Why are some accounting firms moving up the continuum of value while others remain firmly rooted in transactional and compliance work? The answer often has to do with a lack of a firm vision and strategic plan. The talent shortage, hybrid work environment and succession have only increased the importance of a shared vision and game plan, while reducing the timeline to one to three years versus the traditional planning timeline of five to 10 years.
Partners, managers and staff are stretched thin in most firms. Too often, partners are responsible for business development, marketing, production and training, as well as firm management. Also, the average partner in a CPA firm earns a base salary of $220,793 according to the LLH 2023 Salary Guide. Remember that average is where the worst of the best meet the best of the worst.
To put this in perspective, the average equity partner in firms over $5 million is making over $525,000 (as reported in leading firm surveys). The best of the best partners are making more than $1 million. Short on time and doing well financially without strategic planning, it can be hard for some to see why they should bother, yet the need for sustainability and future deferred compensation payments are real. According to Dan Sullivan, founder of Strategic Coach, money is only one of the four freedoms employees desire. The other three freedoms are time, purpose and relationships.
Why your firm needs a vision and strategic plan
The profession is in transformation (on a journey) and firms need a road map. Top talent wants to know where the firm is going and how they fit into the plan. Without a vision and strategic plan, firms operate without consensus, spread their resources too thin, avoid accountability and severely limit their potential.
I’ve used the analogy before of an athletic coach who goes into each week’s game without a game plan or a means of keeping score. Under such circumstances, even with quality players on the team, their chances for success would be slim. With the rapid pace of change happening in the accounting profession, operating without a vision and strategic plan is like a coach showing up to the playoffs without a plan or a team that knows what they’re supposed to do once they get there.
Let’s review the steps required to develop a strategic plan.
1. The visioning process. It all starts with a shared vision that captures your firm’s purpose and values. Ask yourself the following questions:
- What type of future do you want?
- What is your business model?
- Who is going to lead?
- What is your brand?
- Who are your ideal clients (now and for the future?
We recommend looking at a three-year window for your vision. Make your vision concise so that it’s easy for employees to remember and communicate it consistently. Also, make it narrow in focus. Remember, you can’t be all things to all people. The focus should be on what you want to be, do, have, create and experience. An easy way to summarize is to focus on how you can add value to the top 20% of your clients. What do they “want” and how can you add value?
2. The plan. Your strategic plan is a roadmap for accomplishing your vision. It should identify and document:
- Strategic objectives in the five pillars critical to a firm’s success: leadership, talent, process, technology and growth.
- How progress toward those objectives will be measured.
- Strategies or initiatives in support of those objectives.
- Due dates/milestones and a responsible party (who).
For example, if firm leaders identify increased revenues and profits as a strategic objective, your strategic plan might include the following:
- Measurement: Percent growth in annual revenue or growth in revenue per full-time equivalent
- Initiatives: Package and price client advisory and consulting services, identify target clients and have conversations with clients and prospects who could utilize advisory and consulting services.
3. 90-day game plans. Once the firm’s strategic plan has been approved by firm leaders. Every partner, manager and team member should develop a personal 90-day game plan that supports the strategic plan.Many firms that do have a goal setting and review processes in place only do so on an annual or semi-annual basis. This is not frequent enough to keep people on track and committed to their goals. We recommend 90-day plans to ensure that people remain focused on achieving results. Firm leaders and managers should view this as coaching. After-action-reviews are a great tool to learn and grow.
The plan should document each employee’s goals for the upcoming quarter. Having a written plan increases commitment by the employee as well as their managers. This is a critical step in developing a “self-managed” company. Leadership and vision are not the same as a self-managed company. Make people responsible for their goals and hold them accountable, including the scheduling of their quarterly accountability sessions.
4. Accountability reviews. Accountability reviews document the results of the previous quarter’s 90-day game plan and are the basis for the assessment (self and supervisor) of a team member’s performance.Accountability is the fastest way to improve results, and it starts at the top. When you start holding people accountable, you’ll quickly identify the ones who are getting results for your firm and those who are underperforming. Today’s workforce seeks timely and relevant feedback.
The convergence of multiple technologies and digitization of processes are pushing firms to transform their service offerings, revenue replacement strategies, technology ecosystems and business models. Your firm should be clear on its objectives to improve productivity and remain relevant. No single strategy will guarantee the ability to sustain success in today’s rapidly changing profession, but a vision and one-page strategic plan are a necessary first step.
Peter Drucker did say “Culture eats strategy for breakfast.” He did not diminish the importance of visioning and planning. Is your culture an advantage or obstacle?
Think — plan — grow!
