has taken the volume of large transactions
from many of the bigger firms. As such, these
firms are coming down to markets they have
previously left behind or never served. The
CFOs are taking bids at below what they are
current paying to get the name on their audit
even if for just a few years.
Also, the average partner age in many firms
is climbing rapidly. Some of the firms doing
mergers for succession reasons have average
partner age of over 55 post-merger. We are
using our industry group knowledge and our
partners’ experience to challenge the larger
competitors. We don’t play games with our
rates, so we charge fair rates all the time and
can explain how an upfront discount puts
pressure on the firm to require the client to do
more and/or try to get the billing up.
The average age or our partner group is 45
and we have the ability to merge in a group
with an average age of over 60 and have sufficient talent to manage the new business as
the partners retire.
Bill Hagaman, WithumSmith+Brown:
We see the top challenges as retaining talent, pricing and partner accountability.
We’ve worked hard at creating a culture that
our professionals want to work in. This starts
with our philosophy that no jerks are allowed
at any level and while we will work with partners and staff to mentor them regarding the
proper behavior in the office we will not tolerate any unprofessional conduct toward our
staff.
With regard to pricing, we have been constantly working with our partners to improve
pricing on our existing clients with a current
year target of 5 percent. When bidding on
new engagements we ask partners to not discount fees to just obtain the client; if fees are
the only differentiating point we haven’t sold
our firm to the potential client effectively.
As for partner accountability I meet with
each equity partner to discuss their various
metrics that we measure annually. Their compensation is skewed to metric performance.
In addition we meet and counsel partners
who are on the low end of our firm- wide metrics to allow them time to improve. If poor
performance persists we will ask them to
separate from the firm.
Charles Postal, Santos Postal & Co.: We
see a shrinking market share of small and
medium-sized businesses with the need for
premium accounting services caused by increased competition from larger firms with
greater resources. Also, diminishing profit
margins caused by a) increased regulation,
legal liability, business risk; b) lack of confidence in the economy by clients, coupled
with their low cash reserves and lack of access
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to credit to pay for all but the minimum level
of services. And finally, a scarcity of skilled
people to fuel our growth, especially 30- to 40-
year-olds. To address those challenges we’re
developing niches that differentiate us from
our competition and allow us to avoid having
to compete against stronger competitors for
low margin commodity-type projects. We’re
investing in people, training and provide our
staff with a comfortable work environment
with soft skills as well as technical training.
We also regularly seek out strategic mergers
and acquisitions.
Tom Bonadio, The Bonadio Group: The
top issues facing our firm at this time are,
maintaining growth, improving profitability
We must
always look
10 years out,
positioning
our firms to
be relevant.
and firmwide succession planning. To meet
those issues we’ve taken a number of strategic actions. We’re keeping our clients happy
with appreciation events, all hands-on meetings with larger clients to discuss what else
we can do to assist them and, of course, give
great and responsive client service.
If you lose business, it’s very hard to grow
so, first secure your client base. We are focused on improving our relationships and
other referral sources to push for more project work, including cross-selling our other
services, and to make it mandatory to ask for
new work referrals from our clients and referral sources. We are also working to free up our
best-selling partners so that they have more
time to sell. Removing them from some of
their clients service requirements and giving
them larger new work goals.
Competitive pricing is fierce and in some
cases absolutely ridiculous. Our strategy is
to find more work that is not “hard bid”, that
is, special projects that fit our skill sets and
more new work in industries where we have
a dominant position. Our goal this year is
to grow our top line by 5-7 percent with the
same payroll as last year and find ways to be
more efficient.
Dave Sibits, CBIZ Financial Services: Ac-
counting firms are facing an aging of leader-
ship at the partner level. Second, firms are
facing a continued erosion of pricing in ser-
vice areas, which is mostly a result of a chal-
lenging business and economic climate. The
last concern is the competition for the best
and brightest talent, especially among top
firms seeking to add specialty expertise or
employees to groom for the future.
