CPA Leadership Report
Expanding Your Knowledge While Conserving Your Time
Vol. 10 No. 3, March 2012
CPA Leadership Report is the monthly review of the most important management and leadership
articles in the accounting press. It includes electronic links to publishers’ websites, where you
can find the original complete articles. Our editors review more than 35 publications every
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Practice Management
Being Accountable for Accountability . . . Continued
What does accountability look like? Bill Reeb provides some answers.
Public Practice
*Leading Outside the Box
Consider the differences between conventional and unconventional leaders and thinkers.
Partner Insights
Meet the Challenges of the Year Ahead
What are your critical challenges for 2012, and what can do you about them?
CPA Trendlines
Six Steps Toward a Clear Vision for Your Firm
When firm leaders are unable to formulate and articulate a clear vision, their ability to make
decisions and drive change becomes hampered.
AICPA CPA Insider
Today’s Partners Must Be Accountable
Tips for clarifying partner expectations and measuring partner performance.
CPA Practice Management Forum
The Administrator’s Key Role
How administrators can play a critical part in your firm’s success.
Accounting Today
Is Your Firm a Good Place to Work?
A look at trends among firms ranked at the top of 2011’s “Best Firms to Work For” list.
The Marc Rosenberg Blog
How to Build a Strong Partnership
August Aquila discusses seven characteristics of a great partnership.
CPA Trendlines
Engagement Letters: Are You and Your Clients on the Same Page?
Steve Erickson offers tips for improving the engagement letter process.
CPA Trendlines
Are Poor Pricing, Billing, and Collection Practices Hurting Your Business? The author offers several suggestions for improving these practices.
Journal of Accountancy
Take the Lead
Rita Keller challenges firms to do less comparing with other firms and more innovating.
Solutions for CPA Firm Leaders
Succession Planning and M&A
Designing a Successful Partner Retirement Plan
Without proper planning, a firm is left directionless.
Partner Insights
When Should Your Partners Retire?
Try a retirement timeline exercise.
Solutions for CPA Firm Leaders
Marketing
Is Paid Search a Mistake in the Consulting Profession?
Ed Kless thinks it leads to poor customer acquisition.
VeraSage Institute
*Getting Everyone Involved in Business Development
It’s hard to make it “rain,” but anyone can make it drizzle with the proper professional support.
RedZone, Play of the Month
Client Services
Tone at the Top: Management’s Role in Accounting Fraud
Recent studies show how focusing on the CEO and CFO can help clients prevent and detect
fraud.
The CPA Journal
Identifying a Successor Who Has What it Takes
What qualities should your client’s successor possess?
AICPA CPA Insider
Find the Right Buyer for Your Client’s Business
Pros and cons of selling a business to a key employee.
AICPA CPA Insider
Advising Clients on Retirement
Are you clients prepared to retire?
AICPA CPA Insider
Surveys
*CPA Firm Revenues: Has the Bleeding Stopped?
Highlights from the Rosenberg MAP Survey and tips for putting the results to work in your firm.
Public Practice
Resources
Ron Baker’s Best Business Books of 2011
Ron Baker reviews the best business books he read last year.
VeraSage Institute
Ron Baker’s Best . . . Books of 2011
For those of you who are “over reading business books,” Ron Baker reviews his 10 favorite
books from 2011.
VeraSage Institute
Practice Management
Being Accountable for Accountability . . . Continued
Source: Public Practice
In his previous column [http://goo.gl/BwdqX], Bill Reeb commented that accountability is one of
the top issues for CPA firms today, but few firms do it well. In this column, Reeb examines
“what accountability might look like.”
For partners, Reeb explains, accountability means “having a system in place that rewards
partners for following processes and procedures, living up to their roles and responsibilities, and
implementing the firm’s strategy.” Ideally, positive reinforcement is the primary motivator, but
there should also be penalties for poor performance.
Partners should know precisely what they are accountable for, there should be an objective
component to help measure performance, and the firm’s expectations should be consistent over
time (rather than changing to match a partner’s performance). Partners should be empowered to
control how much they earn by deciding whether they wish to meet the firm’s minimum
standards or exceed them.
The article lists common examples of objective criteria (both financial and nonfinancial) used to
define partner performance expectations. It also discusses subjective criteria and the need for
“objective support tools” to gauge success in these areas.
