CPA Leadership Institute Driving Practice Value and Profitability Timothy I. Michel, CPA MICHEL CONSULTING GROUP LLC Creating Practice Value

Imagine A Firm MICHEL CONSULTING GROUP LLC Creating Practice Value

Imagine A Firm One-firm concept All members share a common vision Understand roles and responsibilities Communication is abundant Consistent way of producing and delivering services A willingness to embrace change Celebrate successes together MICHEL CONSULTING GROUP LLC Creating Practice Value

Imagine A Firm Client- Centered Focuses on delivering value Creates innovative solutions Continually exceeds client expectations Known as a consulting firm vs. a compliance firm Creates raving fans MICHEL CONSULTING GROUP LLC Creating Practice Value

Imagine A Firm Our People An employer of choice Talented – motivated team members Interested in building a career Passionate about what they do Continual system of succession MICHEL CONSULTING GROUP LLC Creating Practice Value

Imagine A Firm Structure Efficient - effective governance Service lines and industry niches New products and services Firm of choice to clients Offers varying career paths MICHEL CONSULTING GROUP LLC Creating Practice Value

Imagine A Firm Our Results Individual goals aligned with firm goals System of accountability Recognizes and rewards performance and contribution Better to be fair than to be equal On-going growth and profitability MICHEL CONSULTING GROUP LLC Creating Practice Value

The Glory Days MICHEL CONSULTING GROUP LLC Creating Practice Value

The recession brought MICHEL CONSULTING GROUP LLC Creating Practice Value

Today’s challenges MICHEL CONSULTING GROUP LLC Creating Practice Value

Today’s challenges A competitive marketplace An aging of the partner group Finding a way to grow Sharing a common vision Executing a strategic plan MICHEL CONSULTING GROUP LLC Creating Practice Value

Objectives Review the attributes of a high-value firm Position the firm for long-term success Drive long-term firm growth, profitability and value MICHEL CONSULTING GROUP LLC Creating Practice Value

Practice Value Model MICHEL CONSULTING GROUP LLC Creating Practice Value

High Practice Value Firms Sustainable growth & profitability Attract and retain good clients & staff M&A attractiveness MICHEL CONSULTING GROUP LLC Creating Practice Value

Practice value attributes 1. Solid leadership & management 2. A great culture 3. Talented people 4. Good clients 5. Solid reputation and relationships 6. Specialty services/industry lines 7. Ongoing growth and profitability MICHEL CONSULTING GROUP LLC Creating Practice Value

Question Does your firm provide meaningful leadership and soft skills training for its people? Yes ___ No ___ MICHEL CONSULTING GROUP LLC Creating Practice Value

The firm foundation Culture Leadership Governance MICHEL CONSULTING GROUP LLC Creating Practice Value

The Firm’s roots Embracing culture A one-firm concept Living firm values Positive communications Relationship building MICHEL CONSULTING GROUP LLC Creating Practice Value

What is a one-firm concept ? MICHEL CONSULTING GROUP LLC Creating Practice Value

The One-firm concept Sharing a common vision Operating policies & procedures Partner support in word & action Partner support of leadership MICHEL CONSULTING GROUP LLC Creating Practice Value

The One-firm concept Creating a firm of choice Partner influence Being accountable to one another MICHEL CONSULTING GROUP LLC Creating Practice Value

Culture Take-away A great culture positively impacts the other attributes of a high-value firm leading to growth and profitability. MICHEL CONSULTING GROUP LLC Creating Practice Value

Leadership MICHEL CONSULTING GROUP LLC Creating Practice Value

What is leadership? Guide – Direct – Influence Leaders: Create the Vision Drive for results Positive communication Coach and mentor Raise up other leaders MICHEL CONSULTING GROUP LLC Creating Practice Value

Leadership Evaluate your firm’s leaders You are being watched! Improving leadership effectiveness Succession - creating future leaders MICHEL CONSULTING GROUP LLC Creating Practice Value

leadership Take-away High-value firms have great leaders, value leadership, and strive to create new leaders continuously. MICHEL CONSULTING GROUP LLC Creating Practice Value

Firm governance MICHEL CONSULTING GROUP LLC Creating Practice Value

Question Does your firm have written job descriptions clarifying the roles and responsibilities of each management position in the firm? Yes ___ No ___ MICHEL CONSULTING GROUP LLC Creating Practice Value

Firm governance “…governance relates to: - consistent management - cohesive policies - guidance - processes - and decision-rights for a given area of responsibility” Per Wikipedia MICHEL CONSULTING GROUP LLC Creating Practice Value

Successful firms 1. Efficient and effective governance structure – Understanding of roles and responsibilities Timely execution Decisions and opportunities Focused approach MICHEL CONSULTING GROUP LLC Creating Practice Value

Successful firms 2. Value management’s forward looking visioning 3. Utilize financial & operational KPIs 4. Continually enhance the culture 5. Position the firm as an employer of choice MICHEL CONSULTING GROUP LLC Creating Practice Value

Successful firms 6. Create new services 7. Provide continual succession 8. Design strong ownership agreements MICHEL CONSULTING GROUP LLC Creating Practice Value

Successful firms 9. Focused partner group – Understand roles Playing to their strengths High-value activities Bringing value daily Not administrative duties MICHEL CONSULTING GROUP LLC Creating Practice Value

