Discover the Fortune Lying Hidden in Your Practice: Why do some professionals make so much money while others are barely getting by?
- How to turn complaints into increased client loyalty
- Quality service: Client perceptions are the key
- The key to client retention and referrals
- Get More Clients, More Referrals, and More Business From Existing Clients
- Billing for Value
- Things You Can Do Right Now to Increase Profits
- Inhibiting Management vs. Enhancing Management
David Cottle, CPA, B.B.A., with double majors in Accounting and Mathematics, who works with firms to improve their profitability, growth, and management.
Dave has studied which management and marketing techniques were successful — and which were not.
Dave has found definite features common to most super-successful firms which are missing from firms that are not so successful.
Dave has spoken often for the American Institute of Certified Public Accountants, for State CPA Societies in 26 States.
Dozens of his articles have appeared in publications ranging from The Journal of Accountancy, The Law Management Journal, The Practical Accountant, and The Practicing CPA, to Veterinary Economics and the Texas Bar Journal. Dave served on the Editorial Advisory Boards of the Journal of Accountancy, Quality Client Service newsletter, the CPA Managing Partner Report, and the Panel of Experts for CPA Partner Hotline newsletter. Several of his articles have been reprinted in AICPA Selected Readings in Management of an Accounting Practice. He formerly edited CPA Digest newsletter published by Harcourt Brace Professional Publications.
David W. Cottle has helped firms improve their profitability, growth, productivity and performance.
David’s clients range from sole practitioners to the Big Four international accounting firms and everything in between.
Cottle function as cheerleader, and teachers, directly involving client personnel, management, and resources in transferring skills to the client.
He benchmarks his work against specific objectives with clearly established outcomes and timing, contributing to client business goals.
The purpose of management is to create a prosperous, expanding practice, and that the product of good management is an efficient, profitable, expanding firm.
Know what progress you are making toward your goals.
Respond to situations fast enough to prevent minor problems from causing major damager and prevent major problems from occurring at all.
Know exactly where to place management emphasis and company resources so they are not fixing something that isn’t broken and not leaving problem areas ignored.
Channel marketing and improvement efforts to the areas that produce the most gain, the most progress toward firm goals, for the least effort.
When we do not know the above, we make mistakes and waste time money and effort.
As a manager, what are you responsible for managing?
Is it just yourself and your firm?
No, not if you want to be successful — you have to manage your clients, too!
When speaking about management, Dave Cottle often says “every successful practice sits on a three-legged stool.” That means that there are several factors which — like all the legs of a three-legged stool — are essential for success. This is a generalized “ideal scene” model.
The first leg is technical expertise, i.e., the ability to do the work of the profession. The second leg is management, the ability to run the firm in a businesslike manner. The third leg is marketing, the ability to attract and retain clients. (And, yes, client retention is also a part of marketing.) The floor that supports the stool is that other ingredient indispensable to business success, the clients. The “person” that “sits” on the stool is you and all the other people that make up your firm — the personnel.
All five aspects of professional practice depend on each other. Therefore, to analyze a particular decision, strategy, or phenomenon, it helps to examine it from these five different viewpoints. You must consider all aspects of management. If you don’t, your plans often often fail and you often find yourself working harder. This is similar to seeing instant replays of a football play from five different camera angles. Each angle reveals facts that might have been overlooked or obscured when seen from only the initial viewpoint.
Without clients there is no practice. Every management decision must be examined from the viewpoint of its effect on client relations, client perceptions, and client retention.
Next in importance are the people of the firm. The people are the firm. Management decisions must be evaluated on the criteria of their effects on personnel. Understanding and managing the people who work for you is one of the most crucial points of management, and one that is often failed.
Technical expertise is the most important, it is required just to be in business, and is therefore more important than either marketing or management, because that is the “product” that the firm sells. But — in the public’s eye the technical expertise is about the same usually — so technical quality cannot your competitive edge.
Marketing takes priority over management because “nothing happens until somebody sells something.” Good marketing can make up for many flaws in management. The reverse is not true.
Management may rank last in importance by process of elimination but not by far. Management consultant Peter Drucker has observed, “Most marketing problems are really management problems.”
A firm cannot long be successful without having talents in all five areas.
What do you think would have to happen to increase your income 20%? 50%? 100%?
The first thing that has to happen is that you have to change your ideas!
Some of my clients achieved the following results by changing the ideas they used to operate their firms:
A Midwest firm of 25 total personnel in a city of less than 20,000 people increased its net income from $360,000 to over $700,000 two years later.