For the complete article, read “Accountability for Performance Management (Column 2).”
[http://goo.gl/BnOyN]
From Public Practice, Texas Society of CPAs, February 2012, www.tscpa.org.
Leading Outside the Box
Source: Partner Insights
The following includes excerpts, reproduced with permission, from an article by Eric J. Romero.
Unconventional leaders are fanatical about their products and services, rather than about their
profits, yet they tend to lead the most profitable firms in their industries. Unconventional leaders
are unconventional thinkers, but what does that mean? Below is a comparison of conventional
and unconventional thinkers.
Conventional thinkers:
Avoid risk
Say things like “This is just the way we do things”
Accept things as they are
Avoid expressing their ideas unless agreement is likely
Follow trends
Continue doing things the same way
Value agreement, as well as consistency
Have a negative perception of differences
Do not question why things are the way they are
Value established knowledge
Unconventional thinkers:
Strive for improvements or even perfection
Think and act differently from most people
Re-evaluate everything
Integrate disparate ideas and knowledge into new ideas
Are not restricted by other people
Like change
Are willing to try new things
Believe that constructive conflict leads to a better understanding of issues
Openly express what is on their mind
Value thinking and creating knowledge
To become a more unconventional thinker:
Try new things: music, food, activities, travel
Question everything
Tell people what you think
Debate with people who disagree with you
Talk to people who are totally different from you
Try new ideas
View failure as part of the learning required to try new things
Don’t take yourself too seriously
For the complete article, read “Lead Unconventionally and Beat the Competition.”
[http://goo.gl/jq5fC]
From Partner Insights, Aquila Global Advisors, LLC, February 2012, www.aquilaadvisors.com.
Meet the Challenges of the Year Ahead
Source: CPA Trendlines
The following is adapted, with permission, from an article in CPA Trendlines.
What are your critical challenges for 2012, and what can do you about them? A number of the
profession’s leading lights have been sharing their thoughts with Accounting Today. Here’s one:
Dave Sibits, CBIZ Financial Services
Accounting firms are facing:
1. An aging of leadership at the partner level.
2. A continued erosion of pricing in service areas, due primarily to a challenging business
and economic climate.
3. Competition for the best and brightest talent, especially among top firms seeking to add
specialty expertise or employees to groom for the future.
Some steps we have taken to meet these issues include 1) development of a robust training
curriculum for our managers and 2) continued expansion of our Emerging Managing Director
Academy – a multifaceted training program that readies our most talented people for the move to
the managing director role, and for the changes and responsibilities associated with it. In
addition, we continue to improve our process for the transition of client relationships as
managing directors reach the end of their professional careers.
Also, our firm has moved toward greater specialization. This led us to the formation of five
national niche practices – construction and real estate, not-for-profit, ERISA, forensic and
financial services, and specialty tax consulting.
For the complete article, and links to other 2012 strategies, read “Strategy 2012: Leadership,
Pricing, Competition.” [http://goo.gl/IZ60L]
From CPA Trendlines, December 22, 2011, http://cpatrendlines.com.
Six Steps Toward a Clear Vision for Your Firm
Source: AICPA CPA Insider
The following includes excerpts, reproduced with permission, from an article by Jennifer Wilson.
When firm leaders are unable to formulate and articulate a clear vision, their ability to make
decisions and drive change becomes hampered. When you develop a vision for your firm, you’ll
benefit from increased inspiration and engagement, clarity of direction, definition of scope, and
enhanced unity. Consider taking these steps:
1. Designate a vision committee. Include partners, younger up-and-comers, and key
administrative managers.
2. Establish ground rules. No subject is off limits.
3. Establish scope for the vision. Develop a vision of where your firm will be in five years
in terms of differentiation, industry and service specialties, size, leadership and
management, M&A activity, and so on.
4. Do your homework prior to formulating your vision. Conduct competitive analysis in
each of your key markets and undertake an honest SWOT (strengths, weaknesses,
opportunities and threats) analysis.
5. Think big, take risks and make tough decisions. Developing a vision requires a
willingness to dream about the future and identifying a stretch outcome through which
your team can get very energized.