Successful firms 10. Increase effective communication – Shared common vision Motivated team Less confusion and inconsistent messaging 11. Increase accountability throughout the firm MICHEL CONSULTING GROUP LLC Creating Practice Value

Firm governance 12. Increased guidance and direction – Effective coaching and mentoring Life-long careers vs. ‘a job’ Development of skills Technical Soft skills Leadership Business development MICHEL CONSULTING GROUP LLC Creating Practice Value

governance Take-away High-value firms have well- structured governance models that focus on creating growth, profitability and practice value. MICHEL CONSULTING GROUP LLC Creating Practice Value

Talented Staff MICHEL CONSULTING GROUP LLC Creating Practice Value

Talented Staff Concept: “First Who, Then What” – from Jim Collins – Good To Great - having the right people on the bus… MICHEL CONSULTING GROUP LLC Creating Practice Value

What are Staff Looking For? MICHEL CONSULTING GROUP LLC Creating Practice Value

Employer of Choice Challenging work Decision Making Making a difference Titles & advancement Flexibility MICHEL CONSULTING GROUP LLC Creating Practice Value

Employer of Choice Performance feedback Involvement in firm Training – Coaching - Mentoring Recognition - Reward Having fun MICHEL CONSULTING GROUP LLC Creating Practice Value

Firm Programs Recruiting Orientation Timely feedback Career choices Buddy system Timely feedback Career choices MICHEL CONSULTING GROUP LLC Creating Practice Value

Firm Programs Comprehensive training Coaching superstars Culture Communicate vision Advancement opportunities MICHEL CONSULTING GROUP LLC Creating Practice Value

Question Does your partner compensation plan reward partners for their level of performance in developing and coaching staff members? Yes ___ No ___ MICHEL CONSULTING GROUP LLC Creating Practice Value

The Partners’ role Creating Talented Staff Providing the spark! Assigning challenging work Involvement with clients Coaching & mentoring Raising up leaders MICHEL CONSULTING GROUP LLC Creating Practice Value

Talented staff Take-away High-value firms have a talented staff that allow them to accomplish their strategic goals and objectives. MICHEL CONSULTING GROUP LLC Creating Practice Value

Good Clients MICHEL CONSULTING GROUP LLC Creating Practice Value

Attributes of a good client Financially successful High moral standards Relationship of mutual respect Pays timely Listen to advice Needs multiple services Refers the firm to others MICHEL CONSULTING GROUP LLC Creating Practice Value

Developing good clients Managing client expectations Be responsive & proactive Consulting vs. Compliance Create raving fans Engagement management Cull out undesirables ‘The Trusted Advisor’ by David Maister MICHEL CONSULTING GROUP LLC Creating Practice Value

Good client Take-away High-value firms have good clients that buy multiple services and look at their CPA as a trusted advisor. MICHEL CONSULTING GROUP LLC Creating Practice Value

Good client Take-away High-value firms have good clients that buy multiple services and look at their CPA as a trusted advisor. MICHEL CONSULTING GROUP LLC Creating Practice Value

Structuring for growth MICHEL CONSULTING GROUP LLC Creating Practice Value

The Client’s View Client-centered firm Proactive – new ideas Offers multiple services Industry specific expertise Value-added services and products Efficient and effective processes MICHEL CONSULTING GROUP LLC Creating Practice Value

Changing growth model A growth culture - everyone plays a role One-firm concept – working together Move to Segmentation Create differentiation in the marketplace Build solid reputations and relationships Define roles and responsibilities Create raving fans Engagement focus – adding value MICHEL CONSULTING GROUP LLC Creating Practice Value

Service lines – Industry niches Client concentrations Technical expertise Growing new segments Developing new products Supporting firm initiatives Supporting other partners MICHEL CONSULTING GROUP LLC Creating Practice Value

Reputation /relationships Referral base Distribution channels Clientele Thought Leadership Writing articles Speeches Research calls MICHEL CONSULTING GROUP LLC Creating Practice Value

Growth structure Take-away High-value firms are creating a lasting growth culture and are applying strategic marketing techniques to achieve growth. MICHEL CONSULTING GROUP LLC Creating Practice Value

Improving the results MICHEL CONSULTING GROUP LLC Creating Practice Value

the Partner group MICHEL CONSULTING GROUP LLC Creating Practice Value

Improving Long-term Profitability L = leverage x U = utilization B = average billing rate R = realization percentage M = margin MICHEL CONSULTING GROUP LLC Creating Practice Value

Partner Activities that bring value Improving profitability High-level activities Think like an owner Improve leverage Keep staff busy Client base profitability Good business hygiene MICHEL CONSULTING GROUP LLC Creating Practice Value

Hitting the mark Strategic planning Understand partner impact on profits Determine partner strengths Assign goals accordingly Accountability Plans Link to compensation MICHEL CONSULTING GROUP LLC Creating Practice Value

Partner Compensation MICHEL CONSULTING GROUP LLC Creating Practice Value

Accountability & compensation Partner plans: - Utilize talents and strengths - Create value daily - S.M.A.R.T. goals tied to the firm’s strategic objectives - Interim review & guidance - Results impact compensation Base comp vs. Incentive comp MICHEL CONSULTING GROUP LLC Creating Practice Value

Whole > sum of The partners MICHEL CONSULTING GROUP LLC Creating Practice Value

Imagine A Firm MICHEL CONSULTING GROUP LLC Creating Practice Value