2017 Oscars or: How I Learned to Start Worrying and Doubt the Auditors

I can’t recall the last time accountancy was at the media forefront like this.

You’ve no doubt heard of the fiasco happening late Sunday evening/early Monday morning at the Oscars.  La La Land was mistakenly announced as the Best Picture winner, and as producer Fred Berger was giving his thank-yous, stage managers with headphones were bustling about the throng of people with envelopes.  You know how it ends, right?

Moonlight was named the real Best Picture winner.

Over these past few days, there’s been a barrage of finger-pointing as to who should be held accountable for the mishap.  Emma Stone?  No, she had her envelope with her after she won.  Warren Beatty?  Possibly, he should’ve been able to read that it wasn’t the Best Picture card and make an announcement as such.  But he showed it to Faye Dunaway – she should’ve recognized it, too.

And yet…they wouldn’t have gotten confused if the correct envelope had originally been placed in their hands.  Which led the Academy of Motion Picture Arts and Sciences and their auditing firm, PwC, to trace the blame to one person.  Brian Cullinan is the chairman of PwC’s Board, and the Managing Partner of the firm’s Southern California, Nevada and Arizona practices.  Apparently Cullinan was so starstruck over the course of the evening that he neglected to pay attention to handing the correct envelope one final time to Warren Beatty.

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A photo Cullinan took of Emma Stone moments before the gaffe.

This led to the onstage confusion, culminating in the most ghastly mishap in the 89-year history of the Academy Awards, and a deeper look on the part of the Academy as to the result of this entire ordeal.

First of all, what’s going to happen to Brian Cullinan?  Will he lose his position within PwC, or will he be allowed to stay?  As Tim Ryan, U.S. chairman and senior partner of PwC told USA Today on Monday, “At the end of the day, we made a human error.”  Pretty big human error, though, if you ask me.  And it’s not like it happened with one of the smaller awards, no, it was the biggest award of the night.  Definitely no bueno.

And yet, there are those that would argue that it was an honest mistake.  But how could it have been a mistake when the award was printed right on the envelope?

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See “Actress in a Leading Role” printed right on the envelope?

Further, I can only speculate what this will mean for the reputation of PwC moving forward.  PwC has counted Oscar ballots for 83 years.  That’s a long time to go without a single blemish on their part.  But this incident, a rather large incident, at that, may very well provide grounds for reconsideration.  Would this mean the Academy goes with another firm moving forward?

The crystal ball is a bit fuzzy at this point, but as I see it, big changes are coming to next year’s ceremony to ensure not just the security of the Academy Awards, but their integrity as well.  Maybe a decade or so down the road, they’ll make a movie about this.  Going off resemblance alone, Matt Damon would be a perfect choice to play Cullinan.  I mean, look at those eyes!

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In closing, as I’m a theater buff by heart, a particular set of lyrics from Rodgers & Hammerstein’s Oklahoma! comes to mind:

It’s a scandal. It’s an outrage.
It’s a problem we must solve.
We gotta start a revolution!
All right, boys. Revolve!

Paving the Path to Growth: Creating a Sales/Business Development Culture for Your Firm

Hey, everyone! Things have been very busy lately, but I didn’t want to leave you without a post, so I’m reblogging this post from a few months back. Enjoy!

Introspections of a marketing gentleman

So you’re an accountant in a small- to medium-sized firm.  You’re looking to build your client base but you don’t really know where to start.  Or maybe you’ve been in business for a while, and you want to go to the next step.

What can you do?

Let’s look at Nick Nappo’s Strategies for Sales and Business Development.

1. What makes you unique?

Before you start work on growing your firm, you need to have clear marketing objectives in place.  And before you do that, you must first determine what separates you from all the other firms out there.  The professional services marketplace is incredibly oversaturated anywhere you go, but every firm is unique in its own way.

So what is it for you?  Is it your approach to client service?  Do you have a unique story to tell through your compelling culture?  Do you give actively to your…

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Minimizing Your Client Base – When to Fire a Client

via Daily Prompt: Simple

I’ve always felt simplicity is conducive to maximizing a firm’s growth potential.  If you have too many services or focus on too many niche industries, you won’t be able to grow as quickly as you would if you specialized since you’re now a jack-of-all-trades, master of none.  This is why so many industry experts, including our friends at Hinge, tout industry specialization as one of the preeminent growth strategies for professional services firms.  But instead of focusing on the firm, let’s take a minute to look at another crucial component of the operation – the firm’s clients.

