The world is changing and if one is not aware of what the future is and what major changes are taking place in the future, one may not be able to sustain the practice. The users, needs of users, method of delivery, form of delivery among many others would change. The speed of change is amazing. Yesterday we were talking of what the millennials need today, we have started on the Gen Z. Technology and automation is increasingly replacing the professional’s routine jobs (reconciliations, filing etc.) and even the basic information level service. If one knows where to go, one may get much better advice for general issues/ problems at the click of the phone. The quality and accuracy are far higher with automation and therefore clients would prefer that mode. The fees would also reduce for such jobs. Clients may still like the professionals using IT to provide the services though we have heard of software companies taking over this function.
The need to provide a wider basket of services resulting in value is the general trend. If the entire function itself can be outsourced, then even better. Smaller firms may find it difficult to grow unless only focusing on advisory or litigation. Even in that case one needs to plan as more people, more reach, more geographies would need may aspects to be considered. The saying that one needs to put resources ( capable/ trained) in place considering the future. Firms which recruit when work comes would be found short in delivery timelines as well as quality. Plans today need detailed operation plan, ( how the work would be done- resources needed), technology upgradation plan, visibility plan, financial plan along with the business plan.
One can grow organically year on year with expansion in numbers/ locations number of collaborations/ networked firms. Another option is to merge or take over another firm. This could bring in economies of scale, better branding and reach, wisdom/ knowledge share. Once one reaches some stage of say 100 employees, one can also look at international affiliations after careful research of cost vs benefit which also be a way to take one to the next level of professional services. In this article we have focused on the organic growth which we are familiar with.
Benefits of Plan to grow
There are many advantages of having a structured plan to grow. Growth has its own advantages as under:
- Enables all in the firm to be proud of the firm and make a difference.
- Attracting more and diverse type of work which in turn adds to the knowledge and confidence.
- Attracts and retain the competent and committed within the firm enabling the capacity for taking up more work or new areas focus.
- The larger the firm, more investments in IT, processes in time reduces the overhead costs and helps to quote competitively.
- In challenging times (like the pandemic) all eggs not in 1 basket. Huge referral base of clients as well as collaborators/. Networked professionals.
- Ability to provide high quality services in new geographies leading to overall benefit for the industry, profession and of course the firm.
- Better utilisation of the resources of the firm. In this age of internet, even work of a few days can be shifted to locations/ qualified who are free.
- Once clients are assured of good quality services delivered in time, the charge out rates can also be increased.
Steps for Growth
In this article we look at some of the steps to ensure and enable growth with grace.
Step- 1 - Purpose, vision, mission and core values
Today every growth-oriented firm may have to have its purpose, vision, mission and core values put in place. Ideally this could be a shared vision with at least all the partners and the key seniors. It would be important to bring out the value proposition as well as the differentiators for the firm in this plan. Differentiators could include the problem solving skills, cost reduction, service experience, communication, accessibility to required level of expertise, specialisation etc. The client centric firms focus areas would determine how successful it would be in growing. We need to remember and guard against being mediocre and superficial. The excellence in quality as well as delivery in time is something, the client expects. Therefore, firms may have to have their own clear objectives. In article -1, we have looked at how to set goals.
Where one wishes to be in 5 years’ time frame needs to be agreed and what is the gap presently identified. Against each of the goals- why (3-5 reasons) it is essential maybe noted. Against each of the goals the 10-point action plan to reach the goals with yearly targets [ number of branches, partners, qualified, collaborations, networked professionals, quality levels, new service areas, targeted income in each income stream proposed to be added. Action plan should be further broken into what is to bed one daily, weekly, monthly, quarterly, yearly. This could be said to be the professional development plan. If bigger sized firm planned then the SWOT needs to be prepared for the firm as a whole as well as for each service stream and all partners and key personnel. There maybe a need to ensure that the organizational structure of the professional firm is laid out giving emphasis to the key areas of training, HR, quality, service attraction, adopting IT, standardization of service delivery. These need to be given enough time other than routine service provision. In my understanding the minimum time set aside for these activities should be 20% of the total. This would include the implementation with change management top down in time and regular monitoring where necessary. The plan should be SMART( google) and variances to be regularly corrected and plans tweaked to reality once in an year.
Step-2 Implementation of plan
Good ideas remain so, unless we put in place actions with monitoring the schedules and complete the small/ big projects. This could be internal or as a service to the clients. Our innate capability of being able to understand risks would help in putting proper IS controls as well as general controls to detect, correct and prevent errors.