A Western firm of 40 total personnel from a major city increased net income $100,000 annually from one idea.
Another firm of 35 personnel from a city of less than 50,000 population which has experienced no economic increased profits annual by $200,000 from one idea.
A Midwest firm of over 70 people from a major city increased realization 7 percent in four months for an increase in net income of over $350,000.
A rust belt firm in England increase billing rates 30 percent with less than 2 percent client losses.
Another firm increased billing rates 35 percent with less than 5 percent client losses.
To change conditions in your firm, you must be willing to look at your practice from a new viewpoint. What is going on right now in your practice is nothing more or less than exactly what you have agreed to.
Your current condition is the result of all the decision you have made — or not made — in the past. You agreed with conditions, or you would have changed them. If you say “It’s this way because …,” you are agreeing that this is the way it must be. What is going on in your firm is what you are causing to occur. It may not be what you want to be causing, but it is what you are causing. So your objective should be to spot what you need to change in what you do and what gets done in your practice.
Many clients change their view on what to do, how much can be done, and on how easy it can be to dramatically improve their firm. They make significant improvements in their financial results, even without bringing in any new clients — just by managing better the clients they already have. The long-range goal of my efforts is to help firms improve their long-term financial performance in a significant way. Specifically by teaching them the management and marketing skills needed to raise their practice to a high level of performance and keep it there.
To help you identify immediate opportunities within your practice to increase net income
To give you the working tools to manage your practice better on a regular basis
For you to develop action plans to increase chargeable hours per person, reduce write downs, and increase billing rates
To improve your firm’s net income per partner materially within one year and dramatically within two years.
In the professions, all of your real assets go home every night. All the revenue of your firm is produced by people. Oh, sure, we use computers and other state-of-the-art technology. But all the equipment in the world will not earn a nickel without the people. The people produce the results; technology only makes them more productive.
The key ingredient in any firm is people. And the key task of any executive is to manage people.
Understand the executive function and its important place in the firm;
Understand the practical side of motivation;
Delegate effectively and efficiently;
Plan for productive performance by themselves and others, and measure that performance against clear, fair, and valuable standards.
Identify the causes of performance problems;
Coach people to improve their abilities; and
Communicate objectives so that others often understand them.
Pervasive changes in the last two generations have caused many developments in management styles.
Theory X-Theory Y-Theory Z, the One-Minute Manager, Transactional Analysis, Management by Objectives, Empowerment, Job Enrichment and so forth have all been attempts to control the forces for change that continue to sweep through business and the professions in the face of deregulation and an erosion of traditional attitudes toward personnel.
It is clear that we live in revolutionary times. Many management systems and philosophies followed in the past simply do not work any more. They produce neither sustainable growth, an acceptable level of profits, nor a desirable life style (both on the job and off it) for the people in the firm. What were some of these old philosophies (at least for personnel)?
“Hire people that crank out the work and that are satisfied working for a salary forever.”
“Don’t pay your people a compliment; they’ll just want a raise.”
“People don’t want to work anymore; you have to watch them like a hawk or they goof off on you.”
“You just can’t get good people any more!”
None of these statements is true. Today’s firm must face two important facts if it is to survive, let alone prosper.
First, people entering the workforce today, and who will enter the workforce in the foreseeable future, look at things differently from their predecessors a generation ago. They are better trained, better motivated, and more in demand. Jobs are not scarce for the most part, and smart, articulate white-collar workers can walk across the street anytime they want. Young people today can afford to be picky. Whatever the reason, the fact remains that young people today are different.
It is not just an isolated product of these particular times which will soon restore itself to the old ways. Young people of each generation have responded to the environment they face — an environment which always differs from their parents’ environment. The twenty-first century will see a continuing acceleration of changes in all areas of life. These changes require each generation to be different from the generation before; the differences are more pronounced in recent years because the changes are coming faster. And change and the rate of change, shows no signs of diminishing.
Which leads us to the second fact we must face: the business climate differs from any faced by our predecessors. The market for business, financial, and professional services has changed, is changing, and will continue to change at ever faster rates. This means you have to recruit a different sort of employee than you did twenty years ago. The market for employees has changed also. This has affected our relationships with our competitors and our clients and has created a competitiveness not seen in my lifetime. It has made it more important than ever that we hire, train, and retain the best possible quality of personnel.
Books by David W. Cottle, CPA, CMC
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