How many clients can you have before it becomes too many?  The answer is unique to each firm, but in a perfect world, you don’t have to fire any clients.  You’ll have a great relationship with each, both parties will prosper from the relationship, and they’ll keep referring you to new clients.  Of course, it doesn’t work that way, and occasions will arise when you must fire a client due to one or more outstanding reasons.

There are a wide variety of situations in which this would be the appropriate action, but let’s take a look at just a few.

  1. The client is temperamentally difficult. We’ve all been there.  You answer the phone and hear their voice and your stomach sinks a little.  And you probably think, “Why do I even deal with them?  I don’t want to associate with people who are just plain rude to me and our staff.”  So why do you?  Life’s too short to deal with people that are going to drain you of energy and motivation, and that’s the last thing you need in your practice.
  2. The client doesn’t listen to you.  Are they argumentative?  Do you recommend a strategy to them, only to find later that they haven’t taken action as you instructed and now you have to fix it?  Have you also heard that they’ve been consulting someone else?  Then you probably don’t need them.
  3. You just don’t provide enough services for them.  This is something else to keep in mind.  Is their difficulty worth the few services you provide for them?  Have you done all for them you think you can?  And this actually relates to our next situation…
  4. The firm is moving in a different direction.  It happens.  You wish to concentrate on objectives that are different than those with which you started, and certain clients may not align with those objectives based on where they are in their development.  Do you keep them on when you won’t be doing them any favors because you won’t be facilitating a mutually beneficial relationship?  Or do you let them go in order for them to pursue a new opportunity with an advisor that’s better suited for them, and in order for you to really prosper?

Now let’s look at how firing clients can actually be great for your practice.

  1. You can work with clients that you know you’ll service in the best possible ways.  Firing clients who fall outside the boundaries of your target industries will allow you more time to provide increased services and proactive advisories to your A- and B-clients.  It also allows you to improve your avenues of communication with them – you can follow up better on emails and phone calls and take more time to meet with them, thereby ensuring your time is well-spent in all directions providing the best service to them.
  2. It’ll maximize your resources.  Again, you know your time and the staff’s time is well-spent on your best clients.
  3. It improves morale.  Because let’s face it, when you let a temperamental client go, it removes a dark cloud from over the office.  People can be a little more at ease when they come to work, since they know they won’t have to deal with *that client* anymore.
  4. It makes things more simple.  To come full circle, simplicity is so important for long-term growth.  To dismiss a client doesn’t just mean you’re lightening your client load, but more importantly, you’re allowing yourself more time to do what you need to do to succeed.  And if you do that, you’ll be successful.

Because who wouldn’t their work life to be a little more simple?

Do you have a story about firing a client?  Sound off in the comments, or let me know on LinkedIn.  Ciao for now!

Integrating Practice Management With Marketing: Positioning for Growth

Happy New Year to all!

Sorry for the delay – I’ve had a lot of irons in the fire since the start of 2017.  But a lot of exciting things on all fronts.  Hopefully I can tell you about them soon!

In the meantime, I want to discuss something that is likely to become a hot topic in the finance/accounting worlds over the next few years.  Actually, it’s two things meshed into one: practice management and marketing.

See, practice management is directly related to the strength and growth potential of any firm.  If a firm is structured properly and effectively, it positions itself in the best possible way to succeed in the marketplace through outstanding client service and dedication.  However, many partners and professionals may not understand how successful practice management strategies relate directly to the firm’s marketing efforts.  In truth, there’s a direct correlation between the strength of a practice management system and the effectiveness of the firm’s marketing, and there are various strategies firm leaders can undertake that will, in turn, make a valid contribution to marketing their firms.

Let’s take a look at some of these strategies!

