3 tools to boost your metrics

overhead view of several people working on an oversized spreadsheetonce again, accountability is key.

by domenick j. esposito
8 steps to great

in my experience, making sure that your economic model becomes reality only happens with persistent and consistent accountability.

more on strategic planning: how many partners do you need? | is your pyramid upside down? | start with sound firm governance, economics | how to develop tactics for your strategic plan | taking a balanced scorecard to your partners | as tax season ends, strategic planning seasons begins | the big eight: harsh realities for firms today | seizing the $10 trillion opportunity | learning to ‘run with the big dogs’

to achieve accountability, i recommend three management tools that will help you create focus and improve performance:

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how many partners is too many?

older businessman leaning back thinkinghint: probably fewer than you have.

by domenick j. esposito
8 steps to great

more often than not, cpa firms support too many partners relative to the firm’s revenue, profitability and its anticipated growth rate. that usually means, too, that the partners are doing a lot of work that could or should be done by staff.

more on strategic planning: is your pyramid upside down? | start with sound firm governance, economics | how to develop tactics for your strategic plan | taking a balanced scorecard to your partners | as tax season ends, strategic planning seasons begins | the big eight: harsh realities for firms today | seizing the $10 trillion opportunity | learning to ‘run with the big dogs’

look at the average revenue per partner for the mid-market sustainable brands and you will see that the trend is to get more done with fewer partners, more staff and more effective use of technology.
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is your pyramid upside down?

esposito_pyramididentify the issues you face, then prioritize them.

by domenick j. esposito
8 steps to great

there is no question that the most profitable cpa firms (i.e., those with the highest average partner earnings) have figured out that leverage and a well-managed partner/staff pyramid is one of the key ingredients for success.

more on strategic planning: start with sound firm governance, economics | how to develop tactics for your strategic plan | taking a balanced scorecard to your partners | as tax season ends, strategic planning seasons begins | the big eight: harsh realities for firms today | seizing the $10 trillion opportunity | learning to ‘run with the big dogs’

why is it then that so many firms today are struggling with just the opposite – an upside-down partner/staff pyramid where there are

  • too many partners and managers,
  • too few staff and
  • too little use of technology?

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why some partners don’t deserve equity shares

woman and man shaking handsuse these 7 sets of criteria to decide.

by domenick j. esposito
8 steps to great

i suggest two lines of business for a sustainable cpa firm brand. given that, let’s begin with a basic principle: every firm should have two classes of partners:

  • equity partners and
  • non-equity partners.

more on strategic planning: start with sound firm governance, economics | how to develop tactics for your strategic plan | the big eight: harsh realities for firms today | seizing the $10 trillion opportunity

equity partners are those partners who have demonstrated that they consistently build enterprise value through a combination of relationship, business development, technical and management skills. these partners contribute capital to the firm, usually each and every year.
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start with sound firm governance, economics

hand drawing a rainbow-colored 33 critical components of success.

by domenick j. esposito
8 steps to great

“growth is never by mere chance; it is the result of forces working together.”

james cash penney
founder, jcpenney

your firm is a business and the vehicle for generating wealth for you and your partners. you need to operate it with strict governance processes, a system of accountability and a firm economic foundation.

more on strategic planning: how to develop tactics for your strategic plan | taking a balanced scorecard to your partners | as tax season ends, strategic planning seasons begins | the big eight: harsh realities for firms today | seizing the $10 trillion opportunity | learning to ‘run with the big dogs’

balance sheets, usually funded by partner capital and a line of credit for seasonal working capital needs, need to be strong to protect your cpa firm from the loss of a senior partner, loss of a marquee client or just an overall poor economy that results in tepid growth for clients and therefore a reduced appetite for professional services.
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how to develop tactics for your strategic plan

overhead view of five people in a meeting‘failure to hold your partners accountable is unacceptable leadership.’

by domenick j. esposito
8 steps to great

once you know where you want to go and when you want to get there, the next step requires you to develop the tactics or steps on how you and your partners are going to get there.

more on strategic planning: taking a balanced scorecard to your partners | as tax season ends, strategic planning seasons begins | the big eight: harsh realities for firms today | seizing the $10 trillion opportunity | learning to ‘run with the big dogs’

let’s take an example. assume, for purposes of illustration, that your strategic plan and your firmwide balanced scorecard indicate that you will elect a new ceo in the next year or two.
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taking a balanced scorecard to your partners

working day in office.without commitment, strategic planning is a waste of time.

