Change for Survival’s Sake

iShade brings this informative and insightful piece to you, authored by accounting profession thought leader Craig Baldwin.  

I have the unique perspective of working and talking with owners of 1-2 person CPA shops to partners at big four firms on a daily basis. In a short amount of time I’ve met the laggards, the braggarts, and the leaders of the industry. One thing they all feel is the changing tide of the accounting industry. Yet the real question every individual asks is, “How will it affect my firm?” The question I pose is a better one, “What are you going to do about it?”

Lots of things are changing or finally taking hold in the industry. The cloud, value pricing, succession planning galore, a renewed entrepreneurial spirit in the industry. Oh and wait for it… millennials. The same song and dance you’ve heard before, but let’s try and really break it down.

As Larry Ellison, founder and CEO of Oracle has ranted in the past, the cloud is merely an evolution of the Internet packaged in a much prettier box. We’ve been experiencing “the cloud” for the last 10+ years. But somehow the tagline of cloud computing has sent people in our industry into a frenzy akin to city dwellers of a Godzilla movie.

In reality the cloud is just more present in our day-to-day lives than it ever was before. Technology spawned from the cloud gives CPAs the power do to things better and faster than they ever have. The interesting thing about the cloud is never has our industry straddled “old” and “new” technology like we do now.  Technology in the SMB accounting world is hitting on all cylinders and giving us efficiency we’ve never had. It’s only a matter of time until efficiencies of the same scope hit the attest services scene. I know, because I’m currently working on one of those solutions.

Value pricing is another idea that seems new but really isn’t. Although it really can lead to more money in our pockets, yet not until recently have we seen it take hold in the industry. Why? My take is just like the Apple Newton, it was before its time.

Our day-to-day functioning wasn’t ready for a Newton in 1994, but now take away my iPhone for 45 minutes, and someone is getting it! It took us a while, but we’re okay with the idea of our lives being housed on a computer.

The day-to-day of accounting firms hasn’t changed that much in the last 15-20 years. QuickBooks is (still) king, Excel is the godfather of data, and there are always e-mails out the wazoo. We hid behind the hourly bill for 100 years, and I’d argue mainly due to insecurity about our inefficiencies.

The beautiful thing about hourly billing is it’s a constant barometer. It can be our friend when we go over budget (although a possible strain on client relationships) and a sign to slow down when we’re flying through work.

You’ll notice that firms embracing value pricing are tech adopters. The word “inefficiency” isn’t in their vocabulary. Their full suite of cloud technologies allows them to come from behind the inefficiency curtain and deliver on realizable value. If my time were really worth $200/hour, I’d collect money from my friends on NFL Sundays and my girlfriend on date nights. Your time isn’t worth anything, but your work is worth everything.

I’ll admit, as former big four auditor and newcomer to small business accounting, I can’t give much advice on succession planning. But I can talk about success planning.

Last week I sat down and set some goals for our firm. We are 3 guys who offer bookkeeping and outsourced CFO services. Given our performance in the last year, I projected a goal of $1 million in revenue for our firm. The kicker? It would require a total of 5 professionals (bookkeepers, CPAs) and 1 additional employee. Quick math gives us an efficiency of $166,667 in revenue/employee.

That number felt staggering, so I decided to do some quick research into what the big boys do. So I pulled up the top 100 accounting firms as listed by Accounting Today. Here’s revenue per employee for each of the top 100 firms:

Baldwin_Top 100

While the numbers don’t change a ton across the board, you can tell efficiency does drop a bit going down the top 100, presumably due to billing. What’s interesting is that if I stuck our current firm into this data set, we’d be number 65 for revenue per employee… and we do not provide a single attest service.

So the question becomes, why would we? The real point at hand is that our embrace of the newest technology available, value pricing, and a fresh perspective on what an accountant actually does has allowed our business to hum. So what we you could apply those same methodologies and mindsets to attest services? I imagine we’d be a lot higher than 65th.

Another interesting thing I found was that for the 97 firms that had complete sets of data, 54 of them had a higher % increase in hiring than they did in revenue, year-over-year. Which tells me that a lot of these firms are hitting the proverbial ceiling of their respective models. Commoditization has been chasing the top firms down for years and each year that seems to become more and more evident.

As Gary Boomer stated so clearly a couple of weeks ago, getting into the value chain and moving upwards could be the smartest thing you and your firm do. The real question is – how many of these top firms swallow their pride and jump in? If you decide to keep fighting for audits, don’t say I didn’t warn you!