6. Integrate your vision plan into the day-to-day business. Communicate your vision and
provide ample time for questions and feedback.
For the complete article, read “Does Your Firm Have a Vision for Its Future?”
[http://goo.gl/QDPKd]
From AICPA CPA Insider, January 30, 2012, http://www.CPA2biz.com.
Today’s Partners Must Be Accountable
Source: CPA Practice Management Forum
According to August Aquila, firms cannot afford to have underperforming partners in the current
economy. To improve partner accountability, firms should develop expectations or written
guidelines clarifying partner responsibilities. Whether or not partners are performing up to
standard, Aquila says, is an issue of firm survival.
Firms should create standards for partners in four areas:
1. Ability to develop business. Partners should be involved in marketing for the firm,
personal marketing, cross-selling, and bringing in new business.
2. Relationships with clients. Partners should adhere to the firm’s client acceptance policy;
be willing to transfer clients to members of the team who are best-suited to serve those
clients; and be committed to exceptional, proactive customer service.
3. Strength as a business manager. Partners should be able to meet standards of client
profitability, timely billing and collecting, leverage, and billable hours.
4. Ability to lead. Partners should take part in firm-wide social activities, be willing to
invest in the growth of individual team members, be able to trust and be trusted, and have
a greater concern for the firm as a whole than for themselves.
To ensure that partners meet their responsibilities, firms must 1) clarify partner expectations, 2)
measure whether those expectations are being met, and 3) create a direct connection between
work performance and compensation.
For the complete article, read “The Brave New World of Being a Partner.” [ http://bit.ly/zwI0dr ]
From CPA Practice Management Forum, CCH Incorporated, 800-449-8114, February 2012, p.
10.
The Administrator’s Key Role
Source: Accounting Today
In this article, Danielle Lee examines the value that high-level office administrators can bring to
a firm. Firms without an overall administrator may be allowing partners to be pulled away from
their critical roles to be overly involved in issues such as human resources, IT, marketing, and
other organizational matters.
Lee features an administrator/managing partner duo from the New Jersey firm Wilkin &
Guttenplan. Janine Zirrith, office administrator, has been with the firm for more than 25 years
and works closely with Ed Guttenplan, the firm’s managing partner. Zirrith and Guttenplan meet
every two weeks to ensure that the firm is operating at its best. Zirrith addresses issues such as
staff training and marketing that would otherwise draw Guttenplan away from focusing on firm
growth, strategic planning, etc. Zirrith has even overseen building renovations and disaster
recovery.
Deborah Sessions is chief operating officer for Porter, Keadle, Moore in Atlanta. Sessions, who
has been serving her firm for 25 years, is heavily involved in human resources and staff training,
making sure the right people are hired and that they’re trained and mentored to prepare them to
contribute to the firm long-term – including possibly being part of the firm’s succession plan.
Because of their high-level, but administrative, roles, team members like Sessions and Zirrith can
help with matters like succession planning, which must be dealt with but are also sensitive
subjects. Administrators at this level can offer feedback and insight from a knowledgeable, non-
partner perspective and, as a result, can play a critical role in partner discussions and planning for
the best interests of the firm.
For the complete article, read “Firm admins: A secret source of growth.” [http://goo.gl/ERpQm]
From Accounting Today, February 1, 2012, SourceMedia Inc., One State Street Plaza, 27th
Floor, New York, NY 10004, 800-221-1809.
Is Your Firm a Good Place to Work?
Source: The Marc Rosenberg Blog
The following includes excerpts, reproduced with permission, from a blog post by Marc
Rosenberg.
Accounting Today released the 2011 Best Firms to Work For list in the December 2011 issue
with some interesting findings.
Top-scoring firms offered a variety of features that contributed to high employee satisfaction,
while the lowest-scoring firms were so cited due to one particular item across the board:
dissatisfaction with pay and benefits.
Companies earning positive feedback in the financial reward categories were noted for:
Reversing salary freezes
Restoring raises
Reinstating 401k match
Celebrating employee anniversary with personal gifts
One firm took an unusual step to see both staff and clients through the challenging economic
times: To reduce the need to lay off employees during the recession, it offered its staff free-of-
charge to not-for-profit clients.
In addition to emphasizing compensation, one of the top three companies emphasized physical
fitness, offering an on-site gym, sauna, and massage room; yoga classes; and an annual tax-
season weight-loss competition.
