THERE'S NO COOKIE-CUTTER STRATEGIC
PLAN that works for all firms, but all
strategic plans encompass clear initiatives that
enable a practice to analyze the effectiveness of
alternative actions and logically link tasks and
relationships designed to move an organization in a
particular, or perhaps new, direction. |
FIRST, CLARIFY THE FIRM'S MISSION
AND VALUES. A mission statement
concisely expresses the entity’s purpose and
uniqueness. A core-values statement describes its
common beliefs and behavior standards.
AN ENVIRONMENTAL ASSESSMENT
DEVELOPS information about a firm’s
current situation. Ideally, it looks at the
broadest factors first. Then, in stages, it
narrows its focus to specific firm issues and
IT CAN TAKE A SEVERAL YEARS
to implement a strategic plan. The busier
a firm is the more a plan can help to focus its
efforts. Once a firm has a plan, it should revisit
it on a regular basis.
DIALOGUE WITH ALL LEVELS OF STAFF
helps prevent disenfranchisement later. A
professional staff implements any plan, especially
in a service organization, and disillusionment by
this group will doom a plan at inception.
STRATEGIC PLANNING REQUIRES
DISCIPLINED, logical, self-reflective
thinking. It’s an investment that will pay
dividends to the firm in the form of a more
focused, cohesive business direction, a firm’s
greater sense of commitment to commonly understood
goals and, ultimately, better service for clients.
|THOMAS PURCELL, CPA,
PhD, is an associate professor of accounting and
professor of law at Creighton University, Omaha,
Nebraska. He is a member of the AICPA tax executive
committee and a former chairman of the board of the
Nebraska Society of CPAs. The views expressed in
this article are his own. His e-mail address is firstname.lastname@example.org
. The author acknowledges with gratitude the
helpful comments of Andy Hoh, PhD.
| ne CPA I know says strategic planning
is akin to making soup: There are lots of recipes
for what works—but the ultimate test is whether the
soup tastes good and nourishes those who eat it. To
navigate changing regulatory, professional and
marketplace patterns and get maximum growth with
minimum waste, a firm needs a recipe for action—that
is, a strategic plan. No one plan will work for all
firms, but all strategic plans encompass clear
initiatives designed to move an organization in a
particular, perhaps new, direction. |
|The busier your practice is the more useful a
strategic plan can be. Although it can take several
years to implement one, benefits include improved
decision making; enhanced organizational
responsiveness; better performance; and more
productive, confident and responsible personnel.
Here’s how a CPA firm can organize a strategic plan,
work it and minimize future pitfalls. Two CPAs who
have done the planning process and recommend it give
the hands-on view in the case study sidebar. Once
you have a plan, revisit it on a regular basis to
keep it relevant. |
PLANNING THE PLAN
plan’s function is to logically link the tasks,
relationships and schedule to achieve a business
goal. To get started
To develop a good plan, identify
organizing principles in six key
areas: clients, technical skills,
executive skills, support skills,
alliances and, above all,
“subtractions”—areas of business you
definitely won’t seek or accept.
Source: Institute of
Management and Administration, New York.
Agree on the process to follow.
Convene a partners meeting to lay
the groundwork. At it, management needs to frame
and find answers to a range of questions such as:
Will we work from the top down (management directs
the process) or the bottom up? (Management bases
its plan on input from all levels of staff.) What
types of planning teams do we need, and who will
be on them? Will we use an outside facilitator? In
addition, the firm must choose goals, schedule
interim accomplishments and decide how and to whom
a final plan should be disseminated. Keep the
process as simple as possible.
into focus the firm’s present position and future
hopes and articulate its mission and values, use
the meeting to get answers to the following:
Who are we?
Where are we today?
How do we want to conduct ourselves?
Where are we going?
How are we going to get where we want
What’s the best way to measure our
progress toward getting there?
for working on answers to the above questions, as
well as those in “ Planning Questions ,”
below, can include using a facilitator or a
|Wee Duit Awl’s Strategic
After a productive
two-day retreat, the Wee Duit Awl CPA
firm has reached consensus on a
tentative strategic plan. Selected
elements of that plan follow:
Duit Awl, CPAs, assists its clients in
developing innovative solutions to
assurance and tax issues in a dynamic
Values: Wee Duit
Awl, CPAs, values integrity, timeliness
Vision: By 2006,
Wee Duit Awl, CPAs, will be the largest
locally owned and operated CPA firm in
the state of Nebraska.
The plan: The
following notes show different elements
of a plan and how it evolves. The degree
of detail depends on individual firm
style. While each element could be
expanded, the key is to clearly cascade
down in degree of specificity as you
move from the strategic issue level to
the action plan level.
I. Strategic issue— How
do we attract and retain quality staff?
Strategic objective A—
Meet 70% of staff needs
from entry-level college students.
