How do accounting firm leaders create a sustainable, top and bottom line growing and thriving organization of the future? It’s accomplished through refining the firm’s business model.
One facet of refining the business model means focusing and aligning the firm’s strategy and acquiring appropriate resources to more effectively meet the needs and demands of the best clients and the evolving marketplace (or meet a broader range of needs and adding additional value). The process of refining the business model should be geared towards making the necessary changes to engage in strategies that make a sustainable positive impact on the bottom line for the foreseeable future. Also, the process should identify less profitable clients and activities that should be discontinued because they are using up valuable resources.
According to a recent survey taken by Inside Public Accounting, the Top 100 Firms in the country grew organically at only a 5.2% rate on average. However, of those firms attaining double digit growth, 56% also achieved double digit growth in non-traditional services. Thus, over half of the firms with double digit growth have refined their growth models to address the need for advisory and solutions oriented services. This type of strategy is an external market to internal business model approach which develops services that clients and prospective clients need and value. Implementing external market strategies may involve acquiring, outsourcing, or partnering with other businesses.
For example, some firms have merged or acquired consulting companies to provide advisory services to complement existing services or to address a particular need in their marketplace. According to Inside Public Accounting, twenty eight firms in the Top 100 provide consulting/advisory services, making up more than 25% of the firm’s total revenue. The following are some examples:
- Clark, Schaefer, Hackett & CO., launched a private equity group to assist clients in M&A transactions.
- Marcum has entered the Same Sex Marriage marketplace with both compliance and advisory service taking advantage of a newly created niche created by changing state laws.
- MCM, LLP merged in Personnel Profiling, a company that provides a wider array of services in the human resources consulting niche.
- Sikich merged in Illinois-based supply chain consulting firm Achieve Consulting.
- EideBailly acquired Denver Net Suite solutions provider, Next Business Suppliers.
- Armanino developed AMF media group to provide clients with marketing, branding, and social media strategies.
These firms are refining their business models to provide value added services and maintain a competitive advantage while meeting the demands of their clients and marketplace.
What made your firm successful in the past may not necessarily make it thrive in the future without refining the business model.