Firm communication is improving. Open communication is a top priority for high-scoring firms.
To this end:
Avoid surprises
Give staff as much say in the decision-making process as possible
Focus on the positive; give as thorough an explanation of the negative as possible
And more firms are moving from a closed-office to an open-door environment. With a focus on
teamwork, partners are becoming more hands-on, creating opportunities for more partner-staff
interaction and exchange. Top-ranked companies are finding that striking a better work/life
balance and fostering a friendly, pleasant workplace environment that keeps employees engaged
results in the highest degree of staff satisfaction.
For the complete article, read “Best CPA firms to work for: top trends.” [http://goo.gl/L57zj]
From The Marc Rosenberg Blog, January 31, 2012, http://blog.rosenbergassoc.com/.
How to Build a Strong Partnership Source: CPA Trendlines
The following includes excerpts, reproduced with permission, from an article by August Aquila.
Here are seven characteristics that form the foundation of a great partnership. If you are missing
any of them, or if you merely need to improve in some areas, now is the time to start
strengthening your firm’s foundation.
1. Trust. The foundation of any good relationship is trust. Without trust there can be no
productive conflict, commitment or accountability.
2. Common values. Some people may argue with me, but I believe that having common
values is the very foundation for the successful partnership. This does not mean that
partners are clones of one another, but partners need to agree upon the firm’s core values.
3. Chemistry. The key question is, “How do you feel about each of your fellow partners?”
Would you still make them partners today? If you are not comfortable with a current
partner, it’s best to take heed and address the issue.
4. Defined Expectations. I have found that the best partnerships set goals for each of the
partners at the beginning of the year. And they don’t try to make all the partners do the
same things. They look to leverage each partner’s strengths. Each partner knows his role
on the team and its corresponding value.
5. Mutual respect. When partners have defined expectations and understanding of each
other’s strengths, they develop a mutual respect for each other. As a partner meets or
exceeds his or her goals, the feelings of respect for that partner only increase.
6. Synergy. Great partnerships create more than the sum of the parts. They are able to
match one partner with another whose skills and experience are different.
7. Great two-way communication. The above elements of a good partnership won’t make
much difference if there is not good or great two-way communication in the firm.
For the complete article, read “Seven Steps to Building a Great Partnership.”
[http://goo.gl/pjg8c]
From CPA Trendlines, http://cpatrendlines.com, January 31, 2012.
Engagement Letters: Are You and Your Clients on the Same Page?
Source: CPA Trendlines
The following includes excerpts, reproduced with permission, from an article by Steve Erickson.
Tips for improving the engagement letter process:
1. Have face-to-face meetings with clients to discuss the terms of the engagement and go
through the engagement letter.
2. Have clients initial important clauses to make sure they understand their responsibilities.
3. Provide, in the letter, for change orders in the event the scope of work changes during the
engagement.
4. Include a “stop work” clause providing that work will cease if payment terms aren’t
followed.
5. Attach examples of work that are within and outside the scope of the engagement.
6. Attach a sample change order.
7. Attach a copy of your firm’s credit policy.
For the complete article, read “Seven Tweaks for Your Engagement Letters.”
[http://goo.gl/6sA7m]
From CPA Trendlines, http://cpatrendlines.com, January 28, 2012.
Are Poor Pricing, Billing, and Collection Practices Hurting Your Business? Source: Journal of Accountancy
In this article, the author offers suggestions for improving these practices, including:
Review each of your services to be sure you understand the value they provide and that
they are priced appropriately. Consider “value pricing” rather than billing based on time.
Don’t be afraid of high price quotes – reducing a quote is easier than increasing it.
Keep clients informed of changes that require extra work, and discuss additional fees
before you do the work.
Enhance cash flow by presenting bills together with the deliverables.
Improve the presentation of your bills by itemizing services and including greater detail.
Improve collections by communicating your value to clients, following up after bills are
delivered and accepting credit card payments.
For the complete article, read “Pricing, billing and collecting fees – What CPA firms can do to
run their businesses more efficiently and effectively.” [http://goo.gl/h5BLa]
From Journal of Accountancy, American Institute of Certified Public Accountants, November
2011, http://www.journalofaccountancy.com/Issues/2012/Feb.