1. Leadership enforces the mission and core values, which trickle down through the firm and create a positive, growth-minded work environment.  The mentality of any organization begins at the top and filters down to the rest of the team.  If leadership embraces the mission and core values of the firm, everyone else will most likely do the same.  In turn, this enables staff to do their best work, and partners to service their clients in the highest-quality, most proactive ways.  Those are pretty great ideas to market to your publics: a firm with strong leadership that believes in the firm’s mission, a staff that wants to grow and do their best work, and a firm where people are happy.
2. Embrace technology to improve communications.  Find a CRM system that’s accessible and documents activity and even manages email communications and event invitations.  There are so many good ones out there – HubSpot, Practice CS, Microsoft Office 365, among others.  You want a system that integrates inbound marketing with your practice management activities not just for consolidation purposes, but so you can keep on top of external client communications (email, newsletters, invitations, etc.) while you perform services for them.  Many systems also help you to keep track of leads, and document reactions and response time for any marketing materials you send.
3. Allocate company resources to your niches.  From a marketing standpoint, it would behoove a firm to emphasize its services in niche industries and develop expertises in those same areas.  After all, it’s widely known that focusing on a niche is a sure-fire path to growth.  So in order to facilitate that growth, bring the niche specialization mindset to your practice management activities.  Dedicate time and staff to servicing A-clients and cross-selling in specific niche industries.  This supplements your marketing campaigns in those categories because you’re carrying the dedication and expertise you market into the reality of your practice.  Practice management and marketing integration – bam.
4.  Use KPIs.  Make sure you integrate Key Performance Indicators into your practice management activities that relate to marketing.  These include billable/non-billable time, staff/partner time, and projected billings against marketing budget.  This metrics quantify the implementation of the diligent, dedicated services you market, and integrate it into practice management in another fashion.

If managed properly and effectively, practice management synergizes with marketing on a variety of fronts.  Demonstrating expertise and technical knowledge is certainly key when marketing a firm, but a strong management structure contributes to the efficiency, communication methods, and overall morale of the operation, which, in turn, puts the firm in a better position for long-term organic growth.

Accounting Firm Mannequin Challenges and More

About a month ago, one of my LinkedIn connections who works extensively within the professional services arena posted about the #MannequinChallenge.  She asked in her post, “who will be the first accounting firm to do it?”

Although it seems no firm immediately answered her request, there are a few that have come into the fray in the past couple weeks.

The first I noticed is from my acquaintances at Prager Metis in New York City.

Although a typical Mannequin Challenge video utilizes Rae Sremmurd’s “Black Beatles” in its soundtrack, these guys deviated from the norm.  Not that I’m at all complaining.  AC/DC is for all time.

Then I discovered other firms soon after.  Below is from Wermer, Rogers, Doran & Ruzon from Joliet, Illinois.  They did a special Christmas theme!

We also have the Norman, Oklahoma office of Eide Bailly.

Now let’s go across the pond to BKB Accountants in Poole, England.  Watch out…this is the explicit version.

PricewaterhouseCoopers even got in on the fun in Hungary…

Switzerland…

…and Canada.

Those are the only ones I’ve noticed so far.  Any others out there?  I’d love to hear about them!

Finally, I want to end today by sharing with you a wonderful video from this past spring.  California-based Armanino created this announcement about their new casual dress code policy.

There’s a fantastic use of creativity here, and I love that they went in this direction.  It definitely isn’t something you would expect to announce this sort of thing, but it’s so apropos in terms of the instructional manner of it.  Props to their video production people for truly embracing the 50’s educational film aesthetic, from the grainy quality to the peppy muzak to the baritone-voiced announcer.  And here’s another interesting bit of trivia – “Jimmy” is played by Sean Taylor, Senior Tax Accountant at the firm.  In a recent interview with Jeff Phillips from AccountingFly, Sean mentioned that he had never acted in anything prior to doing this video.  I would’ve never guessed – he came off as an absolute professional.  Well, maybe the fact that he had no experience contributed to his stellar performance.

Anyway, those are some pretty dope videos I wanted to share before the holiday.  It’s always nice to see fun and creativity running rampant in firm culture.  I’ll try to sneak in one more post before 2017, but until then, follow me on Twitter at @HeyNickNappo (changed my handle back) for more good stuff!

Happy Holidays, crew!

 

 

Looking Ahead: Navigating the Millennial Economic Climate

I recently read a very thought-provoking piece by Hanna Brooks Olsen at Medium, entitled “Let’s Talk About Millennial Poverty”.  If you haven’t already, I recommend you check it out here.  It’s an interesting commentary on the overreaching current economic situation of Generation Y, supplemented by various statistics and citations of data supporting Hanna’s claim.

The claim that as a generation, Millennials are headed towards irrevocable poverty.  I think that might be a bit extreme, but I absolutely agree with the idea that we’re not as financially stable as our preceding generations, and this situation has the potential to affect a lot of things.

