What it’s like leading a CPA firm from traditional tax factory to advisory focused firm.

By Julie Smith and Ryan Conn

In a recent meeting of the minds, we had an opportunity to reflect on a pivotal journey that both of us have lived and led. A journey that is prevalent in the public accounting profession today for leaders of hundreds (even thousands) of small and mid-sized CPA firms, and one that has been the subject of dozens of articles, webinars, and conferences for the past several years. 

That journey is a multi-year commitment to executing significant change in our respective firms. As Ryan puts it, turning a traditional ‘tax factory’ into an advisory firm. 

During our conversation about what it took to start from scratch and produce a firm that yields exponential growth, we talked a lot about a formula for building teams that willingly execute change. That topic will be “part 2” and covered in a separate article about teams.

However, before you can build a team, we landed on five common denominators that were key ingredients and non-negotiables for a successful transition of a firm to an advisory practice. 

  1. Neither of us were owners of the firm.

Both of us were brought into our respective firms by owners who were tired of the traditional grind and knew there was work to be done to shift focus from compliance work to advisory and consulting. 

This is more than a business decision. It’s emotional for the owners and partners of small and mid-size firms, because they are invested in long term relationships with clients and employees. Some clients may be overly time consuming and not profitable, and some employees may not be in the right roles, but established relationships and conflict avoidance can trump the initiative to make difficult decisions.

Owners and partners must realize that some of these emotional investments may be holding the business back, and they also need to realize that they can’t do it alone.

Above everything, firm owners who want to change should understand that if they don’t find a firm champion to do it with them, it’s not going to happen. 

  1. Take the hardest step…the first step.

Before any change takes place, leaders have to do two things. First, look in the mirror and realize it starts with you. Understand and accept that all of the failures and successes boil down to leadership. Every single one. Further, as a leader, you must take accountability for the failures, and give your team credit for the successes.

Second, take the first step and commit.

  1. The united front.

When you go through change…there must be a united front between the firm owner and the firm champion. In order to accelerate the change, you must commit to a 100% united front and positive attitude with the team. Be impenetrable. No one can drive a wedge into that relationship between the firm owner and the firm champion.

To be clear, change is hard. You and your firm’s owner and/or partner are not always going to agree. It’s ok to vent and debate behind closed doors, but when that door opens, the smile goes on and the positive energy and attitude walk out.

  1. Define your mission and vision first. 

In order to move forward and execute permanent change, the entire team has to have a rudder. Otherwise, you’ll be rowing in circles. 

What do you want to be? Start with a mission. This is bigger than a goal and bigger than everyone in the firm- it’s a cause, a purpose. What are we showing up every day to do? 

Once your mission is established, document your vision. The vision should be clear and include well-defined roles and responsibilities. 

Then, you need to communicate both to the team. Most importantly, you’ll need to define each person’s role and show them how they all fit together to move forward as one. It’s everyone’s job to cross the goal line, and everyone has a different critical role they play. As Julie emphasizes, each person needs to understand how vital their role is to the whole firm’s vision.

  1. Build your team. 

Having written documentation of every person’s role is imperative. Responsibilities and expectations are then clear. 

Recognize that everyone has strengths and weaknesses. A great team plays to their strengths and is able to ensure that weaknesses never show. A team who is ‘bought in’ to the mission, vision, and each of their roles within that vision will work to cover for each other- never allowing a teammate to fall down or weaknesses to be exposed.

For a leader to effectively lead a team, it is important to have the ability to figure out what makes people tick. Some may baffle you, and have you wondering, “how do I get this person to come to an aha moment on their own accord?” In other words, as Ryan points out, some people just require a little coyote medicine, and that’s ok. It’s on the leader to understand how each person is motivated and inspired- then support them with that. Do they need encouragement, strict guidelines, more independence? 

As you build your team, you build your culture. 

Do not let an employee who is a bad fit compromise the work you’ve done (and continue to do) to achieve your vision. Keeping a toxic employee will poison the firm, regardless of how highly credentialed they are. And, regardless of how difficult it is to find talent. 

When you hire, make sure the people you bring into the firm share the same core values you have as a firm. Building the right culture takes time and intention. Look past the credentials to ensure new hires will compliment the team and be able to contribute toward your vision.

Julie sums it up best by saying, “be fiercely protective of your culture.”

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