Take the Lead
Source: Solutions for CPA Firm Leaders
The following is a complete reprint, reproduced with permission, of a blog post by Rita Keller.
I have worked in the CPA profession for over 30 years. I have seen CPAs drag their feet with
embracing and implementing new ideas and trends. It’s always “let others do it first and then
we’ll see.”
A prime example is going paperless. CPA firms began moving into the paperless world in the
late ’90s, and there are still a huge number of firms who aren’t there yet. “It takes more time.”
“It’s too hard to review on screen.” “I can do it faster if I have a paper copy.” “My clients want a
paper copy.” “I have older clients who don’t have a computer.”
Right now the major topic is social media. There are all kinds of excuses aired by CPAs why it
won’t work for them and their firms.
Please, please read this recent blog post by Michelle Golden: “Listener Beware: Don’t Take
Everything You Hear From Experts as Gospel.” [http://goo.gl/EByYU]
CPAs, in my opinion, place too much weight on comparing themselves to other CPA firms. One
of the common questions I hear is, “What are other firms our size doing?” What I would like to
hear once in a while is: “Who cares what other firms are doing, let’s try our idea and do it our
way!”
Think for yourself – read and take to heart advice from successful business people outside the
CPA profession – be more creative and don’t always rely on other CPA firms to lead the way for
you. Why don’t you lead the way for them?
“Innovation distinguishes between a leader and a follower.” – Steve Jobs
For the original post, read “Are your firm’s leaders pooh-poohing social media?”
[http://goo.gl/4Idwp]
From Solutions for CPA Firm Leaders, February 2, 2012, http://ritakeller.com/blog/.
Succession Planning and M&A
Designing a Successful Partner Retirement Plan
Source: Partner Insights
The following includes excerpts, reproduced with permission, from an article by August Aquila.
Without proper retirement/succession planning, a firm is left directionless. While there is not just
one way to have a successful retirement plan, there are some basic elements that you need to
incorporate.
Retirement Age
The most important issue to determine is the retirement age. Some firms require partners to step
down at age 60. Others have a mandatory retirement at 65 or 66. The actual age is not as
important as actually having one in your agreement.
Retirement Notice
It used to be common to give a six- to 12-month notice. Today, I am seeing more agreements
requesting a one- to two-year notice.
Retirement and Deferred Compensation Agreements
If you ask retiring partners to transfer their client bases or cut back on hours, make sure you are
not asking them to do something that will hurt their retirement payments.
Early Retirement
I discourage smaller firms from letting partners retire at too early an age. It can be very
detrimental to lose the intellectual capital, the relationships, and the referral sources that a partner
has. In addition, early retirement can impose a financial burden on the firm.
Client Transition
Partner retirement and client transition should go hand-in-hand.
Compensating Retired Partners
Many times, retired partners will continue to do work for the firm. It should be up to the firm to
determine what the work will be and how the partner will be compensated.
Partner Retirement Calculations and Benefits
Many firms are moving from deferred compensation benefits based on equity to a multiple of
compensation. Review the retirement formula to make sure the firm can afford it.
For the complete article, read “Plan Ahead for Partner Retirement.” [http://goo.gl/aryfe]
From Partner Insights, Aquila Global Advisors, LLC, February 2012, www.aquilaadvisors.com.
When Should Your Partners Retire?
Source: Solutions for CPA Firm Leaders
The following includes excerpts, reproduced with permission, from a blog post by Rita Keller.
If your CPA firm, like so many others across the country, is facing the succession challenge, try
this simple Retirement Timeline Exercise and use it as a tool at your next management retreat.
Do you have too many clusters of partners reaching retirement age? How many younger partners
are also in clusters?
I suggest doing two timelines – one based on the year a partner reaches age 65 (in many firms
this is when you have to sell your stock) and one based on when the individual partner thinks
he/she will actually “retire.”
One of the major issues you will be facing is that many partners will reach retirement age, sell
their stock and then want to stay active in the firm for many years to come. You have to decide if
that’s a good thing or a bad thing. It’s often a downer for the young partners and future partners
in the firm in that they are looking forward to their chance to take over and do things their way.
