Archive for the ‘Succession Planning’ Category

Wednesday, July 11th, 2018

Left Standing At The Altar

“Let the beauty of what you love be what you do.” – Rumi

Your accounting firm has several partners in their late 50s or early 60s. You don’t have enough young partners or future partners to take the firm into the future and still pay-out a significant amount of retirement dollars.

What do you do? The popular choice is to seek a larger firm to acquire your firm.

In a recent article for Accounting Today, Terry Putney and Joel Sinkin have shared ways to make your firm more attractive to acquirers. It used to be a seller’s market but it has now become a buyer’s market because so many smaller firms are looking for succession assistance.

A large firm is “looking at” your firm and another firm of similar size. The other firm has embraced technology and you are still not completely paperless. They choose the other firm and leave you standing at the altar.

Here are the Five Ways to Beautify Your Firm For M&A. Follow the link to read helpful descriptions about each of the five ways.

  1. Embracing technology
  2. “Brand” versus “partner” loyal
  3. Good clients and staff
  4. Niches
  5. Realistic terms

Thanks to Terry and Joel of Transition Advisors for this helpful information.

  • The future belongs to those who believe in the beauty of their dreams.
  • Eleanor Roosevelt

Thursday, May 24th, 2018

Bringing In New Partners

“The price of greatness is responsibility.” – Winston Churchill

Recently, Marc Rosenberg contributed an article to CPA Practice Advisor titled 7 Must-Haves for Accounting Firm Succession Plans. 

Rosenberg notes that 80% of first-generation firms never make it to the second generation because they have non-existent or ineffective succession plans.

If you want your firm to survive into the future, choosing the right partners is an important step. Often, owners make someone a partner without them truly understanding the expectations and responsibilities of a partner. Firms also often make someone a partner just because they don’t want them to leave the firm.

In his article, Rosenberg kindly shares his one-page list of criteria for promotion to partner. You can download it here. Be sure to read his entire article. Thanks for sharing, Marc.

  • Ninety-nine percent of all failures come from people who have a habit of making excuses.
  • George Washington Carver

Thursday, May 10th, 2018

Words of Wisdom from a Succession Planning Panel

“It is better to live rich than to die rich.” – Samuel Johnson

At the BDO Alliance conference, the Succession Planning panel was comprised of Marc Rosenberg, Jay Nisberg, Carl George and Bob Lewis. It’s important for you to keep tabs on current trends in the succession area and tweak your own plan as the years go by.

Daniel Hood, Editor of Accounting Today tweeted some great comments from the panel. I have selected a few for your contemplation.

  • Lewis: The first thing to do is look at the gaps – financial gap (can the successors support the retirees?), the talent gap (who can bring in work), the strategy gap (do you know where you want to be in 5 years?)
  • Nisberg: Too many Baby Boomers don’t see the people coming up behind them as having the same strengths they have. I assure you, they do – you just have to trust.
  • Rosenberg: Partners need to have a show-down meeting: When do they want to retire? What do they want from it? It’s a hugely emotional issue.
  • Nisberg: Vision is critical – highly successful firms have a vision that is the culmination of the will of the partners – where they want to go and how they want to get there.
  • Rosenberg: 80% of 1st generation CPA firms don’t make it to the second generation.
  • George: If you don’t put succession planning in partner goals and the compensation system, you will be stuck in the mud.
  • Lewis: It’s important that staff know there’s a succession in place.
  • George: A surprising number of firm leaders don’t understand the business of public accounting.
  • Lewis: In many firms, staff doesn’t understand firm revenue, the actual size of the firm. How can they operate in the dark?
  • George: Start teaching staff the business of public accounting on Day 1 – while you’re onboarding.
  • Rosenberg: Get everyone in the firm to understand how the firm works and how it makes money. That needs to happen at CPA firms. Partners are much too secretive.
  • Rosenberg: Staff doesn’t have a clue how much partners make – give them an idea because it’ll be higher than they expect.
  • Lewis: If a non-equity partner isn’t willing to convert to equity, then you don’t really have a partner.
  • Nisberg: I don’t understand why so many firms rush to M&A when there are so many other options.
  • George: I’m very happy to see more women than ever running firms — and they’re doing a great job.
  • Golf is played by twenty million mature American men whose wives think they are out having fun.
  • Jim Bishop

Tuesday, December 5th, 2017

Gender Study

“We realize the importance of our voices only when we are silenced.” – Malala Yousafzai

The AICPA Women’s Initiatives Executive Committee recently released the results of their 2nd annual CPA Firm Gender Study.

women-cpa-firms-gender-survey-768x493There has been little change. Women still make up less than one-quarter of partners in public accounting firms.

