When Strategic Planning is Right for Your Firm

I recently spoke to a group of marketing directors who were interested in discussing how a firm’s strategic plan can be integrated with marketing. They quite rightly felt that if they are expected to impact the firm’s marketing efforts and growth, they need to have a “seat at the table” during partner meetings focusing on firm strategy and vision.

I began the discussion by asking how many of their firms even had a strategic plan. Surprisingly, very few.

Why have their partners avoided strategic planning? Their response was consistent with what I have heard throughout 20 years of consulting with CPA firms: Too busy. Don’t want to be held accountable for achieving goals. Not sure if the effort will make the firm more profitable. Complacency – partners are perfectly satisfied earning $345,000 a year – the current average earnings per partner at firms under $10M, according to the 2014 Rosenberg Survey.

We perform an analysis each year that we call the “haves vs. the have-nots.” It’s a comparison of profitability (as measured by income per equity partner or IPP) between firms over $10M and those under $10M. 2013 data showed the over-$10M with an IPP of $492,000, 43% higher than at smaller firms. At its peak before the recession, the larger group outperformed the smaller group by a whopping 65%!

What accounts for this huge gap in IPP? Larger firms are much more likely than small firms to have: (1) a strategic plan with partner goals and accountability (2) partners who keep billable hours lower to avoid being “too busy,” (3) a culture that does not tolerate complacency among partners.

And finally, the firms engaging in strategic planning believe in their hearts that the effort will make a significant impact on firm profitability.

Readers of this post are likely to have one of the following reactions:

• We’re satisfied with what our firm has achieved. Sure, we want higher IPP, but we don’t feel that strategic planning is right for us. As Clint Eastwood famously said: “A man’s got to know his limitations.”
• We drink the same Kool-Aid as Rosenberg. We’ve been doing strategic planning for years and swear by the results it has achieved for our firm.
• We haven’t done strategic planning but we’re now ready to give it a try. We want to be in the “Haves” column!
  

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For those who wish to get started on strategic planning, or for those who have been doing it for years but are in need of retooling, our monograph Strategic Planning And Goal Setting For Results is a great place to start. Take advantage of our generous bulk discount pricing structure and purchase a copy for each partner in your firm.