In years gone by, firms have been able to keep the founder on the payroll and provide an office
and other support. However, now you might be facing many Baby Boomer partners wanting to
keep working. Does it make sense to have four or five over-65, former partners around the office
indefinitely? Be sure to examine, discuss and decide what is really best for the firm.
For the complete blog entry, read “CPA Firm Partner Retirement Timeline.”
[http://goo.gl/jMmHe]
From Solutions for CPA Firm Leaders, the blog of Rita Keller, president of Keller Advisors,
LLC, [email protected], January 31, 2012. Visit http://ritakeller.com/blog/.
Marketing
Is Paid Search a Mistake in the Consulting Profession?
Source: VeraSage Institute
The following blog post by Ed Kless is reproduced in its entirety with permission.
Fellow Sage team member Greg Tirico posted an interesting link [http://goo.gl/kEay0] to an
article which suggests that small and medium businesses are beginning to favor social media
spending over paid search.
I have always thought of paid search (and even SEO) as a mistake in the consulting profession
because it tends to lead to poor customer acquisition. In other words, it produces more D and F
customers than A or B customers.
By their very nature Web search prospects are in the gather information step in the buying
process. They tend to be tire kickers who are generally looking at buying more on (pun intended)
low price rather than a long-term relationship.
I think social media has the potential to change this because it turns search on its head. Instead of
looking for people who already have their hand in the air (an intercept lead), social media allows
the providers to look for people who have unrecognized need.
In my opinion, it is a much better place to spending marketing dollars.
For the original blog post, read “On Paid Search vs. Social Media Spending.”
[http://goo.gl/vwuoP]
From VeraSage Institute, http://www.verasage.com/index.php/community, January 11, 2012.
Getting Everyone Involved in Business Development
Source: RedZone, Play of the Month
The following includes excerpts, reproduced with permission, from an article contributed by
Accountants Advisory Group.
It’s hard to make it “rain,” but anyone can make it drizzle with the proper professional support, a
well-directed and managed marketing program, and practice development coaching and training.
Here’s a game plan that will allow most CPA professionals to become more successful in their
practice development efforts and spend less time in the process:
Use target marketing, which provides focus to all of your marketing activities and most
often produces better results than the “shotgun” approach.
Have a “relationship manager” who can assist partners with the prospect relationship
management process.
Provide partners with practice development training throughout their careers to help them
learn and refine practice development techniques and to motivate them to market
themselves and the firm.
Having a number of your partners making it “drizzle” versus relying on a few “rainmakers” will
increase the chances of a successful succession plan.
For the complete article, read “Anyone Can Make It Drizzle.” [http://bit.ly/yrKL7U]
From RedZone, Play of the Month, Accountants Advisory Group, February 2012,
www.AccountantsAdvisory.com.
Client Services
Tone at the Top: Management’s Role in Accounting Fraud
Source: The CPA Journal
This article reviews several recent research studies that provide insight into the role of CEOs and
CFOs in accounting fraud. Auditors and consultants can use the findings to help their clients
prevent and detect fraud. Highlights include:
One study showed that the CEO or CFO is implicated in 89 percent of financial statement
fraud cases (CEOs in 72 percent of the cases and CFOs in 65 percent), and a second study
also supports the conclusion that accounting fraud usually involves CEOs and CFOs.
A third study suggests that CEOs participate in accounting fraud for personal gain (by
maximizing equity incentives) and that CFOs typically get involved because they
succumb to pressure from CEOs. A fourth study, however, found no link between fraud
and equity incentives.
A fifth study suggests that CEO accounting fraud is often driven by narcissism – that is,
“an inflated view of himself and the company’s performance” – combined with a high
degree of power.
A sixth study concludes that despite the audit committee’s oversight role, CEOs and
CFOs continue to drive the audit selection process, which can compromise auditor
independence. But the Sarbanes-Oxley requirement that CEOs and CFOs certify the
financial statements (Section 302 certifications) has helped improve the integrity of
financial reporting.
In light of these studies, the authors recommend that fraud programs focus on the CEO and CFO.
They also recommend that audit committees and external auditors (1) develop an understanding
of the CEO’s personality and power, (2) assess the CFO’s ability to withstand pressure from the
CEO, (3) monitor management’s role in auditor selection, and (4) determine whether the CEO
and CFO take Section 302 certifications seriously or view them as “check the box” requirements.
