The Dangers of Competitive Relaxation

The other day I came across, or more accurately stumbled across, an article that listed five once-iconic companies that for decades dominated their respective markets, but are now relegated to that ever-widening graveyard of American business fatalities.

Millennials most likely have heard only anecdotes from older friends or relatives or perhaps read case studies in college about companies such discount dry goods brand F.W. Woolworth or Bethlehem Steel, while others like Amoco, Circuit City or Compaq Computer may be more peripherally familiar.

Growing up, my grandmother would treat us to hamburgers and a large glass of Coca-Cola at the Woolworth lunch counter after shopping, while my father’s 1965 midnight blue Mercury Comet would fill up regularly at the local Amoco station.

Some are gone because of poor business decisions, while others simply didn’t react to competitive challenges from younger and more vibrant companies quite fast enough. In the case of Woolworth, a massive restructuring in 1993 shuttered some 800 locations and several incarnations and ownership changes later, it eventually morphed into what is now Foot Locker.

At Circuit City, the big box retailer was at the top of the electronics segment, but failed to address the challenges of online shopping and coupled with the head-scratching move of abandoning its critical appliance sales strategy to partner with Verizon in a failed mobile phone sales venture, eventually forced its liquidation in 2009.

Those reared in the New York area perhaps remember Herman’s World of Sporting Goods and Pergament Home Centers, each of which had a stranglehold on in their particular segments in arguably one of the country’s most competitive markets. But both arrogantly chose to ignore encroaching national brands like Sports Authority, Home Depot and later Lowe’s, which ultimately resulted in each soaping the windows and padlocking the front door.

And in case you haven’t guessed by now, it’s no different for CPA firms that continue to exist in a time warp.

Ask yourself, would a potential client be impressed by a waiting room decorated like a scene out of Mad Men complete with a floor to ceiling pole lamp and a copy of Look magazine? Or how about one with rows of file cabinets and enough stacks of paper to earn a warning from the local fire marshal?

Do the majority of your partners and staff resemble the cast of “Cocoon?”

Hey, the 1960s called and they want their CPA firm back. It’s time to wake up and face north.

While CPA firms will never rival say, cutting edge restaurants or boutique stores for innovation and design, there’s no reason you can’t increase its curb appeal and keep pace with the times.

With the advent of massive cloud adoption, young and entrepreneurial minded CPAs are creating both online and boutique practices with far less overhead and increased productivity that can undercut most traditional brick and mortar CPA firms.

And even though the above-mentioned is the exception as opposed to the rule at this moment, I would not relax and wait. You may want to ask the thousands of former employees of those now-defunct companies about the dangers of doing just that.