alan long: entrepreneur first, cpa second.
by ian welham
the accounting success podcast
alan long of baldwin cpas is an entrepreneur first and cpa second. that entrepreneurial mindset is the driving force behind the strong revenue growth, innovative practices, and steady expansion that’s bringing baldwin national attention as a rising regional firm.
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the practice that started in small kentucky towns such as maysville, (pop. 8,920), flemingsburg (pop. 2,694) and richmond (pop. 30,000), has expanded into louisville and lexington – and now long is planning his next strategic move.
whatever it is, it’s likely to be unexpected – as is the baldwin founder himself.
alan long rides a harley davidson motorcycle, was once a wedding photographer, and is someone to avoid in a duel (he’s been ranked in the top 20 in his class nationally in competitive pistol shooting). his success formula, which he calls “the baldwin way,” is based on five future-focused principles.
1 — adopt an entrepreneurial mindset.
in 1985, at the age of 26, long purchased the oldest practice in his hometown of richmond, kentucky. it wasn’t that he wanted to own an accounting firm. he wanted to own a business.
“i’ve always been entrepreneurial,” comments long. “when i went into this profession, the one thing i liked was that i would be able to own and run a business. i wanted to be able to grow and control my own destiny. i didn’t have a boss. i had to be accountable to myself.”
since then, baldwin has grown to five offices, 11 partners, and over 60 employees. when he speaks to accounting groups, his message is: don’t be fooled by the numbers; accounting is a people business.
“the numbers are the easy part,” he says. “i can hire folks. i’ve got computers that will figure the numbers. the hard part is understanding people and dealing with people issues.”
2 — change is here to stay. embrace it.
“cpas need to get outside their box and their comfort zone,” says long. “we need to embrace change and thrive with it – not fight it – because we’re in a fast-moving world today, and things that used to take years to change now change in six months to a year.”
as an example, long cites auditing, where he sees big changes coming in the next five years, thanks to big data, artificial intelligence, and advanced data analytics tools. and it’s not only large accounting firms that will be affected. small firms will need to adapt, too.
“when standards are written, they’re not written for any one size firm,” states long. “they’re written to cover what’s happening in the [entire] auditing world. a small firm can’t enlist the help of watson, let’s get real, but there are still lots of data analytic tools they can use. however, the skill set for the auditor is going to [have to] change.”
long points out that with data analytics, auditors will be able to audit 100% of transactions versus just taking small samples of huge bodies of transactions. in the process, the standards are changing.
“most of the issues are going to be flowing through the income statement. they’re not flowing through the balance sheet. for example, if you’ve got to do defalcation, where’s it going to end up? it’s going to flow through the income statement as an expense somewhere, or as a reduction in income.”
3 — develop areas of specialization.
there are three ways to develop niches – internally, externally, or through acquisition. long leverages all three to move his firm forward.
long’s very first niche was contractors, and the baldwin name continues to be known in the bonding circles, and among underwriters and other players in the contracting field. the firm has also developed internal expertise in litigation support, forensic and fraud, and business valuation.
through the louisville acquisition, baldwin acquired a partner who “lives, eats, and breathes not-for-profits, and does an excellent job.” and now the firm is winning new business in that area.
externally, baldwin conducts frequent peer reviews for other cpa firms. in addition, long is a past member of the aicpa peer review board. he sees peer review as a way to keep up to date, open potentially valuable relationships, and stay ahead of trends.
4 — don’t be afraid to ask for outside help.
“cpas make a huge mistake in thinking they can be everything to everyone,” declares long. “they don’t seek outside help from the consultants that help cpa firms manage just like we want to help our clients manage.”
baldwin enthusiastically welcomes the outside perspective, consulting with gary boomer on strategic planning, gale crosley on business development, and alan koltin on mergers. baldwin has also talked with ron baker to explore moving to a value-pricing model and away from time sheets.
the firm’s hottest growing business segment – advisory services – is a combination of internal and external expertise.
“i think that advisory services are going to be the largest growth area we have,” says long. “we’re already starting to see it. we’re still in the infancy stage, but our fastest growing service is [providing] more of an advisory role to small businesses.”
5 — use systems and “champions” to manage change.
as baldwin acquires new firms, a frequent challenge is indoctrinating new employees in “the baldwin way.”
“getting folks to let go of what they’re doing is always a challenge because most accountants do not like change,” says long. “everybody wants to go back to what they did last year because it’s easy and that’s what they feel comfortable with. managing change is one of the hardest things, not only for my firm, but for any accounting firm, because change is growing so exponentially fast.”
changes in the tax law, changes in auditing, changes in technology, and changes in client expectations are all putting pressure on accountants. long’s solution is to develop systems and ‘champions’ – individuals in the firm who take ownership of a project – whether it’s a merger or a new initiative or new service.
“we have worked really hard on our processes to keep us all on the same page and moving in the same direction, and [to avoid] the hodgepodge that happens in a lot of cpa firms where individuals are only concerned with their own stuff, and not the firm. ours is very much a firm-oriented approach.”
many cpas see change as a threat. long sees it as an opportunity.
“every time we get a regulatory change from the dol or from any government agency – even when standards change – those are opportunities for firms. they’re opportunities that some of us don’t like, but if you give me lemons, i’m just going to have to try and figure out a way to make lemonade out of it.
“some of this stuff we can’t control, but we need to figure out the best way to help our clients and explain to them, ‘you need my help, and here’s why.’ sometimes cpas, because of the personality types we are, [react] ‘oh man, that’s just more work i’m going to have to do.’ we don’t realize that the client is not only willing for us to do that work, but they’re willing to pay us for it. a lot of times, especially in smaller firms, they don’t look at it that way.”
watch alan long address the national association of state boards of accountancy on reforming the peer review system: