A Morning with Allan Koltin
My large firm roundtable group in Chicago recently invited Allan Koltin, President of Koltin Consulting, to share his experiences with us.
If there were an election of the most highly visible, sought-after consultant to CPA firms, Koltin would be the hands-down winner. Some of his accolades: Accounting Today’s Top 100 Most Influential list for 15 consecutive years; IPA’s list of Most Recommended Consultants for the tenth straight year; CPA Practice Advisor’s Top 25 Thought Leaders in the profession. Here were some of his nuggets:
The glass ceiling. $7-10M firms are the hardest size grouping to be able to burst through the glass ceiling. To continue growing revenue and profit, all partners must be in sync and be willing to ante up for investing in the firm’s future.
Partners doing admin work. All too often, firms do things on the cheap, and often, they pay a steep price. An example is partners doing admin work instead of hiring a COO. The most common reason partners serve as the firm’s COO is because they have the time.
How Top 100 firms differentiate themselves from smaller firms. Great and united leadership. They execute better. They invest profits today for tomorrow. Innovation.
What should the typical, local, $5-10M firm be thinking about in terms of changing their governance structure? These firms need to run their firm like a real business. This means that partners have to give up what they perceive as their inalienable right to be “involved” in management.
Recent changes in mergers. Buyers are being more flexible in areas such as mandatory retirement and downpayments. More mergers are being done today for strategic reasons than for an exit strategy. On the other hand, the bigger buyers have so many sellers to choose from that they have raised the bar for firms they are willing to consider.
A big mistake sellers make: Sellers are often intimidated and don’t do sufficient due diligence on the buyers. They should ask to see the buyer’s balance sheet as well as a list of deferred comp obligations, by partner. Sellers should also look carefully at the buyer’s younger talent.
Partner compensation bonuses. Bonuses should only be paid for hitting home runs. The better firms are avoiding the payment of bonuses because they were paid last year or because the partners’ achievements were commonplace, expected of all partners.
Compensating staff for bringing in business. 90% of firms pay very little in new business incentives to their staff. It’s not because these incentives are a bad idea. It’s because firms mistakenly feel that all they need to do to get staff to bring in business is offer them money for doing so. They miss the obvious: firms need to train their staff how to do practice development. There needs to be a firm culture reinforcing the importance of practice development. Partners should be taking staff along on sales pitches. 70% of success in developing staff into business-getters is from real experiences; 20% is from mentoring and only 10% is from classroom learning.
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