Managing the Next Generation CPA Firm

The following article was written as an introduction to a course currently under development called “Managing the Next Generation CPA Firm.”  The article and course highlight the importance of changing demographics in our country and how serving and hiring new generations will affect how professional firms do business.  In addition, the article will serve as a catalyst for a talk I’m giving at the SC Association of CPA’s BPEN Piedmont Chapter Series at Barley’s downtown Greenville on November 5, 2009. Word up.  Article and course are Copyright 2009-2010, Jason M. Blumer, CPA, All Rights Reserved.

Change is in the air, and it has been for quite some time now.  And for the CPA firm industry, change is affecting how we do business, what is expected of us from new generations and how we use technology to do our jobs more efficiently and profitably.  In managing my own CPA firm, I’ve discovered some amazing truths about how our industry is changing, how some are pushing against that change, and how others are embracing it.  Permit me to share some of those thoughts with you.

We are in the midst of a huge demographics shift in our country, where the Baby Boomer generations are beginning to transfer their practices to the next generation.  And this is happening in many other service-based industries that our firm serves: medical practices, veterinarian practices, law offices, engineering firms, dental practices, and the list goes on.  How this transfer will take place, the new methodologies the younger generations will ultimately use to manage their new practices, and how newer generational clients want to receive service is about to shock our long standing traditions.  And to add to the confusion, some Baby Boomers will not even be retiring now that their retirement plans have been extended indefinitely.  How will this continued traditional service be accepted by the newer generations that continue to be more and more entrepreneurial as technology continues to eliminate barriers of entry into the marketplace?

Let’s discuss our industry for a moment.  After growing over 400% in the past 5 years, I’ve started to notice some trends as new clients come in our doors looking for different types of service.  First, there is the fact of sheer numbers – depending on the estimates you look at, there are around 78 to 80 million Baby Boomers (born between 1946 and 1964) in our country just now hitting retirement age, and around 40 to 41 million Gen Xs (born between 1965 to 1977) available to replace them.  That’s a disparity of numbers.  Then come the Gen Y’s or Millenials, one of the most entrepreneurial generations yet (born between 1978 and 2000, and we’re still figuring out how to define who they are).  There about 70 million of those techies running around ready to shock us all into a new way of thinking.  How will these demographical issues affect our industry?

The word VALUE comes to mind.  Typically, those in the service industry we serve are very bright, but bright enough to say they don’t know anything about their finances.  But they typically don’t know what service to even ask for and what will help them continue running a growing business serving new generations.  And we as an industry typically offer these clients the same old service of a monthly compilation, which if you asked the clients, often ends up in a filing cabinet unread.  Did I step on any toes?  Yes, those pretty bound compilation reports are continuing to offer minimal VALUE to our clients who are unfamiliar with numbers and what they mean.  But it’s all we know, right?  No.  As an industry, we have learned so much about our own business and the countless businesses we have served, that we could truly be a light to a younger professional seeking our help.  Yet we continue in the non-value added world of “comfortable service” and “the way we’ve always done it”.  There will come a time when VALUE will be required of us… and those who can’t meet the demand will no longer be viable.  Ask your clients if you are offering real value, and be ready for the answers.  Then charge value-added rates, and get paid well for providing real value to your clients.

Another word that has struck me as we’ve developed a generationally-focused model of service is INNOVATION.  Innovation is the key to our country’s success and it is what offers growth in the future.  Without new people innovating in their industry growth ceases to happen, and we become complacent and boring.  I think our industry is boring.  We have four basic commoditized services that we continue to fall back on when trying to bring in new clients: audit, tax, accounting and payroll.  What else is there?  Technology and younger more entrepreneurial generations like the Millenials will force us to innovate in our industry or move aside.  And it will happen.  Innovation in our industry involves really listening to our clients, creating new services that did not exist before, and testing those new services in the marketplace.  In this area, you’ll be an entrepreneur yourself as you create, then test and continue to go back to the drawing board to reevaluate what you are offering, and what your clients truly consider valuable.  Our firm has created our “D.I.S.C.O.F.E.R. How To Thrive” Series (yes, I know it’s spelled with an “F”).  It involves an innovative 12 month coaching series as well as the D.I.S.C. and F.O.R.E. models of service for our service-based industries.  Our clients respond with WOWs when we take the hour and a half to go over what our services mean, and what they are meant to achieve.  They always respond that this is what they needed but didn’t even know to ask for it.

These two noticeable words, Value and Innovation, have driven what I’ve been trying to create for the last 5 years.  And my firm is a multi-generational firm where my father started the firm, and I have taken over in his footsteps (but not his model of service).  And now I see clearly that next generation CPA firm service…
(1) is highly tailored to the client (what one client needs is not what another client needs),
(2) is intensely relational (newer generations want to be with you),
(3) is niche-focused (no more being everything to everyone),
(4) always offers value to the client (because newer generations see right through non-value added services),
(5) innovates to create newer models of service when there is a need being unmet in the marketplace (and needs change day to day),
(6) leads their clients to the service they need (not the other way around),
(7) eliminates internal inefficiencies in their own firm, to better improve the face-to-face time they can give their clients (so they can focus on service and not administration time),
(8) uses technology to serve anyone from anywhere (and avoid the intensive capital needed to start new offices in new cities),
(9) understands generational issues within their staff and how their next generational clients want to receive service (and how we can “collaborate” instead of “command”),
(10) installs processes internally that assist the firm in capturing the relationship intelligence constantly running through the firm (which further helps the firm in targeting their service to their specific clients),
and many more!  This list is not exhaustive, just meant to shake up the industry a little bit, look up from our desks, loosen our ties and talk to our clients face-to-face, ask for honest feedback, and see how we can be changed from the inside out.  I believe we are going through some demographical changes in our industry right now that will require this of us, and ultimately create success or eliminate those unwilling to play in the new economy.  It is a difficult road we must walk, but one that is now required of us at this time in our history.

But you don’t have to be one of the many that are unwilling to change.  You can learn new things, and our industry can become one of offering continual value and helpful innovation.  There’s much to learn, many generational thought changes to make, but the end result will be one of higher client satisfaction and enjoyment for your work.

To learn more, and dig deeper into these issues, our firm will be offering an online webcast and get into more details of how we can learn and change together.  If you’re interested, visit our firm’s blog at http://thriveal.com, and click on the page titled “Upcoming Webcasts.”  You can comment on that page if you are interested, and we’ll respond there.  Also, remember to sign up for our email database list on the left-hand side of the front page of our blog to see what kind of value and innovation we’re offering.  Let’s discover how to thrive together!

Thanks, Jason M. Blumer, CPA

If you are interested in responding to these points, please take one of the ten points mentioned above in the article and contrast why these will define the next generation CPA firm, or why the statements don’t matter to the newer generations we serve.  You can respond in the comments if you wish.

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