By L. Gary Boomer

While there are seminars and on-the-job training for managing partners, there is no book or school on how to manage an accounting firm. Too often, managing partners get strapped with administrative duties and fail to lead the firm toward strategic objectives. It is often lonely in the managing partner's role, as they have to enforce discipline, manage partner disputes, deal with financial issues, and, in many firms, simultaneously manage a book of business to retain security and status. This is not a formula that entrepreneurial coaches prescribe. At the recent Winning is Everything conference, Michael Gerber, author of The eMyth Revisited, stated, "Most entrepreneurs are technicians who had an entrepreneurial seizure." This statement definitely applies to professional service firms. The technicians prefer to work in the business rather than on the business. Accounting firms simply do not manage themselves; and those that have a full-time managing partner (without a book of business) tend to grow much faster than those that have a part-time leader and part-time practitioner at the helm.

Therefore, most firms are looking for management strategies that produce the greatest returns on their investments in the shortest time. There is no magic formula; however, focus and accountability are keys to success. The following list is not intended as a complete list, but rather as a list of high-priority strategies that firms should focus on if they want to succeed during a period of transformation.

1. Get the right people in the right jobs
Everyone has unique abilities, and the trend in most firms is to hire "mini-mes." Several years ago, we found an excellent tool called the Kolbe Index to match candidates to job descriptions and to determine how well people can work together on a team. Firms are generally faced with the decision to terminate employees who don't fit the culture or are unproductive. The tendency is to wait too long before making these tough decisions. Slow decisions regarding non-performers tend to promote mediocrity and demonstrate that no one is really in charge of the firm. The trend in well managed firms is to conduct performance reviews on a quarterly basis. With the right tools and processes, this works very well and requires an insignificant amount of partner time.

2. Focus on revenue per FTE position
Most firms are very profitable for the first four months of the year and then hang on for the rest of the year. Start by determining and benchmarking your current revenue per FTE. (2080 hours per year represents an FTE. Include all personnel in your calculation of total hours.) Too many firms have partners working 2,700−3,000 hours. Working too many hours does not make sense, causes burn out, and reduces profitability. Often, firms overstaff for the busy season and then retain unneeded people during the balance of the year. Temporary employees and outsourcing can make significant differences in firm profitability if you properly manage the required headcount.

3. Train and learn
This is cultural and a key to attracting and retaining quality personnel. Training and learning is a two-way street where everyone in the firm learns as well as teaches. This is the formula for leadership development at all levels of the firm. Combine technology, soft skills, and traditional continuing professional education in the training function. Also, focus on process improvement and implementation of best practices (in the firm and the industry). According to the Gartner Group, capacity increases by five hours for every hour invested in training. Two groups where training has the greatest impact are the administrative personnel and partners. Don't say you are too busy to take time to sharpen the saw.

4. Improve your processes
Process improvement and standardization are keys to training and to developing consistency in client service. Technology and the Internet are increasingly playing greater roles in process improvement. Workflow and scheduling systems are being developed that follow your firm's processes and track work throughout the entire project. In small firms, the risk is having as many processes as you have partners. It is easy to differentiate firms that consist of sole practitioners sharing overhead from those firms that have the one-firm concept. The one-firm concept promotes teamwork, training, and learning. Efficient processes are keys to competing in a commoditized industry and to creating a better client experience and increased value.

5. Manage to a written strategic plan
Too often, firms manage to a budget (or, even worse, to the checkbook) rather than to a strategic plan. Resources are limited (time and dollars); therefore, it is imperative to identify the firm's strategic objectives, measurements of success, initiatives, assignments, and due dates. People must be held accountable, especially at the top of the firm. We suggest using 90-day game plans for all personnel, including partners. This provides alignment with the strategic objectives as well as accountability. Most firms spend too much time trying to develop consensus over a vision, mission statement, and core values. While these are important, the strategic objectives and related strategic initiatives are far more important. You should be able to communicate your plan easily to everyone in your firm and to clients. If you can't, I suggest you get some help in this area.