More than just inward facing operations is the drastic change taking place in the market itself. We now have a huge chunk of millennial entrepreneurs and business owners coming into the market for accounting services. A recent study of 1000 SMEs (small to medium-sized enterprises) by CCH discovered that more than half of the respondents would replace their accountant if they didn’t move to a cloud-based system. And in owners aged 18-34 (ahem, millennials), that percentage was 72%.

What many firms do not realize, nor do they want to, is we are currently in one of those every 30-40 year periods where the habits and expectations of our population are drastically changing. To put this in context for some of you, I think the last time this could be said is when some guy named Bob told us, The Times They Are A-Changin‘.

The individuals who’ve hardly ever known a world without the Internet are now business owners (soon to be needing tax, audit, and consulting services you top 100) and they have very different expectations than their parents. Millennials want online, on-demand, and transparency. While this is worrisome for firms still operating like it’s 1990, it’s a huge boon of success for firms that easily fit that demand. Just ask Michael Hsu of DeepSky, as found in his recent interview with Aspire Magazine.

Hopefully by now you realize the picture I’m trying to paint. The disruptors and idea curators are coming into the accounting space, in fact they’re already among us. Our industry is facing a perfect storm of altering conditions all at once: game-changing technology, deviations from century-old business models, and a fresh new marketplace. Such conditions will leave behind huge losers and even bigger winners.  Which begs the question – which one will you be?

Bio
Craig Baldwin is former big four auditor, partner at Upsourced Accounting, and Co-Founder of GetSqrl. He spends his days in spreadsheets and his nights writing about running a modern accounting practice.

Survival

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What’s On Your Highlight Reel?

As always, Accounting Today’s Top 100 Firms edition is so full of substance it’s like going to a meat ‘n cheese buffet. Strap on the feed bag. The section that grabs my interest first every year is the “Firm Highlights” summary. Each Top 100 firm has but a few lines to put their best foot forward touting their crowning achievements of the previous twelve months. Most of these firms display their broad strokes in this section with mentions of mergers, acquisitions and new service lines. For those firms declaring “had revenue growth of x-percent,” it leaves me thinking that nothing special happened with their firm and that they merely grabbed a few new clients and it was all business-as-usual. I suppose some years are like that, but I do wonder what’s below the surface of that “ten-percent growth” statement.

The following are some of the “firm highlights” that struck me:

*Moving to managing by service line
*Formed two new service areas: a specialty tax services group and a transaction advisory services group
*Expanded strategic planning task force to include “up and comers”
*Deepened industry expertise through hiring experienced staff
*Fastest growing client category – real estate
*Launched an online risk management tool
*Formalized wealth management practice

What is your firm or company doing in 2013 that will be worthy of the highlight reel this time next year? It had better be something more dynamic than:

*Moved to a new office building
*Had a hip deejay at the post-April 15 party
*Got a new coffee machine in the company kitchen

Coffee Pot_Old

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As a reader of this blog, hopefully, you are also a member of iShade. If you’re not, sign up right now.

iShade is THE accounting news source (keep it open on your computer every day).
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How Did “National Meet the Firms Week” Pan Out?

Did you participate in National Meet the Firms Week? Did your public accounting firm, university accounting class or anyone you know take part in it? Either way, the inaugural National Meet the Firms Week was a huge success–and there’s more to come.

Talking with James Hosman, National Meet the Firms Committee Chair and COO of CollegeFrog, Inc., he commented, “We had over 200 firms and 2500 students register for the event. Students are already actively applying for jobs and firms have begun interviewing. Students and firms should login to ensure their profiles are complete so they can be properly matched with firms.”

Although the event is over for this year, students are encouraged to continue to register on CollegeFrog for career opportunities since those employment options hop in year-round. In addition, all of the partners that put on National Meet the Firms Week provide services that can be used by both firms and students.

“This was a great event and we look forward to next year,” remarked Hosman. “Who knows, maybe we’ll put another one on again in the spring….” Stay tuned to iShade’s Curator Comments for more on National Meet the Firms Week in 2013!

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As a reader of this blog, hopefully, you are also a member of iShade. If you’re not, sign up right now. iShade’s BulletIN is THE accounting news source…keep it open on your computer every day.
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Press Release on the 250th Blog Post


Top New Online Accounting Community? Right Here!

iShade was awarded “Top New Online Community” by Accounting Today!

