he world is our horizon! How can we—a midsize accounting firm with three regionally based offices—make such an assertion? Simple; we formed an association of firms of similar size from all over the world and we share ideas with and refer clients to them. CPA firm associations (also known as networks and alliances) are not new to the profession; however, few small and midsize U.S. firms go beyond their states or regions to develop their practices in just this way. My 12-member New York City firm created INTEGRA International and invited other small and midsize firms from around the globe to join together and emulate larger firms by establishing our own network of noncompeting firms.
Joining or creating your own such network is not as daunting a job as you might expect. Read on to learn what a network can do to give your firm an international or, for starters, a national presence, and see what it takes to build one of your own.
NEW BUSINESS OPPORTUNITIES
Although the networks and associations with international presence are organized differently from each other, most are created to expand their members’ markets. For example, our network wants to have one member firm in every significant city or geographic area in the world—my firm represents New York City, and Albany, New York. The following examples of how INTEGRA members exchange ideas and refer business can give you a general idea of the benefits of being a member of an international network.
Reaping such benefits can be as simple as sending an e-mail or making a call. For example, Jonathan Kendall, a CA with a small firm in London, called our office to see whether we could help him with a potential client that wanted to open a business in Manhattan. Our role was to provide the company with tax planning advice to help it get up and started in New York City. After our two-hour conference call with Kendall and his potential client, that client retained both Kendall’s firm in England and our office in New York City.
Another client, who was flying to London to settle his father-in-law’s estate, asked my firm for the name of our London member firm to handle all of his affairs. By not asking for a fee, we earned the intangible benefit of our client’s goodwill. In fact, most referrals between INTEGRA members are not fee- or commission-based. In another example, a colleague in an INTEGRA member firm in Antwerp, Belgium, told us his friend (a New Jersey software developer) needed a smaller New York CPA firm to provide financial planning, tax and accounting guidance. Since we had software development experience, we got the engagement.
The international communication between our members is ongoing. This is not unique to our network. As many as 30 CPA firm associations are international and provide their member firms with cross-border contacts and referral sources. The key to the success of any international alliance is the commitment from each member firm to take its membership seriously. For example, we require all 40 of our member firms to send at least one representative to our worldwide conferences each year, and we ask each firm to actively participate in our committee structure. We have not measured in dollars the contributions the network has provided our members, but most members have increased their client bases through member referrals and strategic alliances made with other INTEGRA firms.
We hold two conferences annually. We invite well-known speakers, often consultants to the profession, and schedule breakout sessions on managing and operating a practice; client services; and technology, accounting and auditing updates. Conferences are held near a member firm; the executive committee selects the location, and the local firm organizes the event—finding the hotel and organizing dinner and entertainment. We require members to pay only for their rooms and travel costs. Member dues cover the rest of the costs associated with the conferences.
The conferences give members the opportunity to discuss strategy, including planning, with their international peers without the fear of divulging information to competitors. Members often leave these meetings with new referral and business opportunities. At our most recent conference in Chicago, a partner from our Argentinean affiliate asked whether our firm had worked on transfer pricing engagements. He needed interpretations of specific tax regulations, relevant sections of the IRC and information on pertinent court cases. My firm provided the Argentinean member with three foreign tax service portfolios to bring the firm up-to-date at no charge. The exchange was simply part of being connected in an international network.
Host firms often invite INTEGRA members to visit their offices to compare operations and meet staff members. I can’t think of a time when such a visit didn’t reveal something I could apply to my firm’s operations. The lessons can be simple but extremely valuable. For example, at our semiannual conference last November, a partner of the host firm in Miami took us on a tour of his office. When we arrived it was early evening and the office had just closed. Eye-catching blue envelopes protruded from the pile of late mail spilled on the floor by the door. Our host explained that his firm encloses self-addressed blue envelopes with all its invoices. My firm made that a standard operating procedure as soon as I returned to the office.
INTEGRA has seven committees, which meet at the conferences and provide updates to the network membership.
