Do You Really Know Your Competition?

A number of years ago, I was in a Wal-Mart attempting to fulfill a lengthy “honey-do” list and somewhere between the housewares and automotive sections, I noticed a small kiosk offering tax-prep services from one of the major vendors.

As someone who was covering the accounting profession at the time, I engaged the representative in a brief but lively conversation about the offerings, which included very basic 1040 work and refund anticipation loans – or RALs, which would come under federal scrutiny a few short years later.

It was then I realized that CPA firms faced competition, from multiple avenues and not just other CPA firms. If just 2-3 percent of the customers who shopped at a big box retailer like Wal-Mart opted to have their taxes prepared there, that would exceed on exponential levels the number of clients a small or mid-sized CPA firm would see in several years.

Admittedly, the average fee per return for a Wal-Mart customer would be far less than a CPA firm would command, and quite frankly, those are probably not the core clients that a business development director would chase, but I think you sort of see where I’m going with this.

I recalled my Wal-Mart experience with tax prep after recently speaking to a managing partner of a midsized firm who, was not only worried about his sketchy succession plan, but went out of his way to mention that a number of local banks and financial services firms had begun to offer a variety of accounting-centric services and not just the aforementioned tax-preparation, but also client niches such as bookkeeping, employee benefits, retirement plans and even payroll.

But to his credit, he was proactive enough to recognize this encroaching challenge early on (unlike say, the U.S, Post Office with fax machines and e-mail) and successfully promoted his firm’s decades of experience in servicing clients. And unlike the profession’s major misstep a decade or so ago, he went out of his way to showcase the pedigree and value of the CPA credential.

Much like the profession’s struggle with succession planning – which would constitute  about six months’ worth of columns – taking the blinders off to see the entire landscape of competition, in lieu of a smaller threat constrained to public accounting will help reduce – albeit not eradicate - the number of challenges firms will face over the coming years.

And those who don’t can always fill out an application at Wal-Mart.