From The Past: Personal Marketing Plans Help Guide Firm Development Efforts

This article originally ran in the April 2011 issue of INSIDE Public Accounting.

Many firms are finding the best way to create a comprehensive business development and marketing process is to put some metrics to the test.

Perhaps the most effective way to gather those metrics is to create personal marketing plans for individual partners and associates. Like other service professionals, CPAs are concerned about billable hours. An individual marketing plan helps organize marketing into the rest of their responsibilities, says Dawn Wagenaar, principal of the Ingenuity Marketing Group in St. Paul, Minn.

A personal marketing plan sets forth the specific steps CPAs need to take and helps them move forward with concrete actions. “A plan makes marketing manageable and understandable to people who are more technically oriented,” Wagenaar tells IPA.

Personal marketing plans are an important roadmap to help partners and staff become more effective at business development, says Eileen Monesson, a principal with PR Counts, LLC in New Jersey. Monesson works with accountants of all backgrounds and experience levels to identify organizations and referral sources with whom they should be interacting.

The end goal is always to keep your pipeline of business development leads full, Monesson says. She works with clients to help perfect their methods of keeping in touch with their network contacts and expanding their influence as thought leaders.

“Every situation is a bit different and you do have to look at the niches that professionals are in,” Monesson notes. She works with clients to map out a plan for how their network can be expanded. For example, if an accountant joins an association, she encourages them to follow a path that will eventually lead to taking a leadership role within that organization – a role that allows them to build a stronger base of contacts.

All associates and principals at Anders, Minkler & Diehl in St. Louis follow a practice-wide development plan. Donna Erbs, marketing director, meets with each professional twice a year. The meetings and plans hold them accountable for business development goals.

Incentives help. When staff members achieve a goal from their plan, they record it using a formal point system. In December, a portion of their bonus is based on those efforts. Each person also has a “bucket” of money to spend on practice development efforts; the amount increases as their level increases.

“We have a mentor program for some of the (less experienced) staff and their mentors are involved in this process,” Erbs says. “It is woven in with their performance reviews.”

The process has garnered results. In 2010, the firm’s fourth quarter numbers reflected that 25% of new business came from non-partners. “The goal in doing all of this is to create a business development culture at the firm and to [turn] technically proficient young CPAs [into] savvy business people too,” Erbs says.

For some accountants, it is important for those in charge of marketing to meet with them once or twice a month to ensure they stay on track and are meeting their business development goals, Monesson says. Such meetings can occur less frequently once a track record is established.

“You want to get the professionals to deliver on their promises because it can be easy to slip back into the billable workload routine,” she tells IPA. “[In reality], building and nurturing this business development pipeline is just as important.”

Personal marketing plans can be audited a couple of times a year for updates so that timelines are met, Monesson advises. These plans are not just for partners, but also for associates who want to build their own book of business early in their career. When successful, these associates will often advance quickly.

“As you move forward with your [personal] marketing plan, you will move faster up the ladder because you bring tangible value to the firm outside of the [accounting] work,” Monesson says. “But you only want to work with professionals who want to build their book of business and are motivated to do so.”

Individual plans focus on the personal strengths so they can do the things they like, Wagenaar shares. Instead of thinking that they have to go to social events or make cold calls, CPAs can focus on their strengths, such as writing articles, cross-selling to existing customers or improving client service.

“The overall impact is not only new business, but hopefully, improved client service. You are creating a firm marketing culture instead of expecting those skills to just show up once someone becomes a partner,” Wagenaar says.

Stacie Muldoon, director of marketing at Mengel Metzger Barr & Co. in Rochester, N.Y., is in the process of working with the partners to develop their first personal marketing plans.

Muldoon’s main goal is to assist the partners in establishing their comfort zones within six categories: client relationships, referral networking, public speaking, community service, industry/trade group participation and niche marketing. Realizing that professionals need to juggle many aspects of their professional and personal lives, Muldoon feels it is a necessity to allow people to focus on areas where they feel confident, and therefore, motivated.

“Once the comfort zones were established, goals were set and reviewed on an individual basis with me and the partner,” Muldoon tells IPA. “Quarterly meetings will be held to assist our partners in staying focused and allowing them to alter the plans in order to keep up with the changing marketplace.”

When developed correctly, a personal marketing plan can benefit a CPA of any age, education or experience level. Typically, however, it is more effective for associates or younger partners who are in the process of becoming rainmakers or building their own book of business, Erbs says.

When managed and executed effectively, a personal marketing plan can help a CPA expand his or her network, create new revenue opportunities, increase exposure and content expertise and even become more effective in creating satisfied clients.

“You essentially should have goals each month, week or day of what you want to accomplish from a marketing standpoint,” Erbs insists. “If you fail to meet some of those goals over that period, it can be hard to get back on track.”

In fact, one of the most common reasons that such plans are not effective is that they require the individual to understand that marketing is as important as billable hours. There is a natural tendency to place marketing at the bottom of a priority list, but carving out a set time can help individuals stay on track, Monesson says.