6. Delegate
For the most part, technicians are generally not good managers or delegators. Remember that authority should follow responsibility in the delegation process. With good systems and processes, you can ensure quality work from lower level staff. Too often, the attitude no one else can do it as well as I can prevails. Partners should be responsible for ensuring that people have the training and resources necessary to succeed rather than thinking they need to be involved in every engagement. As accountants enter the profession, they enter the zone of incompetence. They generally become competent, specialize, and, if fortunate, get to work in their zone of unique ability. Too often, they make partner about the time they enter the zone of their unique ability and then gravity changes, pulling them back and forth between the zones of competence and incompetence. Identify unique abilities, and then delegate. This will increase job satisfaction.

7. Establish standards, policies, and procedures
Standards can apply to many areas of the firm from things as simple as software selection to more complicated issues such as records retention and document destruction. These policies and procedures should be written, and training provided and enforced. Enforcement is the responsibility of firm management. Frequently, we see firms implement department-wide solutions rather than integrated enterprise solutions. Determining best practices and then implementing them is a responsibility of the managing partner. While the implementation can be delegated, it requires involvement in peer organizations and networking with peer firms to have the required knowledge necessary to make good decisions. Taskforces can play a major role in developing standards, policies, and procedures. They also develop future leaders and build consensus during the processes. Don't be afraid to re-engineer the firm. Some say, "If it's not broke, don't fix it," while others say, "Break it, and put it back together again better than it was before."

8. Improve the experience for the client
There is nothing you can do that can have a greater impact on client retention and moving away from commoditization than creating a unique client experience. Uniqueness can be as simple as following some simple referability habits: Do what you say, be on time, and say please and thank you. Cycle time is also important to most clients. Improving cycle time increases the chances of creating a positive client experience. Good processes and procedures increase the chances of accuracy and quality. Discussing fees and terms up front also improves the client's experience and differentiates your firm from most competitors.

9. Improve cash flow
Setting expectations up front is important in the client-accountant relationship. Avoiding the discussion of terms is not wise and only creates future problems. Many firms do not bill with the delivery of personal tax returns. Their excuse is that they don't have all of the time recorded and are too busy during tax season to prepare an invoice. Remember that, to the client, the value of the service only decreases after the delivery of the service. The personal experience of the client is also improved if someone delivers the returns, explains them, and asks for payment. You can increase fees and improve cash flow by simply timing your billing when it has the greatest value. Personal tax returns are not the majority of most firm's business; therefore, progress billings, deposits, and billing frequently all improve cash flow. The managing partner must enforce firm policies and procedures when it comes to billings and cash flow. Hold partners accountable.

10. Focus marketing and sales toward existing clients
The tendency is to fish the entire pond rather than to fish deeper. Your existing clients are your marketing channel. You have already developed relationships and have the opportunity to sell additional services. Ask for referrals. Successful clients tend to have successful friends and business acquaintances. Simply listening to your clients and finding out about their dangers, opportunities, and strengths (DOS) can reveal opportunities for you to provide additional services.

Many firms present the appearance of limited capacity due to the fact partners are spending too much time working in the business and not enough time working on the business. Often, clients tend not to make referrals due to the fear their own work won't get completed in a timely fashion. Cross-marketing of services is not a novel concept, but one that most firms find challenging due to the my client versus the firm's client philosophy. Don't compete against yourself.

Management of an accounting firm is not an easy task. It requires a team of professionals who are focused on managing to the firm's strategic plan rather than to just a budget. It requires leadership, management skill, and discipline. Focus and the allocation of limited resources to strategic projects are keys to a firm's success. Don't be afraid to implement in your own firm the advice you give clients.

About the Author

L. Gary Boomer is the CEO of Boomer Consulting, Inc. His vast experience in the accounting industry spans over 25 years, where he has developed transformational strategies for firms across the nation. He is a well known speaker, consultant, and writer for many venues in the industry. He can be reached at lgboomer@boomer.com.