Let’s Break Tradition with Non-Tradition

Prior to January 1, I have an annual ritual that I have adhered to for nearly 20 years.

Prior to the onset of a new year, I write down all the things I’d like to see and hopefully accomplish in the ensuing 365 days.

As one would imagine, some are easier to achieve than others – i.e. drop 10 pounds, budget money more carefully etc., as opposed to finally sitting down to write that novel or picking the correct numbers for Powerball.

As far as the accounting profession goes, know what I’d like to see in 2019 – one conference session – just one, addressing one of the fastest growing trends currently unfolding – the exponential increase in the number of CPA firms merging with entities that are decidedly not accounting practices.

It is estimated that 20 percent of all mergers by larger CPA firms are affiliations with businesses such as cyber-security companies, HR and payroll consultants, medical and dental concerns and data analytics firms.

Just last week, one of the major accounting publications carried four separate articles detailing such recent mergers. Last year I participated in a podcast on non-traditional mergers and it  received over 2,000 downloads. Yet, not one session is dedicated to that subject in all the major conferences whose agendas I have scrolled through recently.

Last year and despite all the evidence to the contrary, I submitted a speaking proposal to the AICPA to specifically address that topic at Engage 2018 and was not even given the courtesy of a response. To be somewhat fair to them, similar proposals were also ignored by several of the larger state societies in the Northeast.

Instead, attendees at various national and local CPA gatherings are regularly treated to the same repetitive bromides – engaging millennials, value pricing, choosing the correct software etc.

And some still wonder why live attendances at conferences have been declining for years?

But here’s the rub. With pending technologies threatening to reshape the way traditional accounting firms operate and automate certain client services, firms are or have been scouring the M&A landscape for specialty niches to help differentiate their practices and prepare them for those quantum changes.

Closer to home, we have over the past year, facilitated several such mergers and are on the cusp of closing two more prior to the end of January.

And yet, I continue to hear crickets in terms of anything remotely approaching the subject.

Sadly, I fear I’ll be a lot closer writing my novel. 

‘Tis the season – for scams

Now that we’re a week or so into 2019 there are always things you can count on upon beginning a new year.

A sudden flood of people joining health clubs, longer than usual lines at stores specializing in organic and farm-to-table foods and a surge in the downloads of financial calculators as to hopefully better save and budget money.

You know what else?

Scams – whether electronic, snail mail or via the phone.

At the tail end of last week, I received in order: an email from my bank (with a black and white logo I may add) warning me that my personal information had been lost and I needed to re-enter my account numbers and just for added precaution, my Social Security number as well. Next, came a call from someone purporting to be a representative of a collection agency saying that I have a $2,000 outstanding debt and face serious prosecution if I don’t pay up immediately. For my convenience they could offer me a pre-paid card and my record would remain clear.

To Make a R-E-S-olution, You Need R-E-S-olve

Welcome back and Happy New Year.

By now, most of your hangovers – whether food or alcohol - are thankfully a thing of the past. On a personal note, my new best friend for the months of January and February will be the treadmill at my local health club. One more over-sized holiday meal and I could have easily performed my best impression of John Candy.

But with a new year comes the perfunctory annual resolutions. You know the usual bromides, lose weight, make more money, spend more quality time with the family... etc.

You can always tell when it’s early January at my above-referenced gym as people you’ve never laid eyes on before suddenly begin to populate the workout area – a typical New Year resolution that usually lasts at most until the end of the month before cobwebs once again begin accumulating on their membership cards.

Sadly, the same lack of resolve is often seen at CPA firms – particularly those who have done little or nothing in terms of succession planning. “Next Year” is a phrase often tossed my way when I inquire about succession plans – the same barren promise often heard in the locker rooms and front offices of perennially losing sports teams.

That’s the way we’ve always done it!

During college I worked in a restaurant that had just hired a new general manager. He had trained at one of the large hospitality companies and wanted to work at the unit level until he went off on his own.

He was what you would call a very “new broom” and the one thing he made clear on his first day is that if he heard anyone use the phrase “we’ve always done it this way,” he/she would be well advised to start scouring the classified ads.

This restaurant had been stumbling of late, and if we were to fast forward to today’s reality television it might have been a candidate for chef Gordon Ramsey’s trademark wrath to help turn it around.

Within one month, the new GM had let go three servers and two bartenders he felt weren’t pulling their weight and had changed both the meat and seafood purveyors. Within six months the business had done a near 180 reversal and was even written up in the local paper.

One day between shifts I got up enough nerve to ask him the secret of the turnaround. To my surprise he asked me in the office, sat me down and proceeded to draw a clock on a piece of paper.

It Always Catches Up with You

During a business law class in college, the professor said something that not only would remain with me the rest of my life, but I would experience in person several times.

We were dissecting a case study on a Fortune 500 company that he was not impressed with despite a better-than average track record on Wall Street and rising demand for their products.

He cited several infrastructure problems that scant few analysts had identified and told his captive audience “remember, volume hides many ills.”

Nearly 20 years later I experienced that first hand. I had just come aboard a B-to-B magazine as an associate editor. But there were problems - we were third in terms of revenues and readership in our market and the publisher was getting constant pressure from management.

But within two years, via a series of strategic hires, laying off ineffective ad salespeople and restricting travel, the publication not only turned itself around, it recorded the best year in the company’s 60-year history.

The Five Most Hated Words

I once had a boss who, shall we say, lent new meaning to the word “impatient.”

His management style was from the old school – like Charles Dickens old school - and chances are when he asked you a question, he, like a good attorney, already knew the answer.

But if there was one phrase that ignited his temper like no other, it was someone offering the following as a defense for a miscue – “I didn’t think of it.”

When he once assigned a reporter to investigate why so many accidents seemed to be occurring at one intersection, and the completed story did not include quotes from either a local highway official or someone who had been involved in an accident, he heard those five most despised words.

The next assignment for that reporter was a local PTA meeting. And if any of you have ever had the misfortune of sitting through one of those, you would quickly understand what a field demotion that was.

Relationship Building at 35 MPG

Last week I was speaking to the owner of a large automobile dealership in the tri-state area who lords over a vehicular empire that moves roughly 25,000 cars a year and generates some $800 million in sales. Let me repeat that - $800 million.

At 66 years old and with a 45-year pedigree in the business that his grandfather started nearly a century ago, I asked him point blank how he stays motivated and maintains his edge over the competition – including the influx of start-ups and existing entities that allow customers to purchase cars online.

He broke it down in the most basic terms.

“In the end it’s all about relationships. People don’t have to come into a dealership anymore although we want them to keep coming. Take Amazon. They’re talking about getting into online car sales, but they haven’t said how they plan to service those vehicles. We build a trust with our customers and that’s why we have many of them for life. Online companies like Amazon and others can’t do that.”

Prior to the advent of cloud software and other remote-enabling technologies, the relationships between clients and their CPAs were not that different from that of a faithful customer and their local car dealer – or insurance salesman for that matter. When a client had a problem, he/she would pick up the phone and call their accountant and more often be granted a personal audience with them.