She writes, “In the United States, approximately 15% of residents live below the poverty line and another 10.4 million are considered ‘the working poor.’ And yet, we have very, very concrete — and very incorrect — perceptions about how poverty actually looks. And it does not look like Millennial college grads. So we kind of keep ignoring it.

The disconnect is simple: Poverty doesn’t look the way we think it looks, so we don’t think people who are, in fact, poor ‘look poor,’ so we assume that poverty isn’t really that bad. We also assume that by taking steps that have traditionally been associated with improved economy status, it will get better.

We are now seeing that it might not.”

Now, I can’t speak for her situation as it was when she wrote this piece in early 2015, but she makes a really valid point.  I’m not one to say who deserves to live in poverty and who doesn’t based on their life situations and decisions.  I’m only intrigued by the notion that many Millennials at the moment are living below a certain standard while the cost to do so is high above their means.  From my own experience, I can recall many of my friends, myself included, who were told to pursue their dreams through a college education, only to find those dreams hindered by one or more obstacles – lingering debt, mediocre employment prospects, and the rising cost of living in tandem with rising salaries.

If you think about it, there is very little justice for people like us.  We’re told that we can do anything we want, only to find that it might not be so and we’ll spend the rest of our lives paying it off.  This detriment to personal finance impacts other things, too.  As Hanna wrote, “I don’t own a vehicle, and I likely won’t be anywhere near able to afford homeownership until I’m well into my 30s (no matter how many people tell me it’s ‘actually not that hard’ to get together a downpayment) in no small part because I started my path to adulthood, as I was told to do, at a five-figure deficeit.”  In fact, I was at a business breakfast a while back, and when speaking to a mortgage officer at a local bank, I asked how Millennial debt would affect the continuing issuance of mortgages.  His reply, grimly – “Not good.”

So in spite of these issues, how does the business world react?  How will the business world react, when we fully assume parenthood and higher, C-suite roles within companies and organizations?  As financial situations reflect purshasing behaviors and decisions, I think it would behoove companies to respond through their product and service lines to changes in the economic ecosystem.  Certainly the housing market will be impacted, but what about automobiles, as many millennials in recent years have flocked to urban areas with viable transportation systems, thus eliminating the need for a car?  What about banks, facing a dillemma with millennials who have reduced faith in their kind of institution, as well as increased ability to bank online and on phones instead of in a branch?

Finally, there’s the issue of professional advisors – accountants, attorneys, financial advisors.  From a client standpoint, the goals with millennials are to have them look towards the future – save money and plan accordingly.  But from the other side of the desk there are interesting dialogues to be had.  As millennials reshape the economy with the meager amount of money they might have, what does that mean for accountants and advisors?  They’ll have to constantly keep abreast of changes and trends, but from a workplace standpoint, how will having less money than their precendents and coveting increased independence in thought and lifestyle change advisory?  And as it changes the scope of advisors, thought leaders for every conceivable industry, how will the paradigm shift spread across the entire economic spectrum?

Hard to say.  I’m not really sure what the future holds for us as a generation.  We’re certainly not holding ourselves to the same standards as the Boomers or Silents, but maybe that’s not a bad thing.  Maybe this change in ideology will bring about a better working world, one that reflects the consciousness of Millennials to create a world compatible with their beings.  Or, inversely and morbidly, it could cause the working world’s demise, as fashioned by the generation’s self-interest and lack of a substantial financial safety net.

All I know is, I’ve got my popcorn, so I’ll just sit idly by and continue the conversation with you all while we watch it unfold.

The Future of Value Pricing – What Lies Ahead?

You may have heard some talk about value pricing – the notion of selling a commodity at a perceived value.  It’s been reaching a lot of mouths in recent years among the accounting industry, particularly in certain circles.

Recently, the good folks at Thriveal CPAs (“Accounting for the brave”) held their annual Deeper Weekend in Greenville, South Carolina.  In their live podcast from the event, Thriveal compadres Greg Kyte and Jason Blumer discussed their biggest takeaways from the event, and asked some of the attendees what their biggest takeaways were, as well.  And much of the conversation focused around value pricing.

It’s an idea that’s seemingly gained leverage among small to medium-sized firms.  After all, they’re more likely to have the size and independence from standard convention to experiment with alternative pricing structures.  But could this diversion from the billable hour ever exist in a larger firm, thereby spreading to other larger firms, eventually becoming the industry status quo as it presumably moves to the Big 4?

Here’s what some of the Deeper Weekend attendees had to say.