To be successful, individual marketing plans require a commitment to change, Wagenaar advises. “The plans require accountability to someone inside or outside the firm. They also need to be tied to the overall firm goals.”

Back to the Future: Thoughts on the 1991 Debut of the Bowman 100 – Part 3

IPA asked several consultants, thought leaders and influential members of the accounting profession their thoughts on the 1991 debut of the Bowman 100. As part of our 30th anniversary celebration, we will be highlighting some of the responses.

Domenick Esposito, Esposito CEO2CEO

Domenick Esposito

Domenick Esposito

IPA: What are your initial impressions are when looking at the 1991 Bowman 100? What stands out, what’s of most interest to you, what do you see in that listing that reveals something about where we are today? What was behind the consolidations of the ’90s?

Esposito: When I read the Bowman 100 (1991) and compare the compilation to the IPA 100 (2015) one data point is striking to me:

  • The high, median and low revenue for the 100 firms are staggeringly different when comparing 1991 to 2015:
Revenues 1991 2015 ~% Change
High $2.3B $14.9B ~600%
Median $10.3M $71.3M ~700%
Low $6.0M $32.4M ~500%

On top of this explosive growth, it is important to note that there are only 24 firm names that appear on both the Bowman 100 (1991) and on the IPA 100 (2015). To me, this data screams out:

  • Size matters, and
  • Brand recognition is critical

While a good portion of the growth at these 100 firms during the period 1991 to 2015 was organic, a healthy portion was also achieved through mergers and acquisitions. Organic growth in 2016 and the immediate future is going to be very difficult and, as a result, we will see more and more mergers.

In January 2016 alone, there have already been announcements of 22 mergers and acquisitions, including 13 at the Top 100 firms. If this pace continues, we can expect to see over 260 CPA firm mergers and acquisitions in 2016 with about 150 being with the 100 largest firms. That’s more than twice that of 2015! My conclusion is that the largest firms will continue to get bigger, stronger and more profitable.

My observation is that more than one out of every two CPA firms of any significant size is either discussing a merger combination, acquisition or sale or is planning to do so in the near future. Why?

  • The economy is not robust. Clients aren’t growing. Margins are thin.
  • Partner demographics are an inverse pyramid; top heavy with baby boomers and lean with “under 40” partners.
  • Firms do not have enough rainmakers and business people.
  • Partner lead talent, particularly tax talent, is nearly impossible to find.

So if now isn’t the time for firms to consider an alternative path to a go-it-alone strategy, when is? Firms should not wait until the last inning when key partners are nearing retirement. As long as the economy stays anemic and clients aren’t in need of special services (i.e. higher margins), CPA firm valuations aren’t going to get better soon.

If you have any feedback, comments or observations, contact us at editor@plattgroupllc.com.

After 46 years in the public accounting profession, including CEO of Grant Thornton, Dom Esposito launched ESPOSITO CEO2CEO, LLC, a boutique advisory firm, to consult to small and mid-sized CPA firms with strategy including mergers and acquisitions.

View Part 1 – August Aquila

View Part 2 – Allan Koltin

Back to the Future: Thoughts on the 1991 Debut of the Bowman 100 – Part 2

IPA asked several consultants, thought leaders and influential members of the accounting profession their thoughts on the 1991 debut of the Bowman 100. As part of our 30th anniversary celebration, we will be highlighting some of the responses.

Allan Koltin, CEO of Koltin Consulting Group

IPA: What are your initial impressions are when looking at the 1991 Bowman 100? What stands out, what’s of most interest to you, what do you see in that listing that reveals something about where we are today? What was behind the consolidations of the ’90s?

Koltin: What’s most interesting to me when I review this list are the following:

