Benefits to building a niche firm

May 22, 2012

By Craig M. Steinhoff, CPA.CITP, Principal, Hill, Barth & King LLC

An accounting firm is no different than most other businesses. We battle with balancing areas of our business: client service, staffing, marketing and training. All of these must be handled while continuing to keep a watchful eye on the bottom line and ensuring a nice return for our shareholders.

CPA firms, similar to most other companies today, do not like to change. “Stay the course. If it’s not broke, why fix it? Let’s do what we did last year.” These are sayings I’ve heard throughout my career. Albert Einstein said “Insanity is doing the same thing over and over again and expecting different results.” Therefore, the business plan of most CPA firms can be defined as insanity. Unless firms are willing to change, they shouldn’t expect different results (in their bottom lines, in employee morale or in the ability to attract and retain the best clients and talent).

Jim Collins said it perfectly in his book, Good to Great. Collins said, “Managing your problems can only make you good, whereas building your opportunities is the only way to become great.” One way firms have been able to outperform others is by identifying and building opportunities. Many CPA firms have made the decision to build or acquire a niche that sets them apart from the typical CPA firm. Some niches I’ve seen firms have success with are focusing on a particular industry: construction, healthcare or nonprofits. Other firms have created a niche product or service offering (i.e. financial planning or wealth management). Additionally, some CPA firms have identified a professional credential (i.e. PFS, CFE, CITP, etc.) they feel will set them apart.

All the niches identified above can turn an average firm into a firm that its peers and clients view as a leader in the marketplace. However, the firm and its leadership must ensure certain things are carried out before it can expect success:

Identify the right niche: Simply because all of the surrounding firms in your area have built a wealth management division, doesn’t mean you should too. Instead, I recommend that you focus your attention on an entirely different niche idea, because it would allow you to become the sole expert in your geographic area. In the end, choose an area that makes sense for the size and location of your firm. For example, a three person firm shouldn’t attempt to develop a SEC niche and a firm in downtown New York shouldn’t attempt to develop a farming niche.

Find the right people: Another great Collins quote from Good to Great is, “great vision without great people is irrelevant.” The only way for a niche to succeed is to build or attract the right folks to run it. This is the reason many firms have failed to build a niche. Once a niche has been identified, firm leadership needs to identify the plan to find or create the right people to take ownership of it. I should also stress that the right person to run the niche isn’t always the person who has the most experience in the niche. Sometimes the best leader for a niche is the one with the most passion for it and that’s not always the most tenured individual. Additionally, sometimes the right person doesn’t currently work for your firm. Find him or her!

Whatever your firm decides; to build or acquire a niche – or do nothing at all. I hope that your firm’s business plan won’t be defined as insanity for too much longer. And if you’re still serious about building a niche practice, read the how-to feature in the May issue of CPA Voice.

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What it’s like to testify at the statehouse

May 14, 2012

By James D. Gottfried, CPA, Chair, The Ohio Society of CPAs

Last March, I represented OSCPA testifying on HB 368 before the Ohio House Finance and Appropriations Committee. It was a personally rewarding and eye-opening experience that I hope more members will get a chance to experience.

This proposed legislation would create a Long-Range Financial Outlook Council made up of an impartial group of government and private-sector experts. The council created by the proposed legislation would be charged with developing an annual report on Ohio’s financial outlook looking forward four years. This will be a formal, consistent and ongoing documented process that will produce a report available to government personnel and the public. Every year the outlook will be updated and rolled forward another year.

Would Ohio’s adoption of a long-range financial outlook put an end to all state financial issues? Of course not. It would, however, help ensure future issues are identified and analyzed. It would help government and business leaders better examine and prepare for future challenges and opportunities. All of which would be good for Ohio.

This proposed legislation is yet another example of OSCPA recommendations coming to fruition. Along with several other suggestions, such as performance audits, streamlining of government services and strategic planning, requiring a long-range financial outlook was a core provision in OSCPA’s Budget Advisory Task Force Report.

By formally testifying before the committee, we had the opportunity not only to state our continued support for the legislation, but to help move its passage forward by emphasizing the benefits and answering questions from the committee members. This was NOT just a perfunctory reading of prepared testimony to a small group of disinterested House members. OSCPA member Michaela R. McGinn, CPA, talks about testifying at the Ohio Statehouse: http://tinyurl.com/oscpamcginn. As best as I could tell, nearly all committee members were present. They were actively engaged and participating in the process. There were several follow-up questions from committee members in both parties. I take this as positive indication that they were prepared and interested in discussing the proposed legislation.

This was the first time I had the opportunity to testify before a legislative body. I felt comfortable with the written testimony and the summarized verbal presentation to the committee. It was more difficult preparing for the reaction of the committee members and the types of questions they might ask. I wanted to make sure I was prepared to respond calmly and rationally if someone became hostile or negative.

Fortunately, these concerns did not materialize. One line of questioning seemed to center on the proposed legislation failing because the planning process would be politicized. The committee member was concerned that whichever party happened to be in control would “stack the members” of the proposed council in its favor. Our answer to that concern is making sure the council is balanced and bipartisan, just as the proposed legislation is drafted.

It’s a personal honor to represent the OSCPA and you as members in any forum. I’m certainly not the first to testify before Ohio or federal legislative committees. Watch OSCPA member Michaela R. McGinn, CPA, talk about her experience testifying at the Ohio Statehouse at http://tinyurl.com/oscpamcginn. I would like to expressly thank all those in the past who have taken the time and effort to represent OSCPA before legislative committees. Your efforts are greatly appreciated!

I’m also not the last to be asked to testify. Please consider volunteering to testify on future testimony; we need you! There will always be a need for specific subject-matter experts to represent the OSCPA on important legislative matters impacting the profession. My experience was both interesting and rewarding. I hope as many of you as possible can have the same experience.

Know that you don’t have to go it alone. Barbara Benton, CAE, OSCPA’s vice president of governmental affairs, and Amy Mignogna, MPA, CAE, OSCPA’s director of tax policy, are invaluable resources and will work with you all the way through the development and presentation of the testimony. Our governmental affairs team has decades of experience with governmental relations and can offer guidance, perspective and input. To volunteer, contact OSCPA’s Governmental Affairs team at government@ohio-cpa.com or 800.686.2727.

I found the whole process interesting and enlightening. As formal and imposing as it might appear at first blush, it wasn’t that way at all. It was a great experience and I heartily recommend you make the effort to try it if the opportunity arises.


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