between
2008 and 2010. Broken down by firm size, however, results show that firms with revenue
between $500,000 and $10 million enjoyed an increase while other firms saw a decline.
Average net client fees per partner increased from $659,375 in 2008 to $798,951 in 2010,
with the biggest jump among firms with between $500,000 and $10 million in revenues.
Owner billing rates generally increased, but that didn‟t necessarily translate into
increased client fees.
For the complete article, read “Hitting the Target: National Survey Looks at How CPA Firms of
All Sizes Stack Up.” – http://goo.gl/w3ZMr
From Journal of Accountancy, American Institute of Certified Public Accountants, April 2011,
http://www.journalofaccountancy.com/Issues/2011/Apr.
Niche Services
Cash In on the Hottest Litigation Sub-Niches Source: CPA Trendlines
The following includes excerpts, reproduced with permission, from an article in CPA Trendlines.
Law firm marketing consultant Larry Bodine (http://blog.larrybodine.com) reports new results
from a BTI (http://www.bticonsulting.com/) market research study that shows the top four areas
in which lawyers “can earn top dollar from corporate clients with litigation.” And if lawyers can
cash in, so can the CPAs who advise them.
Here are the top four growth areas:
1. Commercial litigation, a market with $6.8 billion in legal fees. This high-growth, high-
fee litigation involves supplier agreements, strategic relationships and outsourcing
agreements that went bad. Industries seeing this litigation include energy, high tech and
manufacturing.
2. Employment litigation, a $4 billion market. These cases are driven by wage and hour
cases, trade secrets and federal reclassification of employees.
3. IP litigation, a $2.6 billion market. Companies were hoping to spend less on this area in
2011, but activity is increasing instead.
4. Securities litigation, a $2 billion market. This practice has the highest premium rates
because of increasing shareholder activism. The cases involve companies in banking,
financial services, chemicals and refineries.
For the complete article, read “The Four Hottest Areas in Litigation Consulting.” –
http://goo.gl/Ze78v
From CPA Trendlines, http://cpatrendlines.com, March 14, 2011.
Risk Management
Closing the Gap Between Risk Management and Performance Management
Source: AICPA CPA Insider
The following includes excerpts, reproduced with permission, from an article by Robert Torok,
CA. The article also includes a detailed example and charts.
The objective of a performance management system – and its underlying management processes
– is to enable managers and executives to understand what is going well, what is not, and what
the future might look like, given data from the past.
Similarly, the objectives of a risk management process are to provide warning signals of
impending or potential events that may impact the organization and quantify those impacts,
while enabling the organization to assess the efficacy of its mitigation strategies.
But there is frequently a gap between these two processes. This is because the performance
management and risk management processes are not intertwined. Therefore, risks are often
assessed and managed without a complete understanding of the broader performance
implications. Similarly, performance decisions are often made without regard for the risks they
may inadvertently aggravate or mitigate.
In bringing these two processes together, it is clear that strong performance management systems
should incorporate measures of risk and be able to predict future results if risks materialize
and/or risk mitigation actions are taken.
For the complete article, read “Leveraging Performance Management to Support Risk
Management.” – http://goo.gl/c8vdS
From AICPA CPA Insider, March 21, 2011, http://www.CPA2biz.com.
When Managing Risk, Get Your Priorities Straight
Source: AICPA CPA Insider
The following includes excerpts, reproduced with permission, from an article by Robert Torok,
CA.
Most organizations prioritize risk based on some combination of likelihood and impact, with
those perceived as high in both dimensions being given the highest priority. Of course, that
assumes organizations can define the basis on which impact will be measured and what the
various gradations from low to high even mean. The next challenge lies in assigning the correct
priority to those risks seen as high in one dimension but low in the other. The typical result in
such cases is some „middling‟ placement on a typical risk map.
But an equal consideration when prioritizing risk should be the degree of independence of a
given risk. At one extreme is the stand-alone risk, which can be assessed and actions taken
essentially in isolation. But these circumstances are rare indeed. At the other extreme there are
risks that correlated with others closely, thus spawning a web-like network of actions and
reactions. At a minimum, organizations must seek to identify those plausible combinations of
events that could cause serious adverse consequences and then identify actions that might
prevent or mitigate more than one risk.
Unfortunately, most traditional risk management approaches overlook one key factor:
Management‟s ability – or lack thereof – to influence or control either the impact or likelihood of
a given risk. The benefit of considering management‟s influence over each dimension of the
matrix is that it can deliver “quick wins” – the mitigation of risks that can be managed with
relative ease while avoiding the waste of resources against those risks that cannot be prevented
or mitigated ahead of time.
For the complete article, read “Risk Management – Setting Priorities by Likelihood and Impact.”
– http://goo.gl/ZzxiT
From AICPA CPA Insider, March 28, 2011, http://www.CPA2biz.com.
Books
101 Marketing Strategies
By Troy Waugh
In this month‟s issue we present Chapter 12 of 101 Marketing Strategies, by Troy Waugh. The
book – designed for senior associates and partners of accounting, legal, consulting, and other
professional business service firms – offers Waugh‟s proven process model for selling
professional services. We present one chapter per month, or you can order the book now (see
below).
Waugh‟s selling process includes three levels: (1) development of the relationship, (2) the buying
process of the client, and (3) the selling process of the professional. Tested and found highly
effective in hundreds of successful firms, this process is used throughout The Rainmaker
Academy‟s courses and in its leadership and business development programs for accounting
professionals.
Troy Waugh, CPA, MBA, CEO of The Rainmaker Academy, and author of two books, was
selected by Accounting Today as one of the “100 Most Influential People in the Accounting
Profession.”
To order the book, call 888-797-RAIN (7246) or e-mail [email protected].
Read this month‟s chapter. - http://bit.ly/hdUpdU
