In a movie that was popular in 2000, a Perfect Storm engulfed the experienced crew of a fishing boat off the New England coast. In the middle of the ocean the opportunities were few. Well, in 2008, a “Perfect Storm” of events both globally and at home hit the business world. While those were trying times, many businesses missed the opportunities in a crisis. The following is an article we published in 2009 that we are sharing again in the pandemic times. In 2020, with the pandemic, there are opportunities that need to be identified. This takes a lot of hard work, perhaps some of the hardest work many of us will do in our lifetime.
The Perfect Storm
We are still feeling the results, and are likely to for the next few years. For CPA firms, this confluence of events has put clients under pressure. They need help protecting their profit and growth. Because of the broad range of industries affected, firms have found themselves more vulnerable than they have been in recent years to the general economic climate.
There are few safe haven industries. Nevertheless, there is a major positive: clients are more willing to listen to advice than at any time in the last 20 years. This can be good news for firms that understand how to approach the opportunities the perfect storm affords. But there are two caveats. First, what may have worked for clients in the past will not work now. Second, the comfort zone has changed. Advisors such as accountants and consultants need to overcome their fear of providing strategic advice in non-accounting areas and to work closely with their key clients.
Knowing What to Say
Knowing what to ask their clients and gauging the client’s commitment to making the changes that will enable their businesses to move forward are the biggest challenges for advisors. Focusing your efforts on developing strategies to help your clients deal with their particular problems is likely to yield the best results.
Understand the client’s needs—not wants—and then identify opportunities to help them with those key issues. One of the best ways to discover the issues that are most worrisome to your client is by arranging a face-to-face meeting at their offices. It is amazing what you can discover simply by paying attention while you are waiting in the reception area. What is the demeanor of those walking through the area: upbeat and friendly or somber? Is the newspaper old or new? How are people interacting with you and with each other?
Have a list of open-ended questions in mind for your meeting. For example, you can ask “What is stopping you from doubling your profit?” or “If you had a magic wand and didn’t have to worry about the cost, what would you change about your business?” Then, be prepared with possible follow-up questions contingent on their positive, negative or neutral response.
After you’ve had a chance to think about the information you’ve gleaned from your meeting, have a follow-up meeting at which you make suggestions. You can propose initiatives such as these:
- Effectively leveraging their people to generate fees and profit. Have a follow-up meeting at which you make suggestions for how they can best utilize their staff. Do they have action plans for their people? Are those plans monitored with feedback provided? If terminations are involved, be able to guide them to the resources they’ll need to be compliant with any legalities and/or refer them to an attorney who specializes in employment law.
- Collecting their receivables in a timely fashion. Near and dear to all CPAs hearts, this is a function that demands a simple process to stay in business. Ask your client about their process for accepting customers, extending credit, invoicing and follow up once a receivable ages beyond 30 days. You want your clients to stay in business, so guide them through efficient cash management practices to protect their assets.
- Ensuring that key performance indicators encourage the right behavior. What you measure you normally get—but make sure you measure the right things. Measure the process elements, not just the outcome. For example, you could measure the gross sales per product or service line…But why not measure process elements such as how many sales calls people make, what web hits you get each month, or the level of referrals you get from customer advocates?
We aren’t suggesting that you do this with everyone. Only your top clients generate enough of a return on investment (ROI) to warrant this level of client care. For most firms, this translates to about one-third of their clients. You must get closer to these clients. Understand the problems they are experiencing in 2009 as well as those they anticipate in 2010, and actively help them develop strategies that will help them through. If they need more customers, what could you do to get them some? If they need more profit, send them your plan for them to increase their profit.
Tailoring Strategies to the Right Level of Client Receptiveness
Once that is accomplished, tailor the level of guidance you offer according to which of the categories listed below you believe the client best fits. Recommending too little or too much advice can easily backfire:
- Frightened deer: Caught in the headlights of this recession and frozen in place, unable to outrun or dodge the recession truck bearing down on them. For this type of client, the best course of action is to be direct in your ideas on how to improve the issue the client is facing. When clients don’t know what to do, they get value out of meeting someone—you—who can guide them.
- Titanic: So big they are unable to change course fast enough to face a crisis head on. Huge clients often require help with achieving best practices. As a trusted advisor, you get to see lots of good ideas across a range of industries. Don’t be afraid to share them with others. Good ideas often come from different industries and markets.
- Zombies: Lack of skills or knowledge to understand what to do to survive. This type of client presents a different set of issues. They need to be coached, trained and directed along the way forward. Advisors often hold back offering advice unless specifically asked, but these clients need you to show them both what to do and how to do it.
- Sharp shooters: Understand the opportunities that exist no matter what the economic circumstances. These clients understand that everything is on the table and making profit is about spending less than you make, having good clients and exceeding their expectations in terms of value for money and getting paid for this value. They are already convinced that their advisors are a terrific resource. They probably became sharp shooters based on your firm’s advice.
Areas of Opportunity
When you really get down to it, there are only a handful of areas of opportunity. It is in those areas where firms can assist their clients. Remember, we aren’t saying that the only things to do are listed in this article. Tactics that are appropriate for one client or may not be suitable for others. What we are saying is that all success and profit-related issues fall into one of these four categories: lack of the right talent, inability to retain talented staff, cash flow or profitability.
What’s Good for the Goose
Interestingly, in order to be the most effective in doing this exercise, the place to start is with your own firm. After all, that too is a business that is trying to remain at optimum profitability during the perfect storm. Think about it: the areas of opportunity are exactly the same for the success of your business—that is, your firm—as they are for your clients. Although the tactics for addressing the issues may differ, the need for a strategic plan to address them is the same:
- How are you going to improve your cash flow? Are you willing to consider converting bill-as-you-go clients into retainer clients? Do you stop doing work for clients who haven’t paid for a certain length of time?
- Are you willing to make tough decisions to strengthen your talent pool? Would you consider firing the the bottom 20 percent of your people and hiring some of the great talent that is coming onto the market?
- Have you started planning to spend some non-billable time with your top clients? The ROI you get may far exceed your expectation.
- Have your marketing and sales efforts become more targeted and strategic? The firms that are prescient enough to view these activities as integral to the bottom line rather than as overhead will come out of the storm much stronger and better positioned to succeed into the future.
None of this is new, but people tend to be complacent and reactive rather than proactive. Leaders need to be disciplined to make sure their strategies are well-planned and well-executed. Their people are depending upon them to grow a profitable firm and guide them to a position of strength while weathering the perfect storm.
About the authors:
Chris Mason is a management consultant specializing in profit and growth strategies and implementation. He is the founder and chairman of Mindshop. Based in Australia, Chris is a regular visitor to the United States, where he works closely with professional service firms to develop both their practice and business advisory services. Sue Groszkiewicz is a strategic business advisor and founder of Accountable For Change. Previously, she was the chief operating officer of GH&I. She helped to establish GH&I’s growth and profit solutions consulting practice that supported business and organizational leaders in achieving their growth, profit and developmental objectives.
Many of us did well after the global financial crisis. It took time. We worked hard to identify and pursue the opportunities that came our way. Now we are reeling from another round of missed opportunities in a crisis. There is still time to recover! Ideas include focusing on wider visibility and stepped up business development. Has your sustainable competitive advantage changed? If so, change your marketing activities to support it. Maintain a growth mindset so you will see the opportunities when they appear.