Your Firm is Smart, But is it Intelligent?

Source: CPA Practice Management Forum

Has your firm ever been surprised by the loss of a long-time client? If the answer is yes, you may not be as intelligent as you think. Your market and competitive intelligence may be weak.

Intelligence includes knowledge of:

• Market trends.
• Pricing trends.
• Compensation trends.
• New service offerings by competitors.
• Client plans and activities.

Conclusions should not be drawn from individual bits of information but rather from patterns emerging from several sources, such as:

• Information from audit fee negotiations.
• CPA society meetings.
• Senior people hired from other firms.
• Articles in newspapers and other media.
• Surveys by associations or research firms.

Intelligence is gathered and analyzed in four phases:

• Scoping—If the scope is too wide, you will be inundated with useless information. For example, do you need to know consumer trends in China? For a CPA firm the scope is likely to include client industries you serve, services you offer, geographic markets you serve, and your competitors. But you may want to enlarge your scope somewhat beyond the parameters of your current business. Formidable competition may come from firms entering your market from just beyond it—or maybe from India. It is also often valuable to study other industries and adapt some of their best practices. For example, maybe CPA firms can learn something about client self-service from other industries.
• Gathering—This role will involve several people in the firm who monitor specific sources of intelligence, including people within the firm. For example, the switchboard operator may be getting an increasing number of calls from recruiting firms.
• Analysis—Your team will continually receive, filter, organize, and interpret intelligence received.
• Action—Distribute a periodic intelligence report, and devote a portion of your management meetings to evaluating its contents and deciding on action.

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From CPA Practice Management Forum, CCH Incorporated, 800-449-8114, September 2008, p. 5, “The Intelligent CPA Firm.”

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