Step-4 Building needed Knowledge and Skills
The partners and key employees would make or break the firm’s progress. Need of being updated with the changes, standards, judicial dictats are important. We have earlier penned Article no-2/3 focused on how to do so. Since people are at the centre of our services how we attract, recruit, indict and train the talent would be needing a focus. Article -4 has more on this. Mentoring in spirit and coaching could be ways to strengthen connects within. The excuse of they will leave may have to be kept away if we want to grow. We have seen the qualified of 2 years handling a 10 member team and also taking responsibility for the final delivery. Trust begets trust at all levels. It may be advisable to have diversity of teams and inclusiveness in sharing knowledge.
It is important to build leadership within the organisation to retain the competent. Among Cas, I have felt that we are cagey about delegation and giving independent authority to the juniors due to fear of poorer quality work or client retention. This can happen but one needs to have overall control and final touch with the client.
If not presently available tie ups (collaboration, networks) with experts or geographically for the time being could also be a fast track solution. Merging with the specialist could also be an option.
Step-5 Customised One to One service
SMPs have the advantage of qualified/ partners themselves interacting with the clients. This major differentiator needs to be safeguarded to retain and attract new clients. The response time and personal attention in such cases especially over a period of time cannot be replaced. This could be offered to the premium clients with the better of the qualified in office being responsible for the delivery.
Step- 6 Value Pricing
In the area chosen one could have a different offering (packages) to suit the SME/ Big client needs. Today there are many products such a tax / cost optimization which could lead to value where a professional can quote a portion of the saving as the fee. Management consultancy type of assignments can be directly linked to the benefit. This type of service would be very attractive for the clients as it is certain to add to the profit with no fixed cost.
Step- 7 Adopting of IT
Every professional firm today needs to use IT tools to verify higher sample ( 100%) as also analytical tools. In GST large number of economical utilities can support recos ++. Having captive (networked) IT team would definitely add value and be fast in solving those issues. Clients would also expect us to guide them to such useful tools.
There could be some more steps to ensure that we grow. However, in our experience, unless there is an owner at the partner level who is passionate to implement the change and make it work, initiatives lose steam and reach the backburner.
Step- 8 Specialise in Specific Industry or Stream
It could be a good idea for firms providing a big basket to also specialise in a subject / industry vertical to gain insights and recognition. This could also depend on the main industries of clients being serviced or targeted.
Step- 9 Focus on Quality – Perception
Consistent quality work leads to client loyalty and fees share increasing. One needs to have some basic checklists, following of applicable standards, peer review, vetting by experienced in place to ensure incorrect advice never given. We have made of SOP for each stream from the stage of enquiry to billing and final follow up on delivered assignment. This ensures some consistency of the work across locations. The final presentation today matters due to top management being busy. Use of infographics along with key insights could be a short ppt with a detailed on provided to the finance team.
Continuation/ Succession
The traditional firms worked with limited number of partners and employees. At that time people would be the firm for 30-40 years. Today with global opportunities and new diverse fields opening up, the period has shrunk to a few years. Therefore, very high salaries linked to income or share of profit could be one of ways to ensure long term continuation of competent professionals. We have an average age of 33 for all partners of the firm as on date. Some of our younger partners less than 30 would put a 50-year-old professional to shame as they are open and fast, learning new concepts is child’s play for them. They have more energy and hunger to prove themselves.
Many old CA firms have not been able to sustain due being closed in their thinking, fearing that the new blood would not be ethical, not willing to share fairly the increased profits, unable to delegate. CAs of my time are looking at exit and many have been steadily losing clients over the years. Obviously, clients are looking at firms which have more stability and todays needed competence. Many of us like me were proprietors for 15 years and then started a partnership. Therefore, the successors are much younger. In my understanding if we had focused on succession 10 years earlier, it might have been better. However, due to my ICAI stint from 2010 to 2019 (with a break) this aspect was not emphasized though discussed briefly. One of many failures as when the next in line wished to leave there was a vacuum. However, taking in young blood at regular intervals with some diversity of background, experience is beneficial for smooth continuation. Clients would also have more confidence when they see a number of levels and competent leaders in the pipeline. We need to ensure that we have enough millennials to take over the mantel of leadership in the firm in next decade as well as get the genZ ready who cannot believe life was possible without the smart phones and their capabilities are tied to what is needed to flourish which may not include much general knowledge or a great memory.
Conclusion
Understanding that in today’s fast changing world, standing still, would be a sure step to oblivion. The article looks at how growth needs to be focused and possibly how one can go about doing it. The nine steps for organic growth above are only illustrative and the subject of management of an office is vast. IFAC- SMP publications which go into much detail could be referred. All the ideas which have worked well, need not be stopped. In fact, care to be taken to only tweak them to get the benefit of both the beast practices understanding theoretically and applying using our common sense and intuition. Today the access to the best teachers in the world is possible for a nominal cost or if one does not mind doing a bit of search and listening to repeated concepts, then Netflix, youtube have a treasure on a variety of documentaries, videos, lessons on subjects like, mastery, excellence, quality, communication, management which was used quite well by many of us when we were housebound.