Allan Koltin

Allan Koltin

  1. Over 90% (maybe even 95%) of the Top 100 firms went through a major transformation of which the end result was that they no longer resemble anything remotely to what looked like in 1991. Interestingly, this transformation took place whether the firm merged upstream or remained independent. It is apparent that when it comes to future success, change is inevitable and fortunately for many of these firms, their journey took them to a better place.
  2. When you look at the firms that remained independent, whether it was geography, product/service line, governance (running more like a business), or partner compensation (Firms are making a lot more money today!), many firms seem to thrive throughout this 25-year period. Local firms became regional firms, regional firms became mega-regional firms, mega-regional firms became national firms and national firms became truly global firms. To some degree, CPA firms rewrote the “record books” when it came to growth.
  3. What’s also interesting to me is that in 2000, the 100th largest firm was approximately $6 million in revenue and that same firm today trades at over $34 million in revenue. One could say some of this is inflation, but the reality is the last decade has been the single biggest transformation of firms in the history of the profession.
  4. Another thing that is of interest to me is what I will refer to as “naming rights.” Firms that used to have four or more names in the title reduced to three and then reduced to two and then reduced to one. It wasn’t enough, though, that many firms stopped at one name. Some of the other firms took a different path and instead of reducing from four to three to two to one names, they simple went to letters and today a significant number of firms have a number of letters as their sole name and brand.
  5. Speaking of names, I also think that branding means much more today than it has ever meant in the past. Accordingly, firms are spending significant dollars on protecting and growing their brand.
  6. Other things that I found interesting is that having lived through the consolidation phase of 1995 through the present, CBIZ is the last soldier standing. Groups, such as American Express and H&R Block, ultimately sold their interest in the accounting firm space and since that time there have been very few new players entering the profession. What’s mind-boggling to me is that private equity has remained on the sidelines, despite the fact that the accounting profession is well over a $100 billion industry. I sure wouldn’t be surprised to see private equity enter the space over the next decade, but I also thought that there would have been other public companies entering the arena as well, and that hasn’t taken place.
  7. On a positive side, very few firms have closed their doors because of a bad audit. Outside of Arthur Andersen and maybe one or two others, quality has really held high within the profession. It should be noted that one or two other firms closed their doors, not so much because of quality issues, but simply because they strategically could no longer exist or had overextended themselves financially and were ineffective in essentially running a business. Today, firms seem so much better run and better managed that I would guess we won’t see implosions of firms going forward like some of the ones we’ve seen over the last two decades.
  8. One final item bears mentioning, which is the merger of equals. For many years, this was viewed as an oxymoron and, in fact, we are seeing great examples today of large firms coming together and doing quite well, such as CohnReznick, EisnerAmper and CliftonLarsonAllen.

If you have any feedback, comments or observations, contact us at editor@plattgroupllc.com.

Allan Koltin is the CEO of Koltin Consulting Group. Koltin Consulting Group Inc. is a Chicago-based consulting firm that specializes in working with professional and financial services firms in the areas of practice growth, practice management, human capital, and mergers and acquisitions.

View Part 1 – August Aquila

View Part 3 – Domenick Esposito

Back to the Future: Thoughts on the 1991 Debut of the Bowman 100 – Part 1

IPA asked several consultants, thought-leaders and influential members of the accounting profession their thoughts on the 1991 debut of the Bowman 100. As part of our 30th anniversary celebration, we will be highlighting some of the responses.

August Aquila, CEO of AQUILA Global Advisors, LLC

IPA: What are your initial impressions are when looking at the 1991 Bowman 100? What stands out, what’s of most interest to you, what do you see in that listing that reveals something about where we are today? What was behind the consolidations of the 90’s?

August Aquila

August Aquila

August Aquila: The driving force behind the consolidation of the 90’s was the realization that firms could be sold. American Express Tax & Business Services created a new paradigm in the accounting market by beginning to acquire accounting firms from 1988 until 2000.  Firms from $100,000 to $55,000,000 were acquired by TBS. When an individual left American Express and went to H&R Block, he started the process again and this was the birth of the consolidation movement in the US. Consolidation was also common in other markets, think of stationery stores (Staples, Office Depot, etc.), medical practices. The timing was right for these “roll ups” because those accountants who were born in the 1930 were looking at retirement. Twenty years later, we have the baby boomers doing the same thing. It was the right time for the consolidation to happen.

When I look at this list what strikes is that not too many things have really changes other than a lot of the firms have gotten larger. Firms are still lacking strong strategic leaders, the very largest of the firms continue to burn out people who then leave the profession, firms talk about hiring the smartest and the best but then have no real program for keeping them or creating an open environment that lets these people shine.

Those firms, such as Moss Adams and Larson Allen, that are still on the list had leaders who realized that it does take many different types to build a successful firm and were more patient in executing their strategic plan.  These firms live their values.

IPA: How would you complete the sentence, “What’s most interesting to me when I review this list is . . .”

August Aquila: “The main thing that strikes me when I look at the firms that are no longer there is the common elements of (1) very dominant managing partners who kept the firms together or not, based solely on their personalities. They weren’t necessarily good or great leaders, they simply ran the firm like a benevolent or not so benevolent dictator. (2) As a consequence of number 1, these firms did not build a firm but rather fiefdoms. Partners who would bring in business were rewarded to the detriment of client relationship and production partners. (3) Many of these firms were forced to sell to a consolidators (American Express Tax & Business Services, H&R Block, CBIZ, etc.) because the majority owners did not believe their partners would and want to pay them the large deferred compensation amounts they had coming to them.

In part two of this series, we will hear from Allan Koltin, Koltin Consulting Group.

If you have any feedback, comments or observations, contact us at editor@plattgroupllc.com.

August Aquila was the Vice President of M&A at American Express Tax & Business Services in the 1990s. He is currently CEO of AQUILA Global Advisors, LLC and continues to advise firms in the areas of M&A, compensation design and partnership issues.

View Part 2 – Allan Koltin

View Part 3 – Domenick Esposito