“Our biggest enemy is probably ourselves.  We always think in numbers.  Let [the client] make the [pricing] decision, not us.” – Jason Miller, Software CPAs

“I’m going to raise prices because my value is so much higher than what I’ve been charging.”- Nesha Pai, Pai CPA PLLC

“I don’t think a lot of [accountants] [believe in themselves].  I think a lot of them fear confrontation.  They fear that the client is gonna reject them on the basis that they’re charging too much…but accountants aren’t taught to communicate how they actually bring that value, how they save the tax.  We gotta believe in ourselves, and actually know that we’re worth it.  We are worth the fees that we charge, and the clients do get their money’s worth out of us.” – David Rynne, Real Time Accounting

“Selling is emotional all the way through.  The value is sustinent on the emotional components and all the things you’re gonna deliver, and the value they’re gonna get, and you’re a sub-amount to that value, as well.” – Ian Vacin, Karbon

“I’ve been practicing value pricing for many years.  I was reminded again of the high value that I have to help another human walk through some type of change process.  I’m learning that it’s probably about time to raise our prices pretty significantly to reflect the value that I know we can give people.” – Jason Blumer

There’s a lot of great ideas here.  To start, value pricing is advantageous for a firm because it assigns a price based on the value of what the client is actually getting and how they will gain from it, and not just how many hours the accountant worked.  If you focus on hours worked, then the deliverables, regardless of how much they help the client to succeed, are produced at a fixed rate.  Nothing more, nothing less.  On top of that, there’s the uncertainty of it – you don’t know how much time the CPA will spend on your account, therefore you don’t know how much the transaction will cost.  It might be okay for your mechanic or plumber to operate in that fashion, but where your business – your mode of daily living – is concerned, do you really want to put your accounting professional to work not knowing how it’ll ultimately affect your bottom line?

Further, if an accountant assigns a price based on their perceived value of their work, it helps them to truly realize the extent to which they’re helping their clients, and how their clients will thrive because of their work.  It can be tricky to begin with, however, as some accountants might not know how to determine their true value, sometimes out of an inability to quantify it, and sometimes, as David Rynne said, out of fear.

But the thing is, the perception begins with the accountant.  Once the accountant sets the value-based price and sticks to it, the client will embrace that price as the true indication of the accountant’s worth.  The client won’t do it for the accountant unless the accountant does it first.  And Greg Kyte offered an interesting tip for value pricing rookies.  He suggested going after certain clients only if the accountant is established enough to assume potential risk if push comes to shove.  “If you already have a book of business, and it’s more or less stable, and you’re paying the bills, that’s when you can go to a new potential client and f-around with them.”, he said.  “You can go, ‘How about I highball this guy, and see what happens?'”

As I stated before, small and medium firms have the luxury of being independent enough that they don’t have to worry about the imposition of institutional demands.  But what of the future – 5, 10, 20 years down the road?  Can professionals in larger firms successfully implement a value pricing strategy with their clients?  It’s certainly never been done before, as far as I know.  And in all honesty, hourly billing seems to be the system most compatible for a mechanized corporate structure present in large firms.

But let’s look back to what the Thriveal people said.  Value pricing, for all intents and purposes, is based on emotion.  Its bases lie in how the accountant feels about what they do, and how the client feels about the accountant after their work is done.  When both parties embrace their feelings, for lack of a better way to put it, that’s when the value of the work increases, and the value of the relationship becomes its absolute best.  Then again, many firms depend on the billable hour to create steady revenue for the firm and keep their professionals on the clock to make sure they’re being maximized as much as possible.  So the question remains, can larger firms find a way to determine pricing based on value in a way that won’t compromise their bottom line, their professionals’ happiness, and available hours in the day?

Hard to say for sure what lies ahead.  But it’s awesome to know that some of us are understanding that the work we do has greater meaning than a paycheck.  As the business world changes in scope and newer generations move through the workforce, and accountants are on the pulse of it all, I’m excited to see what new developments take effect.  There are people such as those from the Thriveal crew that unleash their full potential by embracing a pricing system structured on value, and in doing so, they may be planting the seeds for the profession’s future.  A future in which people and services are more than commodities with a fixed dollar sign attached to them, and their knowledge of this enables them to work and pursue relationships at their maximum potential.  And once that happens…who knows what amazing things we can achieve.

I hope you agree with me when I say it’s certainly something to look forward to.