Advice from Successful MPs

Source: Inside Public Accounting

Growth of accounting firms has been extraordinary. How do firms deal with it?

KBA Group, Dallas:

• Revenues grew 28 percent, but net income fell by 18 percent. The decrease was attributable to investments necessary to sustain the firm’s growth in areas such as technology, staff, and marketing.
• Managing partners reduced client work.

SMART, Pennsylvania:

• Revenues grew 28 percent, and net income grew 67 percent.
• SMART hired 55 employees from Andersen in 2002.

Pannell Kerr Forster of Texas

• Net income grew 34 percent.
• The firm hired a change management coach.

What MPs spend their time on:

• Office space.
• New technologies.
• Human resources function.
• Automation of client work.
• Hiring leaders (e.g., COOs and CFOs).

Accountants aren’t always the best people to manage the business. The COO, for example, can be a non-accountant.

Successful firms have been actively hiring. And the most successful firms are often found on the lists of the best places to work.

Terminating people who don’t perform or who aren’t compatible with the vision or culture of the firm is difficult but essential. Not doing so will stunt your growth.

Successful firms are willing to take risks—on client service, on people, and on changing in response to changes in the market.

Size does matter—because it gives you the resources to better serve larger clients.

Invest in growth resources right away. Don’t try to develop the infrastructure after the growth occurs.

Management’s attention must change in response to changing needs. Sometimes client satisfaction needs the most attention. At other times market positioning may be critical.

Don’t allow changing circumstances to distract you from your goals.

Characteristics of firms whose revenues grew more than 25 percent last year, compared to other firms, include:

• Had more than $10 million in revenues.
• Very little growth came from mergers.
• Higher turnover.
• Higher compensation.
• Utilization was 71 percent.
• CPE hours were higher.
• Partners charged more hours.
• Partners had higher billing rates.
• Partners were younger.
• Belonged to associations.

From Inside Public Accounting, January 2007, p. 1. The Platt Consulting Group (www.plattgroupllc.com). Subscription $369 per year; back issues—nonsubscribers $40. 317-733-1920.