Howard’s Inner Circle, No. 13: Two Diverging CPA Firm Business Models

Being a detached, independently paid and unpaid observer of CPA firms for over two decades allows me to freely comment.

The early successful business model was a firm with a number of rainmakers, often as little as two or three. They were great at business development especially via one-to-one contacts, and also adept at maintaining and working a tight referral network where referrals were expected to go both ways.

Over time, this well-established model has morphed itself into two new distinct business models. One is where those rainmakers have become the executive committee of a CPA firm that runs in a corporate style. Where previously, firm policies and strategies were hashed out in open discussion at partner meetings, decisions are now made at closed executive committee meetings. And no matter how it is sugar-coated, it is understood who are the powers-that-be, and how getting into the inner sanctum, the management committee, is only done by invitation or by a successful power play.

Contrast that with the second business model that also developed from the earlier rainmaker model. These are firms that strive to operate as a team with management building consensus and having a real understanding of the importance of the various individual’s contributions in the firm’s successes.

If I were to predict which of these two models will prove better, I would select the later. This modified team approach:
• Grooms successors;
• Encourages collaboration;
• Has greater multi-disciplinary capacities;
• Rewards innovation
• Promotes a firm-wide project management instead of a capture-what-you- kill mentality;
• Is more susceptible at building real working alliances;
• Taps well into intergenerational resources;
• Promotes widespread mentoring in both directions;
• Supports technology at all levels; and
• Is structured for everyone to be focused on their roles in business development.

In both models relationships remain the key, and referrals are still the main source of new business. The real difference is the lack of community in the corporate model. Although lip service might be given; it exists only in name and spin. The second model, the modified team approach, with a real manager rather than a CEO, truly promotes community. This approach will turn out better in the long run as all indications are technology, globalization, outsourcing and many other factors are permanently changing the rules of the game. Businesses and professional firms will be seeking to become members of various communities and will do so only by building trust and cultivating loyalty as the basis for relationships. Only one of these diverging CPA firm business models lives that.
© 2010
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The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 12: The Current Decrepit State of “Journalism”

One article entitled, “Ditching a $500,000 Salary to Teach Lit,” says it all. I found the article on Yahoo! Finance at http://finance.yahoo.com/career-work/article/109420/ditching-a-500000-salary-to-teach-lit?mod=career-worklife_balance. It was provided by CCNMoney.Com and written by a contributor.

What I expected as I read the title was a story about a difficult decision and how the transition went. The hope was to learn from this individual’s experience. I would have never read the article if the title, although a bit longer more accurately read “Ditching a $500,000 Salary and Selling Your Business at Age 50 for $6 Million to Teach Lit.” We can work at shortening my title if you want, but you get the idea. By the way, there were three bold faced tips in this short article on how he did it. They are 1. By Taking the First Good Offer; 2. By Investing Conservatively, and 3. By Drawing Down Cautiously.

This is the current state of “journalism.”

© 2010
*************************************************************
The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.

Howard’s Inner Circle, No. 11: What Is the Best Book You Ever Read? Why?

I read a lot of self-help and business books and always get a few kernels of brilliance from them. However, the self-help books often bother me as many are constructed as workbooks filled with exercises and warnings if you don’t do the exercises you won’t get anything from the book. The business books are also heavy-handed, as authors after making one keen observation apply it in every context he or she can think of to prove its worth.

The most recent book I read was Paper Airplane by Michael McMillan mentioned by Tim Storey in Utmost Living. It was very good, but not my favorite. It tried to be too many things: a self-help book, a business book, and camouflaged with brilliant design work, also as a children’s book. In the end, it reminded me of my favorite book.

Tom and Pippo Make a Mess by Helen Oxenbury is hard to find as I believe it is out-of-print. I discovered this so-called child’s book at well over age 50, when it was brought to my attention by Alex’s father. He had been reading the book to Alex for many years (my guess at least eight). Alex, a remarkable young man, who has fought with tenacity since he was born at a birth weight of 21 ounces, loves the book, and often, after his father finishes reading it, rips up the book and makes a mess.

Every adult and child can benefit from its message whether as a gentle reminder or as a wake-up call. Unlike the many self-help and business books, Tom and Pippo Make a Mess has an ever so-light touch, and encourages the reader to think and reach his or her own conclusions. Equally important, the book’s message with Alex’s comment resonates louder the more times you read it or have it read to you.

What’s your favorite book? Why?
© 2010
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The above is from the newsletter, Howard’s Inner Circle, which periodically appears on the blog, “Instigator” at http://howardwolosky.blogspot.com/. It may be reproduced in full if that fact is stated and Howard Wolosky is credited as the author.