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How can small practitioners survive?
US based accountant Larry Perry looks at the challenges facing small practices in the post-recession business climate.
Someone once said that 20% of what we do accomplishes 80% of our objectives. On the flip side, 80% of what we do contributes to only 20% of our objectives. Unfortunately this is true for many small accounting firms - our worst clients take up most of our time! It's hard to do, but it's time to decide which clients to serve. Some clients are actually going to prosper during the rough economic times ahead. Some are going to drain us as they head down the drain; we need to let these clients go!
Remember the old cliché', "when the going gets tough, the tough get going"? When adversity threatens, what can we expect from our clients? A president of a growing business said to me recently, "I will not quit!" This proactive leader has positioned himself in the centre of a self-developed marketing network, is producing quality products that are priced far less that his competition and has kept his overhead very low. When the worst of the economic downturn occurs, his market and his profits will grow. This man has planned and developed his business to accommodate economic change. If necessary, he is willing to change again with the times. He has great potential for success and would be at the top of my list of "preferred" clients!
Plan the nature of our services
Are we positioned in the service areas that have high potential during troubled economic times? I met a sole practitioner in a large city recently that made decisions to focus her practice in increasing areas of need in her marketplace. She provides mostly tax and accounting services, along with audit schedules preparation for larger CPA firms. She performs no attest services and has positioned herself to satisfy the growing need for non-attest services. Even in tough times she will have an abundance of work!
I'm not suggesting that every small firm give up audits and reviews, to the contrary. Audit and reviews are also becoming a niche in the small firm marketplace as prospective clients look for fee structures that are less than those charged by larger firms. Some small firms are positioning themselves to meet an increasing demand for cost-efficient attest services during troubled economic times. Is your firm positioned?
Invest in the future of our firms
Here are a few suggestions that may help take the bumps out of the road ahead:
- Train, train, train: Plan for staff training that builds resources from the ground up. For all functional areas of practice, all personnel should have a solid foundation. Whether it's CPD or on-the-job training, a firm's investment today produces success tomorrow.
- Revisit firm policies: With a focus on efficiency for all functional practice areas, we must war against tradition. If we have to change our traditional approaches to getting work done, even if we have to invest in new technology to create efficiencies, the time is now! Thinking outside the box will increase our success in the future. For audit and review services, this thinking should drill down to the practice aids we may have relied on for years. Small firms are beginning to create proprietary audit documentation that meets the needs of their clients and are "canning" their voluminous "canned" purchased practice aids. By creating proprietary practice aids based on both current quality control and auditing standards, these firms are prepared to win even the peer review battle!
Post a comment and let our readers know how you are preparing for success in these times.
Larry Perry runs www.cpafirmsupport.com