St. Louis, MO – iShade.com – the online professional networking site exclusively for the accounting profession – announced the honor of winning Accounting Today’s “Top New Online Community” award.

Part of Accounting Today’s “Top New Products” annual awards, the accolade recognizes the relevancy and value to the accounting profession and the growth of the iShade audience.

A free online community exclusively serving the accounting profession, iShade provides users with a robust platform for collaboration, networking and research. iShade is “The Accounting Profession Online” and part of the next wave of niche-oriented social media sites.

“We are thrilled to be recognized by our peers at Accounting Today.  iShade’s membership continues to thrive, utilizing the features and benefits in the site that result in improving their respective accounting practices,” says Lisa Benson, Executive Director of iShade. “This stamp of approval by the profession in our first year has been amazing.”

iShade’s features are numerous, including: the iShade BulletIn, moderated and user-created topical groups, the tools and resources center, a referral tracker application and companion iPhone app, a turn-key firm intranet, daily blog aggregation, a dynamic Marketplace, online CPE, the 2020 Gateway and so much more. iShade data also powers the AccountantSleuth.com directory.

Rob Nance, the Curator/Chief Content Manager for iShade comments, “The recent implementation of the iShade BulletIn was the first of many feature additions,” says Nance.

Current projections show iShade reaching the 10,000 users and 1,500 member firms milestones in the very near future.

About iShade.com

iShade.com is a free online professional community exclusively for the accounting profession.  iShade provides a platform for collaboration, networking, research, and tools and resources.  iShade is located in St. Louis, Missouri.
iShade.com
The Accounting Profession Online

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“Top New Online Community” Award Goes to iShade

iShade has been awarded “Top New Online Community” in Accounting Today’s 2012 Top New Product Awards

St. Louis, MO – February 16, 2012

iShade.com – the online professional networking site exclusively for the accounting profession – announced the honor of winning Accounting Today’s “Top New Online Community” award.

Part of Accounting Today’s “Top New Products” annual awards, the accolade recognizes the relevancy and value to the accounting profession and the growth of the iShade audience.

A free online community exclusively serving the accounting profession, iShade provides users with a robust platform for collaboration, networking and research. iShade is “The Accounting Profession Online” and part of the next wave of niche-oriented social media sites.

“We are thrilled to be recognized by our peers at Accounting Today. iShade’s membership continues to thrive, utilizing all the features and benefits in the site that result in improving their respective accounting practices,” says Lisa Benson, Executive Director of iShade. “This stamp of approval by the profession in our first year has been amazing.”

iShade’s features are numerous, including: the iShade BulletIn, moderated and user-created topical groups, the tools and resources center, a referral tracker application and companion iPhone app, a turn-key firm intranet, daily blog aggregation, a dynamic Marketplace, online CPE, the 2020 Gateway and so much more. iShade data also powers the AccountantSleuth.com directory.

Rob Nance, the Curator/Chief Content Manager for iShade comments, “The recent implementation of the iShade BulletIn was the first of many feature additions,” says Nance.

Current projections show iShade reaching the 10,000 users and 1,500 member firms milestones in the very near future.

About iShade.com
iShade.com is a free online professional community exclusively for the accounting profession. iShade provides a platform for collaboration, networking, research, and tools and resources. iShade is located in St. Louis, Missouri.

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Tax, H.R., Business Issues and More

It’s all in the new iShade newsletter. Everyone is loving iShade, the recipient of Accounting Today’s “Top New Online Community” award! Check out the current bi-weekly newsletter…then join iShade!

Click on the logo below to read the brand new edition!

Three Nuggets of Inspiration

So many public speakers, business consultants and CEO types talk about “being inspired.” Most of us strive for inspiration of some type, seeking to improve everyday.

The following three gems are all in the spirit of inspiration…

#1: Michael Jordan
“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. Twenty-six times I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”

#2: Australian Ultra-Marathon Man Pat Farmer
He recently completed an epic run from the North Pole to the South Pole in a feat of unfathomable endurance. Over the course of 262 days he traveled 13,000 miles, which is an average of 49.6 miles each and every stinkin’ day.

#3: The Accounting Profession
Today’s busy accounting professional knows a good thing when he/she sees it. As a result of iShade’s jump out the gate in our first year of existence, Accounting Today bestowed iShade with the honor of “Top New Online Community.” You inspire us!