It’s Becoming A Tough Economic Environment Out There

OK, that’s a nice general statement, but if you’re like me the real issue is, yeah, it’s tough out there, but what does that mean to me and to my practice?

Obviously, it differs between practitioners, but most of my clients are seeing a couple of changes that are reflective of the times. The first is that their AR is lengthening and their cash positions are weakening. The second is that clients are pushing back on fees and write downs (or write offs) are increasing. Taken together, this is not a good combination and I know you are putting considerable thought into softening these effects upon your practice.

Many of you would feel very comfortable advising a client experiencing these same difficulties. You could suggest they cut expenses, offer an early pay discount to their AR list, focus the marketing & sales effort on the most profitable lines, stop offering products or services that don’t make money, string out the AP a bit more, renegotiate with vendors, maybe even looking at factoring or asset sales, etc., etc. I have no doubt that you will consider all of the above, and many more, to ameliorate any negative effects you may be suffering.

I have always been an advocate of making changes when the sun is shining; not when the wolves howling. But, we don’t have that luxury at the moment because the wolves ARE circling the campfire a bit closer than they have in the recent past. In response, I want to suggest two additions to the elements you may be considering for your “Survival & Prosperity Plan For Today’s Tough Market.”

The first addition is cleaning up the management of your practice. If you’re like most of us you’ve been doing the same things to run your practice pretty much forever. You have your way of doing things; it’s comfortable the way you do it, and so far its worked, so why change? Well, one reason could be because the business climate is changing.

Did you ever think there might be a better way to manage your practice? No doubt you’ve noticed some sole practitioners and firms just seem to have it together. They get good clients; they are busy and it seems they are very successful financially. Is it possible they know some tricks you don’t? Maybe they have a better approach to planning; their internal communications are superior, everyone is on the same page, they are organized to make the most of each employee’s talents, they set good goals and hold people accountable, they hire and retain the top talent in town and their senior partner(s) seem to motivate their employees to consistently deliver a superior work product.

When you received your degree and earned your CPA you didn’t suddenly acquire these management skills out of the blue. Unfortunately, of all the owners and managing partners out there, only a few are lucky enough to naturally possess exemplary management talent.
If this economic downturn has put you in a frame of mind where you would like to acquire the practical skills to come out of the other end of this period poised to achieve unprecedented success, here’s my first suggestion:

If you are in, or can travel to the Western US, there is an exceptional 2 ½ day management training program you should consider – and no, I have no financial connection with this outfit and won’t make a nickel if you were to attend – by the name of MAP, inc. KPMG, E & Y, Grant Thornton and hundreds of other accounting firms have sent people to this management workshop over the past 30+ years and I believe it not only has a great bang for your buck but also is a totally practical program that starts paying off as soon as you get back to work on Monday. The knowledge you pick up there can be a real game-changer for your practice. A knowledgeable, no BS guy with MAP who has worked with clients of mine is Joe Mohorovich, who can be reached at 707-258-1300 (O) or 707-363-7950 (cell) if you want to check this out.

My second suggestion is that you immediately amp up your marketing and sales effort. Many other accountants will be pulling back and moaning the blues. Don’t do it! Exude a positive vibe! Get out there and make something happen. In the past few weeks I’ve given you a lot of ideas about how to a) get more out of your existing clients (assuming they are solvent and have the cash flow to pay you) and, b) get new clients. In the latter instance, make a point of requesting a copy of the current financials before meeting with the prospect “so (I) can add more value when we talk” and you’ll have a pretty good idea about how hard you want to pursue them.

Something on tap for 2009 for those of you who have, or are considering acquiring, ProfitCents software, I am working on a deal with them to offer a business development “how-to” process wrapped around the software. I’ve been using this with some of my clients and we’ve had remarkable success, so I am eager to tell you about the methodology.

Finally, let me wish you all a great Holiday season! Writing this blog has been fun and at a minimum I’m going to continue it through 2009. The next post will be another case study and it will appear in your In Box in the second week of January.

Onward!
Craig Weeks