Harry Blum

Harry Blum

Focusing one’s business on the clients’ needs first is a traditional business axiom. However, conventional thinking does not fully encompass Collins Barrow Toronto’s mission.

We believe the best way to serve our clients is to start by building a structure that fits the needs of the professionals we want to attract and keep. By consolidating internally before turning our attention outward, we ensure that our clients receive the extraordinary service they deserve.

This comes from recognizing where the firm stands in the business world. As a mid-market competitor, we believe our strategy is advantageous in our competition against billion-dollar global firms as well as smaller independent ones.

Collins Barrow Toronto LLP, operating as a member of the Collins Barrow National Cooperative, has grown in five years from a team of 70 to 240. Profitability per partner, an already strong facet dating back to our inception, has increased by 50%, while revenue has grown from $10 million to $50 million. And we did this in a world where our global giant competitors are treading water, doing their best to maintain existing client relationships, trimming their costs and reducing their partner headcount to artificially maintain their income per partner.  Over this same period, we have had no trouble attracting experienced talent from these firms, including from the coveted partner level.

Our strategy has been successful and profitable for our firm and for our clients. We believe our model can be used as a template for other firms sandwiched between smaller independent organizations and larger multi-billion dollar competitors.

Learn what your top talent wants, then provide it

Our approach to expansion was to get a clear idea of the wish-list for the most highly-skilled, in-demand professionals, and then build a package that would attract them. As well, we made it easy for the best and brightest skilled professionals to join us. Someone joining us at the partner level can buy in at a rate that reflects the net book value of the assets of the firm, without being charged anything for goodwill.

We also make sure our team members stay because they want to, not because of ‘golden handcuffs’ in the form of a rich pension or an overly oppressive partnership agreement. Our view is that if professionals want a comfortable retirement, they should build it themselves through saving, not through burdening future members of the firm with heavy pension obligations.

We have also done away with the non-compete clause for our partners because if someone does not want to be here, we don’t want to stop them from leaving.  There is simply nothing worse than unhappy professionals in a professional services organization.

A workspace you can feel at home in

Between the time they arrive and the time they leave, we make sure that our professionals have a positive work environment; and this starts with the little things that truly have a tremendous impact. Our survey of potential employees found that near the top of their wish-list was having a desk of their own, a seemingly simple request that has fallen by the wayside at many of our larger competitors.

The “hoteling” trend embraced by our competitors makes the cost accountants ecstatic while at the same time making the partners and staff incredibly unhappy. It’s like an adult version of musical chairs with the losers expected to work from home, from their clients’ offices, off the Wi-Fi at a convenient Starbucks, or wherever else they can find a perch. My guess is that professionals are just not motivated when treated like cattle.

These firms have a hoteling culture because the relentless pressure on fees has cut margins to painful levels, and, in their minds, costs must follow. It also results in a culture where staff do not feel valued or secure. So, we took the opposite approach by investing in premises that say “you are valued here”. Everyone gets a desk and every partner has a home (“office”) of their own.

Our investment in our office space in downtown Toronto also reflected our commitment to a positive environment. We successfully found a building that has plenty of floor-to-ceiling windows, offering a wealth of natural light and invested heavily in state-of-the-art offices. Additionally the Collins Barrow building is in the heart of the financial district, so our staff can easily walk to many of their meetings. Streetcars, trains and subways take you directly (or very close) to our location at King and Yonge Streets, and the newly refurbished Union Station is 10 minutes away, which makes for easier commuting.  We are true believers in the saying “if you build it, they will come” and the proof for us is in our numbers.

Building an odds-beating underdog

One reason our revenue has grown five-fold in five years is that we choose to compete in areas where we can add value that you can measure and avoid areas where we cannot. This includes avoiding most compliance-oriented work, which is largely the domain of the larger firms and also tends to be lowest margin and least enjoyed work.

We look for areas where we know we can add value, through offering well-considered advice. We also look for new ways to serve our clients by adding features such as becoming the first accounting firm in Canada, at least to our knowledge, to develop its own insurance products.

To us, financial audit isn’t just an audit; it’s an opportunity to add value. This seems to work for our clients – our recovery rates are higher than those of our competitors, yet we retain clients year after year and continue to grow our audit practice because of our focus on value creation.

One way we create this growth is through seeking out and bringing in skilled professionals who feel that they have plateaued at another firm. We offer them growth opportunities as well as training and mentoring on how to adapt to a hard-driving, sales-oriented, entrepreneurial culture. These programs have been successful, with many of the senior people who join us from other firms finding that their happiness at work has grown substantially.  It does not hurt that their income has grown as well.

In this respect, being a “challenger brand” has its upsides. Our entrenched big-firm competitors can rely on the name brand to speak for them. Our name isn’t widely recognized yet – particularly in some of the new markets we’re aiming to serve – so this combination of right hiring, training and mentoring is needed to succeed. We punch above our weight because we have to win on merit, not on brand.

Setting up and stepping back

Another way we help our team succeed is by staying out of their way. One of the limitations of the traditional partnership structure is the amount of time that the partners must spend on management issues.

We prefer to have a management team structure, which is not unusual among accounting firms, but our implementation is different. Our management team is streamlined with day-to-day decision making left to either the managing partner or the chief operating officer. Each of our service lines has a leader and they are given enough latitude to run their practice area.  The rest of the partnership is spared involvement in the day-to-day running of the firm, which leaves them free to do what they do best – focus on building the revenue and reputation of the firm and bring valuable ideas and insights to our clients.

This streamlined management structure means we can be nimble and move quickly on opportunities such as an acquisition, a new key hire or a new business opportunity.

One thing that is uncommon is that our compensation system for the partners is 100% subjective (no formula). It is completely based on behaviour and this really is the secret sauce to our success.

This culture isn’t for everyone. Our shift from a small firm to being the 10th largest accounting firm (as Collins Barrow Toronto alone) in Canada has meant that many of the existing staff had to learn new skills, particularly in sales and other aspects of business development and many partners had to learn to let go of their administrative portfolio.

In a time when many professions have commoditized themselves, our focus on creating value for our clients by investing first in our talent, distinguishes us from the rest of the field.  Our formula has yielded positive, quantifiable growth thus far, and we believe it will continue to prove successful in our intensely competitive industry.