For the complete article, read “CEOs, CFOs, and Accounting Fraud.” [http://goo.gl/WmVE0]
From The CPA Journal, A Publication of the New York State Society of CPAs, January 2012,
www.cpajournal.com.
Identifying a Successor Who Has What it Takes
Source: AICPA CPA Insider
The following includes excerpts, reproduced with permission, from an article by Heidi Bolger.
Beyond all the financial wizardry that’s essential to effective succession of ownership,
succession of leadership in a client’s business is even more important to business transition.
Without well-chosen and well-prepared leaders, the business won’t thrive and the buy-out
payments to our clients may never materialize.
Who Should Choose the Successor Leader?
If your client’s business is closely held with a next generation family member or two, this may
seem like a no brainer. There may also be a longer-term employee or two who seem to be the
right fit. Your entrepreneurial client may be comfortable in making this choice on his or her own.
With smaller, less complex enterprises, a selection process can also be designed to draw on the
insight of a circle of trusted advisers.
For larger, more complex clients, I advocate the formation and use of a “Talent Management
Committee” in some form. This executive-level team is responsible for mapping the strategy for
attraction, development and retention of talent in your client’s business.
What Should Your Client Look for in a Successor?
Although there’s certainly not a one-size-fits-all list of leader characteristics, some important
aspects for consideration are below:
Core Level:
Trust
Shared Values and Vision
Embrace of Business Philosophy
Commitment and Loyalty
Technical Competencies:
Relevant Education and Experience
Required Critical Skills (Deep Understanding of Products/Services and Customer Needs)
Track Record of Profitable Management of Operations
Leadership Competencies:
Excellence in Communication
Well Connected and Excellent at Relationship Building
Strong Motivational, Mentoring, and Accountability Skills
Creativity to Take the Business to the Next Level
For the complete article, read “Making the Right Successor Choice.” [http://goo.gl/3fBrt]
From AICPA CPA Insider, February 6, 2012, www.CPA2biz.com.
Find the Right Buyer for Your Client’s Business
Source: AICPA CPA Insider
The following includes excerpts, reproduced with permission, from an article by Heidi Bolger.
Do you have clients who are thinking about closing their businesses and are looking for advice
on succession planning and how to find the right buyer? Your clients may have the perfect
buyer-candidate right under their noses.
Key employees are very knowledgeable about what it takes to operate certain aspects of the
business successfully and can be high-potential entrepreneurs-in-waiting. So why not consider
these key employees as potential buyers?
Pros and Cons of Selling to Key Employees
Reasons your client should consider selling to key employees:
Key employees’ abilities have been tested and proven.
Customers already know these individuals.
No outside search process or business broker is required.
Key employee ownership may provide the seller a greater opportunity to stay involved in
an acceptable role post-sale.
Clients gain the gratification and gratitude that comes from rewarding key employees the
privilege of ownership.
Some of the potentially bad reasons or outcomes from a sale to key employees:
Dealing with unsophisticated buyer(s) may require a lot of hand-holding.
Selling to key employees may or may not optimize your client’s selling price.
Outside buyers may be more seasoned in running and growing your client’s business.
Negotiating with people you know well and care deeply about can be very challenging.
It might offend other employees who don’t get offered the opportunity to purchase the
business.
Having a key employee step into an owner role can disrupt the chemistry of your client’s
team.
Key employees often lack personal resources required to purchase the business.
It can be challenging to sell to key employees in a tax-efficient manner.
For the complete article, read “Are Your Clients Closing Shop in 2012?” [http://goo.gl/D0k17]
From AICPA CPA Insider, January 9, 2012, www.CPA2biz.com.
Advising Clients on Retirement
Source: AICPA CPA Insider
The following includes excerpts, reproduced with permission, from an article by Kemberly
Washington.
Whether your clients are in their tender 20s or nifty 50s, it is never too early or late to begin
building a nest egg. Inquire about where they see themselves in retirement; understand where
they are now and, more importantly, what it will take to get them where they need to go.
Listen to Your Clients
Where do your clients see themselves when they reach retirement age? Sitting on the
sandy beaches of Florida? Or working day to day until the good Lord calls them
home? Review your client’s financial picture to determine which expenses can be
eliminated in their retirement years to estimate the amount needed to fund a comfortable
lifestyle during retirement.
