Exercising leadership: Practice-building tips to help owners see opportunity in the new economic reality

The economy – where it is today, where it is headed for the future – is certainly a favorite topic around CPA firm conference tables, and in most other business settings these days. You can’t change what is happening, but how you react personally and as part of your firm’s ownership team can change the impact on your firm.

In other words, think “opportunity” and not “recession” right now – and adjust both your attitude and your personal marketing and business development plan accordingly.

Worrying about what may happen is, in fact, counterproductive, say David Giannetto, director of Cohn Consulting Group’s enterprise performance management practice, and Anthony Zecca, partner-in-charge of Cohn Consulting Group, a division of J.H. Cohn LLP.

The two are co- authors of The Performance Power Grid: The Proven Method to Create and Sustain Superior Organizational Performance. They strongly advocate taking steps to take advantage of the opportunities that economic change can present to CPA firm partners.

Here are a few tips for steering business through the economic downturn:

1. Remember, in business, only the strong survive. During an economic downturn, many owners overlook the fact that their competitors are suffering too – and that what results from the slowdown is still an even playing field. Your strategy for not only surviving the slowdown but prospering during it remains the same as it should be in good economic times: Build the strongest business you possibly can.
   
   
2. Use the hype to focus your staff. One positive thing about all of the fear-inducing hype is that in the right hands it can be a great motivational tool for staff. Fear and the desire to keep your business up and running will unify your firm in ways not likely seen before. The challenge is for leaders to resist being overcome by the same fear and to present a vision and path toward greater prosperity that everyone in your organization will rally around.
   
   
3. Aim to expand, not contract. It seems counterintuitive, but great businesses expand during slowdowns – they don’t pull back. Remember, all competitors within an industry are dealing with the same challenges. As a result, the weakest of these organizations will be going out of business, losing critical funding and cutting operations, or letting go of critical but expensive assets and people. The well-managed CPA firm will survive. Competitors who got sloppy during the recent boom times will most likely be hurt now by not paying attention to maintaining strong processes and practices. The death of your competition creates holes in your market – that you can fill – so you can actually expand through the slowdown.
   
4. Figure out what these tough times mean for your clients. You aren’t the only one suffering because of the slowdown. Your clients are too. The faster you realize that, the quicker you can better meet their needs. Look at your firm from their perspective and make sure that every portion of your organization, not just its product or primary service, is treating your clients right. Go the extra mile – even if that means spending extra money – to reach out to your biggest and best clients.
   
   
5. Know the difference between profit and revenue. You certainly know this from a balance sheet perspective, but consider it from a broader standpoint. Do you – and all your fellow partners – really know which clients, products, services, or geographic locations provide the most profit? This can be harder to determine than you might think. It’s likely that at some point you will need to cut costs, and the first places to cut should be those areas where you are already losing money.
   
   
6. Stay current and creative. Too often during a slowdown, leaders cut back on the things that represent the future of their business. Once the slowdown turns around – as it inevitably will – those who cut back on those future initiatives will find it is too late to catch up to market demands and expectations. If you manage business during the downturn correctly – taking care to address the needs of your employees and clients – it is possible to make it through with a stronger business than the one you had before.

One final thought: All these positive approaches are good ones to share with your clients as a way for them to cope with the changes facing them right now. Good attitudes can be just as contagious as the other kind, and your clients will appreciate yours, in addition to all the other help you and your firm may be able to provide them now.

From the August 2008 issue of Partner’s Report for CPA Firm Owners.
Copyright © 2008 IOMA, Inc. The Institute of Management and Administration.

For more information about the authors, visit performancepowergrid.com. The Performance Power Grid: The Proven Method to Create and Sustain Superior Organizational Performance (Wiley, 2006) is widely available online or in bookstores.

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