As usual, the smaller the firm, the more female partners.

Here’s some info from the Executive Summary but I urge you to review the entire report and share it among your partner group.

  • Partnership on average remains overwhelmingly male, with women representing only 22% of partners in CPA firms.
  • A growing percentage of women are serving as directors or non-equity partners.
  • Only 47% of firms have a formal succession planning process and only 2% include a formal gender component in their plans.
  • Flexible work hours are the most popular program, followed by reduced hours and telecommuting.

Women are key to succession for male partners. Make sure your firm is working on, or already has, a plan to help women (and men) to become future owners of your firm.

Here’s a link to the members of the AICPA Women’s Initiatives Executive Committee members. Maybe someone from your firm should volunteer for the committee.

  • Instead of looking at the past, I put myself ahead twenty years and try to look at what I need to do now in order to get there then.
  • Diana Ross

Thursday, August 10th, 2017

The 10 Most Profitable Industries

“Formal education will make you a living; self-education will make you a fortune.” – Jim Rohn

It’s no surprise to CPA firm owners, but accounting and bookkeeping firms (along with real estate leasing companies and legal services) top the list of the most profitable industries over the last 12 months.

It’s nothing new, accounting has been at the top for several years, but I think sometimes CPA firm owners don’t think much about it, probably because they are used to the profit margins.

The information comes from Sageworks in its annual ranking of the most profitable industries in the U.S.

Most CPAs truly love the work they do. Sure, it involves some long hours, commitment and dedication to client service but being extremely profitable sure is a nice reward.

Share this information inside your firm. Perhaps it will inspire talented, young CPAs to go down the future partner track. Some partners don’t want to share this information because the staff will want bigger salaries. Maybe it is time to have that conversation inside your firm.

most-profitable-2017

 

  • Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1.
  • Warren Buffett

Tuesday, August 8th, 2017

Warm & Fuzzy

“You cannot do a kindness too soon because you never know how soon it will be too late.” – Ralph Waldo Emerson

Many accounting firm owners/shareholders, in years gone by believed they were doing the right things.

  • We can get by with two monitors, no one needs three.
  • We need to stick with our professional dress code, our clients care.
  • Not everyone needs access to remote connectivity.
  • We don’t need to send more than one person to that management conference, they can come back and inform us all about what they learned.
  • We can just send one person to that leadership training, they can teach it at the firm.
  • It will be okay if we delay working on that succession plan until next year.
  • We don’t need to spend very much on Christmas gifts for the staff, they really don’t appreciate it anyway.
  • It is too hard to keep track of everyone’s birthdays, we don’t need to send a card to each person’s home.
  • It will hurt production if we close the office on Fridays in the summer.

Many partners called all of these things and other nice, little things they were expected to do for staff, “warm & fuzzy” stuff.

In the past, some of these did apply but they sure don’t now. Never be afraid to admit that you were wrong and make important changes that will guide your firm into the future.

  • We would all like a reputation for generosity and we'd all like to buy it cheap.
  • Mignon McLaughlin

Friday, May 12th, 2017

Leaders Set The Tone

“You cannot escape the responsibility of tomorrow by evading it today.” – Abraham Lincoln

In case you haven’t noticed, there is a lot of M&A activity going on in public accounting.

There are varying reasons but one of the most prominent is the fact that current firm owners have not groomed, trained or mentored people to take over the firm. So, what do you do? You sell-out so you get “something” out of the practice that you have been a part of for 30 years or more.

If you are a managing partner or sole-practitioner and are still several years away from that decision, you are responsible. You are in charge. The future of the firm is in your hands.