Where are your clients now? Are they active in their current employer’s plan? If they are
self-employed, have they considered establishing a retirement plan? Determine whether
they are taking advantage of tax advantage accounts and/or employer matching
contributions. These options can provide funding that would allow clients to reach their
retirement goals faster.
Are your clients able to sleep at night if their investment portfolios decrease sharply?
Analyze your clients’ current holdings to see whether their current holdings are in line
with their financial goals and risk tolerance. Careful planning can increase the probability
of your clients reaching their financial goals in a timely way.
Understand Your Clients
One size does not fit all. What may work for one of your clients may not necessarily work for the
other. As their trusted adviser, it is your responsibility to let your clients know when they set
lofty unrealistic goals. Stay positive and offer alternatives that would fit their lifestyle.
For the complete article, read “Are Your Clients Prepared for Retirement?” [http://goo.gl/gf7iW]
From AICPA CPA Insider, January 17, 2012, www.CPA2biz.com.
Surveys
CPA Firm Revenues: Has the Bleeding Stopped?
Source: Public Practice
In this article, Rick Telberg examines key results from the 2011 Rosenberg MAP Survey
[http://goo.gl/j9aF1]. Highlights include:
Nationwide, revenues increased by 1.7 percent, compared to 1.4 percent in the previous
year. The increase is modest but, the authors say, significant because it signals that “the
bleeding has stopped.”
Larger firms experienced a 4.6 percent growth rate.
Income per partner averaged $360,000, up from $354,000 the year before.
Projected growth for 2011 is 3.5 percent, the highest in three years.
Marketing expense as a percentage of fees was virtually unchanged.
The article also offers tips on how firms can use the survey results to improve their performance.
For the complete article, read “CPA Firms’ Financials on Rebound” [http://goo.gl/wk0jw]
From Public Practice, Texas Society of CPAs, February 2012, www.tscpa.org.
Resources
Ron Baker’s Best Business Books of 2011
Source: VeraSage Institute
Ron Baker reviews the best business books he read last year.
Top choices:
1. Stanley Marcus: The Relentless Reign of a Merchant Prince, by Thomas Alexander.
2. Healing Leadership, by Howard Hansen and Steven Geske (Kindle edition only).
3. Pricing Strategy, by Tim J. Smith.
Other recommendations:
4. Technology, Management and Society, by Peter Drucker.
5. Target Cost Management, by Jim Rains.
6. The One Best Way, by Robert Kanigel.
7. Car Guys vs. Bean Counters, by Bob Lutz.
8. Obliquity, by John Kay.
9. Practically Radical, by William Taylor.
10. No B.S. Price Strategy, by Dan S. Kennedy and Jason Marrs.
11. The Pope & The CEO, by Andreas Widmer.
12. Drucker’s Lost Art of Management, by Joseph Maciariello and Karen Linkletter.
13. Doing Both, by Inder Sidhu.
For Baker’s complete reviews, read “Book Review: Baker’s Dozen Best Business Books 2011.”
[http://goo.gl/D4rGG]
From VeraSage Institute, http://www.verasage.com/index.php/community, January 30, 2012.
Ron Baker’s Best . . . Books of 2011
Source: VeraSage Institute
For those of you who are “over reading business books,” here are Ron Baker’s 10 favorite books
from 2011:
Top choices:
1. The Politically Incorrect Guide to Socialism, by Kevin Williamson.
2. Economics Does Not Lie, by Guy Sorman.
3. The Thomas Sowell Reader, by Thomas Sowell.
Other recommendations:
4. Super Freakonomics, by Steven Levitt and Stephen Dubner.
5. The Birth of Plenty, by William J. Bernstein.
6. I am John Galt, by Donald Luskin and Andrew Greta.
7. Rush, by Todd Buchholz.
8. Humorists, by Paul Johnson.
9. After America, by Mark Steyn.
10. The Black Book of Communism, by Mark Kramer, et. al.
For Baker’s complete reviews, read “Best Books 2011.” [http://goo.gl/6m6PA]
From VeraSage Institute, http://www.verasage.com/index.php/community, February 1, 2012.