In our last blog in this two part series, we focused on some more short-term strategies to navigate a tumultuous market. Those tactical focuses are important, but we also want to think long-term and create organizations that are sustainable. These are resilient organizations that require permanent and foundational changes put in place, instead of only tactics to help us navigate hard times (though those are still important too). Having guided numerous accounting firms through multiple market cycles, we’ve observed that successful organizations implement comprehensive strategies to remain sustainable; meaning they can bend and wave in the hard economic winds yet still remain profitable (or break even for a time) without overwhelming the owners/founders and the team. Let’s check these out.
Transform Your Service Model
Slowly move towards pricing, which represents a fundamental operational and philosophical change towards value instead of just work. Traditional time-based billing creates constraints on both revenue and client relationships. Pricing can push your service outside of the bounds of an hour time block, and give you the potential to price higher than just what is reflected by an hourly rate. Removing arbitrary earning limitations can allow you to create larger chunks of cash as you create new services.
Service packaging transforms unclear value promises into tangible deliverables. You can move towards creating structured and packaged offerings that combine compliance with advisory services too. A package lets you put them together, and helps the client see your value beyond just compliance. One thing we tell those we consult with is to “sell something your client never asked you to buy.” This means that when clients ask for services, always offer additional advisory services too just to let them know what you can do for them (whether they buy them or not). You can put these advisory services in the higher packages of your offerings. Develop tiers of pitching services (3 options is key), offering a high, middle, low offer for the client to pick what level they want to pay for.
Niching allows you to address specific client pain points for specific clients. Helping your clients can come when you deal with their very real specific issues. Niching leads you to see many types of these issues as patterns when you are serving the same type of client over and over. You become experts at their technology, the types of owners you work with, and the service models start to become easier to deliver for your team. Niching allows you to address the specificity that experts can really solve for their clients. It takes time to become an expert; niching into services (horizontal), or industry (verticals) is worth the time spent and it will make your firm more valuable over time.
Passivity represents the greatest threat during economic uncertainty. When markets fluctuate unpredictably like they are doing now, many leaders instinctively retreat to defensive places – reducing expenses, pausing initiatives, and essentially waiting for conditions to improve. This may not be all that bad, but this reactive approach gives up control just when strategic direction matters most.
Maintain Organizational Focus
Effective leadership requires filtering market information for your team. We mentioned this concept in our first article. As a firm leader, you have to become a master at filtering information. Not all information is good to take in, and some you should stop taking in all together. It is equally as important to filter information for your team. They need to hear the summary of what the market is doing, given to them by their leaders. And the tema don’t need to sort through your own personal emotions about it either. You need to deal with that privately. You can be truthful with your team, but you don’t have to divulge everything to them. Give them the reality of the ups and downs of the market, but also give them the encouragement they need to know that you are steering the ship with intention and a purpose (here is a great article from coach Ed Batista on this very topic).
Structured client interaction frameworks provide stability to your client base. Last year, we added a process to check in with our clients periodically. Before, we only did checkins when we were delivering an advisory service (like explaining their financials to them). But we felt the clients needed more care. So our leadership team created a way to check in more often, even for those clients that hadn’t purchased advisory services. This allows our organizational stability to run all the way through our client base. Now that we are in tough economic times, stability allows our clients to lean on us for advice to get them through this (without thinking they can make it without us).
Targeted professional development maintains critical skills for a firm. We consult with many firms, and we know that those that regularly train their teams are always closing ‘skill gaps’ in their team. That means the firm is always becoming more valuable, more skilled, and more ready to “work-share” their way through tough economic times. If some team has to leave the firm, training props up the remaining team to step in and keep critical services humming. Unprepared team, from a skill level, means the owners have to scramble and fill in the gaps of client service right when running/operating the firm is the hardest. Keep training your team during the tumult of hard economic times.
Create a structured roadmap 24 to 36 months down the road to evolve your firm and services. We hear often (and it’s true) that downturns always create opportunities. This article is about long-term strategies to navigate a tumultuous market, so leaders must focus on how strong they will be when we come out of this economic downturn. Make a plan for what you will do when you see it start to pick up again. Will you launch into a new market ahead of everyone else? Will you sell new services to your client base when they are ready to start growing again? Will your team be ready to pivot back into growth when that time comes (and it will!)? Don’t forget to plan now for that time ahead when you can leverage opportunities that others have forgotten about.
Develop Leadership Resilience
Implement mental discipline practices for the owners/leaders that allow them to stay focused. Allow for your leaders to talk out how they are feeling about the changes in the market and the firm. The owner desperately needs it, and so do the leaders that are supporting the owners. Delivering timelines helps everyone to think clearly about the path forward for a firm going through a down market. In fact, anything written down, put in a chart, or discussed as you share your screen creates clarity of decisions so our emotions don’t step in and feed us incorrect information. Develop rhythms for thinking through firm decisions as a discipline so everyone stays on the same page.
Connect organizational purpose to broader impact beyond present difficult times. More than ever, now is the time to continue to share your purpose and core values. Explain to your leaders and your team that these things do not go away just because you have to make iterative moves and respond to a down market. Rallying around a deeper purpose provides some motivation that sustains teams through the short-term efforts to make it through a hard economy. Give examples of how you are still helping people, that you are still valuable, and that you are a sustainable organization that will be here for a long time to come.
Some Encouragement
The landscape ahead contains both significant challenges and extraordinary possibilities. We’ve seen this before. I can say with certainty that your orientation towards these difficulties – whether you see them as threats or opportunities—will largely determine your outcomes when we pull out of this tough market (again, we will pull out of this!).
It’s interesting that the most successful firms emerge from tumultuous markets fundamentally stronger, having used disruption as a catalyst for the transformations we discussed above. You stand at a pivotal moment where strategic decisions made now will have amplified impacts for years to come. Who knows, this downturn could be the very thing you need to become the firm you are meant to be in 24 months!
We support firms navigating these markets. Reach out to Thriveal.
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