by domenick j. esposito
8 steps to great

when an initial draft of the strategic plan has been agreed to by your initial strategy think tank, the next step requires you to expand the process to all the partners. this can be a very painful process, but it is a healthy one that must take place. it creates buy-in and will clarify who is on the bus and who isn’t.

more on strategic planning: as tax season ends, strategic planning seasons begins | the big eight: harsh realities for firms today | seizing the $10 trillion opportunity | learning to ‘run with the big dogs’

lots of good things happen in this phase of the strategic plan.  a number of your partners, who may be questioning if this firm is the firm that they want to be part of as they build their careers, will begin to see that your merely good firm is trying to transform itself into a mid-market sustainable brand.
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as tax season ends, strategic planning season begins

coffee cup by napkin with words including "action plans."eight key elements to take your firm from good to great.

by domenick j. esposito
8 steps to great

it is often said that leading a cpa firm is like herding cats (everyone going in different directions), because many firms are very good at talking and planning about their future (it’s in their dna), but terrible at execution and implementation.  it’s a little like the shoemaker’s shoes. partners get distracted with client service or low hanging fruit and give up too quickly in creating change within their own firms.

more from domenick j. esposito:   the big eight: harsh realities for firms today   |  the coming battle below the big four  |  seizing the $10 trillion opportunity | learning to ‘run with the big dogs’ | the cpa success formula: ties that bind  |  8 steps to great: the vast new opportunities for smart, aggressive firms | more…

if you are ready to take the first big step of moving from a merely good firm to a mid-market sustainable brand, then a strategic plan, with specific implementation tactics and accountability measures, is the absolute first step.  i would encourage you to begin the process with your partners as soon as possible.

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the coming battle below the big four

pawn takes king checkmatewhy ‘the next six’ are vulnerable to a new competitor.

by domenick j. esposito
8 steps to great

in the u.s. public accounting profession, there are three tiers of cpa firms. the top ten cpa firms are the sustainable brands.  they are principally serving two different markets.  therefore, i refer to them as tier one and tier two sustainable brands.

more from domenick j. esposito:  seizing the $10 trillion opportunity | learning to ‘run with the big dogs’ | the cpa success formula: ties that bind  |  8 steps to great: the vast new opportunities for smart, aggressive firms | and more…

in tier one, we have the giant four (deloitte, pwc, ey and kpmg), with a principal focus on serving the fortune 500, which have institutional, more sterile relationships with their cpa firms (as opposed to personal relationships with the partners; services provided are generally either compliance or consulting).

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seizing the $10 trillion opportunity

targeting the heart of american business the vast market of mid-sized companies.

by domenick j. esposito
8 steps to great

let’s begin by answering two basic questions:

  1. what is the mid-market?
  2. what is a mid-market sustainable brand?

the mid-market is commonly defined as both private and public companies with annual revenues between $10 million and $1 billion. the estimated u.s. mid-market universe is nearly 200,000 companies, largely privately held.

more from domenick j. esposito:  learning to ‘run with the big dogs’ | the cpa success formula: ties that bind  |  8 steps to great: the vast new opportunities for smart, aggressive firms | and more…

these companies are a vibrant, resilient, but often neglected, segment of the u.s. economy. they represent 30 percent of all u.s. companies, one-third of all jobs and more than $10 trillion in combined annual revenue.

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learning to ‘run with the big dogs’

dogs run race adobestock_73651025 copytoday any firm can compete and win against the world’s largest firms.

by domenick j. esposito
8 steps to great

even these days – or, especially these days – there is room in the cpa firm market to build a powerful mid-market sustainable brand and, yes, potentially the category killer.

more from domenick j. esposito: the cpa success formula: ties that bind  |  8 steps to great: the vast new opportunities for smart, aggressive firms | and more…

the opportunity is there for the taking.

but you need to focus on what matters if you want to “run with the big dogs.”

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the cpa success formula: ties that bind

firms can only thrive with both a&a and consultants.

by domenick j. esposito, cpa
8 steps to great

the skills required to provide advisory and consulting services generally aren’t possessed by accounting, auditing and tax partners. that’s why many cpa firms, from the largest to the smallest, have and will continue to add advisory and consulting partners into their firms.

the accounting, auditing and tax business is a long-term relationship business. once the engagement partners establish a relationship with private company owners-operators and senior management, they become trusted business advisors. their dna is wired toward a relationship and their eyes are on providing value-added solutions to challenges facing senior management.

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