Criteria for joining an association vary. Most networks base their minimum size requirements and dues on firm fee revenues. Some also charge dues based on the number of firm partners. Dues can be significant, depending on association needs. A few associations have fixed annual fees; all have entry fees. According to the 1999 Public Accounting Report annual directory, the median association entry fee was approximately $2,400.
INTEGRA requires that each member firm have six or more full-time professionals and that only one firm come from a geographic area. We currently are represented in 45 regions throughout the world. Some of our members have satellite offices in smaller cities that also represent the network. For example, my firm has an office in Gloversville, New York. Also, members must
HOW WE STARTED OUR OWN INTERNATIONAL ASSOCIATION
At first, I wanted my firm to join an existing international association, but I didn’t find one that had an opening for a New York City firm. As a result, my partners Bill Lutz, Bill Zeronda and I decided to start our own association. We shared our ideas with a small group of CPAs we had worked with and knew personally and asked them to be founding members. I wrote a mission statement, which the founding members edited and approved (see mission statement sidebar, below). We then decided on membership criteria following calls to several network executive directors to find out about their dues policies and operations. We chose to pattern our policies after what we considered their best practices, omitting the ones we thought unnecessary. For example, some associations provided CPE for their member firms; we decided not to because we thought CPE already was available to all our member firms.
Next, we created an application form for candidate firms. We wanted firms similar in size and goals and decided to set dues low to encourage firms to join. To keep dues low, we decided to assemble committees, made up of members who would do all the work for which many networks employ full- or part-time staff, such as organizing conferences, maintaining databases or admitting new members.
To get the association started, we made the best use of our ability to network (see box on recruiting tips). For example, I asked my college classmates around the world for the names of their accounting firms, explaining our objective of creating an international association. I contacted a firm in Florida that one of my friends identified, and my partners talked to the firms their contacts recommended. All of the firms we spoke to about the network joined right away.
Once we had 10 members in major U.S. and international cities, we held our first conference in Toronto, Canada to organize our committee, dues and conference structures. At our second conference, the executive committee prepared and approved a set of bylaws. We were able to keep it simple because we were a small group.
The association in the United States grew as we talked about it to our clients, peers and referral sources, but it was our Web site, created in 1996, that really opened the door for international firms to join in. A CA from a firm in Ireland that was in his own European alliance visited our Web site and proposed that the two networks join forces. Bill Zeronda and I flew to Prague to meet with the European association. There, we heard from the European firm managers on how they practiced accounting, who made up their client bases and what services they offered. It was immediately apparent that the two associations would make a good match and we agreed to merge. INTEGRA was born.
Getting our network going was no easy task. It was our idea from the start, so we offered our New York City office as the headquarters for INTEGRA in North and South America. Much of the administrative work was done by our staff in New York, which meant that we would not be able to bill for the hours they dedicated to INTEGRA-related work.
Our European president, Johan DeMey, in Antwerp, Belgium, needed to hire a part-time assistant to coordinate INTEGRA activities. Although dues pay for our conferences and other out-of-pocket expenses, each member firm volunteers additional support, primarily from partners.
Associations like ours that do not employ full-time support staff must be prepared to ask for extra time and financial support from its members to ensure it is properly organized and managed. Nonetheless, the network has provided each member firm with new and powerful practice development tools. Most important, each member takes advantage of the geographical and financial leverage smaller firms enjoy when they band together.
There also is a special by-product of network membership that grows with time: We all make lasting friendships, which extend to our spouses and children, who often join us at our international conferences. Membership in our professional association has been entertaining and enjoyable.
As the profession grows even more competitive in the next decade, small and midsize firms like ours must find new ways to leverage their existing services and intellectual capital. Small companies—our major source of business—don’t want to limit their markets. Why, then, should small firms?
RICHARD GLICKMAN, CPA, is a partner of LCS & Z Glickman Lutz LLP in the firm’s New York City office. He is a founder and president of INTEGRA International. His e-mail address is email@example.com .