As a keen observer of the market over the past few years, I’m eager to share experience and insights for firms operating in the current private-equity-as-growth-driver environment. Whether your firm has a PE backer or you’ve decided to take a pass, be prepared for the emerging market impact.
When I made the shift from the corporate tech world back to public accounting, I was quite frankly shocked to see the lack of sophistication around growth. In fact, that gaping hole is what led me to start my consulting firm 24 years ago. In the early part of the 21st century, strategic organic growth — the lifeblood of corporate America — was almost nowhere to be found in midmarket CPA firms.
Since that time, I’ve become both advocate and evangelist for this approach. Many client firms successfully embraced the opportunity, and the hard work required, to outpace the organic growth of their peer group. Others, not so much. What’s different today is that systematically driving demand is no longer just a good idea. It’s the lifeblood of the accounting profession. That’s because it’s expected by the PE firms that are marching into accounting firms with dizzying strength and speed.
Even if you’ve opted out of PE backing, you need to plan and act, or risk being left behind to wither, as PE-infused accounting firms leverage deep pools of expertise in marketing, sales, and service innovation.
New blueprint required
Creating and executing a business model that includes an advanced approach to driving demand will require a whole new architecture — one that abandons the lone-contributor model in favor of a holistic, leader-driven and team-based method. This is a foundational shift.
If your firm is still toiling under the individual-partner-book-of-business approach (think golfer) vs. a team-based approach (think football), you’re attempting to grow from the bottom up, which is what CPA firms have done for decades. But what’s become glaringly apparent in this acquisition-fueled frenzy is the need for a strong top-down structure. While it’s true that some firms have achieved enviable success without a blueprint, an architectured approach will take you much more quickly and reliably from incremental improvements to robust strategic growth.
Your plan should be holistic, not piecemeal. Bolting on sales training or even hiring a chief marketing officer without a framework are one-off tactics, not long-term strategies. And they won’t move you in the direction that PE is taking the market.
The organic growth strategy I espouse is built on the model of a three-legged stool — sales, marketing and product management. Each is equally vital, and linked. The strategy should include:
- A chief growth officer who is responsible and accountable for all legs of the stool and reports to the top firm executive.
- A fully realized sales organization staffed with professionals (with revenue goals!) who are integrated into the work of the firm. Sales pros are precisely matched to target segments and clients.
- Strategic growth leaders who operate as presidents of each industry or service line as “business units,” assuming responsibility for strategic direction and financial health.
- A key client program focused on large, strategic clients selected to receive preferential treatment due to their potential for significant revenue growth.
- A product management function tasked with developing innovative services and markets at all stages of the product life cycle.
Time to up our game
The tsunami-level changes buffeting accounting firms, largely as a result of PE strength, are impossible to ignore. We’ve known how to deliver work for decades. Now it’s time for firms to flex their driving-demand-side muscle, one that has been sorely underused.
I’m gratified that the strategic organic growth sermon I’ve been preaching is being amplified by private equity organizations that know the value of this approach. It’s how they, and the companies they acquire, grow and thrive.
Change does not come easily to CPA firms. And until now, it really hasn’t been perceived as necessary for many. That understandable caution was rooted in our slow, but steady and reliable, partnership consensus model, and the effect of regulatory and compliance pressures requiring accuracy over speed. But it’s time for a new paradigm — one that’s vital for firms wishing to successfully participate in a market increasingly dominated by a PE presence and corporate culture. Embrace the new normal and avoid being run over in the stampede!
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