If your people are not good managers, relationship builders or passionate about the future of the firm…

If your people usually arrive late in the morning…

If your people spend too much time on a job because they don’t have a clearly defined budget…

If your people make you cringe some days because of the way they are dressed…

You are responsible. It is your responsibility to communicate what is okay and what’s not okay. You are enabling behaviors to continue when they think what they are doing is okay.

Begin planning to have those crucial conversations and maybe you can change your firm future.

  • We are made wise not by the recollection of our past, but by the responsibility of our future.
  • George Bernard Shaw

Monday, November 14th, 2016

Commitment

Duty is what one expects from others; it is not what one does one’s self. – Oscar Wilde

When I read the above quotation by Oscar Wilde, I immediately thought of accounting firm partners and their behavior after participating in a partner planning retreat.

Think about how you felt immediately after your last retreat. Fall is a busy time for me and I have been involved in several of these beneficial planning sessions. Usually, during the wrap-up conversations partners and other attendees feel relieved, enthused, optimistic even happy. How long does that last?

You return to the office and there are voice messages and emails that need attention. There are team members awaiting your return so they can ask questions or obtain your opinion and there are family and other personal commitments you must meet. That is why I strongly urge you to develop specific action steps that will help you accomplish the FEW important initiatives identified at your planning retreat.

Everything is changing so rapidly that it is difficult to really comprehend what your firm will need to do two years from now. To keep your firm moving forward, identify two or three initiatives, document the steps it takes to accomplish each one and commit to getting them accomplished in 12 to 18 months.

It is each participant’s duty to actively participate. See the quotation below. If you don’t commit, there are only promises and hopes, but no plans.

  • Unless commitment is made, there are only promises and hopes; but no plans.
  • Peter Drucker

Tuesday, October 4th, 2016

Don’t Put Off Until Tomorrow….

“Don’t put off until tomorrow what you can do today.” – Benjamin Franklin

I bet you have heard that quote many times.  It was one I often heard as a child.

It is my observation that many accountants have never, in their entire life, heard this quotation. Just kidding, I know they have heard it but just ignore it.

This came to mind as a read an article via HBR titled, How To Beat Procrastination.

My CPA clients and friends do a great job at making to-do lists. They are great list makers, in general. However, the easy things (like answering email) get crossed off the list and the more important, complex things go untouched – sometimes for months!

Then late October rolls around and firm partners all of a sudden get in a hurry to get BIG things done.

The article stated that the problem is our brains are actually programmed to procrastinate. We struggle with tasks that promise future upside in return for efforts we take now.

The article gives us some tips on how to make the benefits of action feel bigger and more real, such as:

  • Visualize how great it will be to get it done.
  • Pre-commit, publicly. (This works with weight loss!)
  • Confront the downside of inaction.

My advice…. take baby steps. Most of the big changes you need to make to help your firm become future ready can be broken down in smaller steps.

What’s important is to take the first step.

  • You may delay, but time will not.
  • Benjamin Franklin

Wednesday, July 27th, 2016

An Important Step In Staff Development

“Mentoring is easy and natural; it does not have to be just another dreaded task on your to-do list.” – Rita Keller

Thanks so much to Accounting Today and Sean McCabe for featuring many of my comments in the article, Molding the Future of the Profession – Mentoring young staff should be a crucial part of the recruiting and retention toolkit of more accounting firms.” 

Follow the link to read the entire article. And, thanks to Edi Osborne for all of her great comments in the article.

Here are some bullet point highlights:

  • Mentoring is just as important as salary and technology.
  • Mentoring requires an investment of time and money.
  • It is about attracting and strengthening future leaders for the profession.
  • Young people will buy into the vision of what it means to be a CPA and stay in the profession longer if they make a solid connection with someone who has already been down that road.
  • CPAs are great at teaching young people the technical skills but fail to impart knowledge about relationship-building and career-building skills.
  • Showing and not telling is vital to the mentor-mentee relationship.
  • Effective mentoring has become a strategic focus for the most progressive and successful firms.
  • You have to water the flowers you want to grow.
  • Stephen Covey