What Business Are You In?

Over the weekend I took in a showing of “The Founder,” the story of how Ray Kroc, a former Chicago-area salesman peddling milkshake mixing machines, discovered the McDonald brothers’ state of the art fast food restaurant in California and convinced them to take him on as a franchising partner.

The rest, as they often say, is history. By the time of his death in 1984, Kroc had spearheaded a global empire that included 7,500 restaurants in 31 countries and generated sales of more than $8 billion.

But the scene in the movie that most captured my attention is when early on, Kroc opens his books to a CFO and bemoans that his constricted franchising contract with the McDonald brothers is actually losing him money despite opening 15 or so new restaurants.

The CFO bluntly tells Kroc he’s focusing on the wrong thing. “You’re not in the burger business Ray you’re actually in the real estate business.”  The CFO then devises a strategy whereupon Kroc would purchase the site plots outright and in turn lease them back to the franchisees, thereby guaranteeing him a steady income stream that could be repurposed to develop new units.

So that got me to thinking. No, not to become a McDonald’s franchisee – that requires about $2 million more in liquid capital than I currently have. But rather asking the question - how many of your know what business you’re really in?

Obviously most of you provide accounting and financial services. But for a moment, let’s gravitate beyond such plain vanilla client niches such as audit and tax.

What are you truly providing your clients?

The answer is advisory services. That moniker of being “The Most Trusted Advisor” didn’t just pop up out of nowhere. Look at print ads or billboards advertising some of the larger CPA firms. Do the words “accounting,” “audit” or “tax” appear in the ad copy? My guess is probably no.

Over the past several years – and one could argue perhaps longer - CPA firms have been moving away from what I like to call a “services driven” approach to one that is more “strategy driven.” The 21^st CPA firm will morph into an entity that is more consultative – helping clients not just with financial services but also with helping to improve margins, advise on industry trends and warn of pending regulations that may affect their client’s businesses. There’s been a quantum shift in the changing of roles and the future ready CPA firms must be agile enough to adapt to the demands of a changing marketplace.

Ray Kroc recognized that the CFO was right and McDonald’s not only became a global food icon but also the largest holder of real estate in the world. 

Many of you are no doubt highly focused. After tax season you may want to evaluate whether you’re focused on the right thing.