Henry Ford’s famous dictum that his customers could have any color car they wanted — as long as it was black — reflected a brief era where drivers had few options. It wasn’t more than a decade or two, though, before car manufacturers started offering a much wider range of colors and models.
When it comes to firm structures and funding sources, today’s accounting firms are similarly emerging from a period of severely restricted choices. Until very recently, your firm could take just about any shape it wanted, as long as it was a partnership, and you could tap just about any source of funding you wanted, as long as it was the partners’ pockets, or a bank loan. There were a few exceptions, but by and large there was very little in the way of choice.
The last few years, however, have seen firms take advantage of a tremendous efflorescence of options, in everything from ESOPs and alternative practice structures to partnering with private equity, venture capital, wealth management firms, family offices and other investors.
These are great developments, giving firms more flexibility, greater access to capital to make crucial investments, new tools for accountability, and fresh ways to draw in and keep top talent. Regardless of what you may think of any of the individual options, having more of them is clearly positive.
The only problem is that, whenever your range of options expands, it brings with it the requirement that you choose among them. You don’t have the option to not choose — that in itself is a choice. (Rush fans know what I’m talking about.) And choosing among all the options available to accounting firms means making hard decisions about what kind of firm the partners want to have. What does success look like for you? What’s the right balance between work and life? How much of your success do you want to share with your staff? What kind of investments do you think are important? What kind of bets do you want to place on the future?
And it’s not just firms that have to make thoughtful choices; it’s individual accountants, as well. What sort of culture do you want to work in? How much money do you want to earn, and how much of your personal life are you willing to sacrifice for it? How accountable are you personally willing to be, and to whom?
As individual accountants, as partners, and as firms, the accounting profession has been able to avoid a lot of complex questions about its structures by just following the time-honored model that worked for most of the 20th century. That’s no longer possible, though: Accountants need to think more and more deeply about all these issues — not because they have no choice, but because they have more choices than ever before.
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