Initiative: Develop college
Identify top three colleges in our
criteria for evaluating college accounting
Tactic: Assess existing
a. Bill Smith will
survey CPA exam pass rates of graduates
from [named colleges] during their first
three years following graduation for the
past five years by August 1.
Judy Jones will present in tabular form
the professional involvement of faculty
at [named colleges] by August 1.
Strategy: Foster relationships with
accounting faculty at top three regional
Initiative: Develop an
Initiative: Develop a
Strategic objective B—
Adjust compensation and
benefits to the mean in our major market
Strategic objective C—
Meet 30% of staff needs
from experienced hire pool.
Initiative: Identify executive
search firms that can provide
experienced staff who meet firm needs
II. Strategic issue—
How do we inform clients and
potential clients about our expertise?
One caveat: Keep all staff levels in
the loop; it helps prevent disenfranchisement
later. A bottom-up method that doesn’t
meaningfully incorporate workers’ input can create
cynicism and derail a plan. Top down or bottom up,
a firm’s workforce implements any changes—and if
the staff doesn’t respect the undertaking, it will
be doomed at inception. Nothing creates
disenchantment faster than asking personnel to
devote time and thought to a process and then
ignoring the input.
Clarify the firm’s mission and values.
A firm’s mission statement answers
the question “Who are we?” and expresses the
organization’s purpose. For example, one Omaha
charity’s mission statement says that it “works
with individuals to build just and compassionate
communities.” A core-values statement answers
“What is important to us?” and cites the beliefs
and behavior standards fundamental to the
organization. It should express the entity’s moral
and ethical basis, as the “Wee Duit Awl’s
Strategic Plan” sidebar above shows. Combine the
mission and core-values statements or not, as you
wish. Developing them calls for honest
introspection. As firms configure themselves in
unusual ways, a mission statement can express an
entity’s most important organizing principle. Stay
open to fresh challenges and changes.
Clarify the firm’s vision.
A firm’s vision describes where it
wants to go and when it wants to get there.
Address how large you want the firm to grow, what
types of clients you want to attract and whether
to expand into new and emerging areas. Keep it in
line with firm resources.
To develop information about a
firm’s current situation, look at the broadest
factors first; then, in stages, narrow the focus
to specific firm issues. Initially, consider the
political, economic, social, technological, human
resource and regulatory forces affecting the
profession (PESTHR analysis).
identify your firm’s SWOTs (strengths, weaknesses,
opportunities and threats the firm faces) and
decide their relative importance within its
markets. Strengths and weaknesses pertain to the
firm’s capabilities, while opportunities and
threats are outside forces. This analysis will be
the basis for defining your firm’s —not
the profession’s—strategic issues. Ask:
What is the nature of our practice in
the entities we serve?
How do new independence standards and
international regulatory forces influence the
How does the shift to a service-based
economy affect it?
What impact does electronic commerce
have on it?
How do CPA education standards affect
What effective geographic range does
our practice area encompass?
What emerging practice specialties
(niches) are in demand in our area?
What capabilities does our firm have
for meeting those demands?
Who are our key clients?
How dependent is the practice on
keeping these clients?
Who are the key clients in our
practice area that we don’t yet serve?
What’s the scope of the financial
resources and challenges of our firm?
Do we use information technology and
specialized staff to leverage professional
How do we sell the firm’s services?
What responsibility do we have to the
future development of the profession?
T o help home in on where your firm is and
where you want to go, answer the following:
What substantive issues face us
today? What will face us tomorrow?
In what ways has technology affected
how we do business? How will it affect us in the
What do we do well?
What do we need to enhance?
What measurements will tell us how
well we are doing?
Have we clearly defined our ethical
What are we neglecting that we should
What kind of staff training should we
What makes us unique?
What potential profit areas are we
How can we involve employees more?
What safety issues should concern us?
What form will future market
Have we imagined every possible
Caroselli, Center for Professional Development,
Rochester, New York.
Answers to such questions help you
develop an overview of the nature of your practice
and of the influences affecting it.
Identify strategic issues.
There are four cautions about
strategic issues. First, because only those things
your firm can do something about are strategic
issues for your firm, differentiate
between your firm’s issues and those of the
profession. If you identify the regulatory
environment as a potential strategic issue but
there’s little your firm can do to affect it, it’s
not a strategic issue for your firm.
times strengths, weaknesses, opportunities and
threats are complementary aspects of the same
issue. If you recognize the firm’s lack of
consulting capacity as a weakness and clients’
demand for consulting services as an opportunity,
a strategic issue for your firm might be how to
take advantage of the demand for increased
Second, if your
process identifies a large number of strategic
issues, combine some. For example, you may note
that staff preparation for providing services is
poor, staff ability to progress to partner is
stalled and staff is unresponsive to changes in
the business environment; you don’t have three
strategic issues, but one—staff development. There
is no set maximum, but you will put energy and
money into addressing these, so the fewer there
are the easier progress will be. Try to narrow the
focus to three to five crucial issues. One way to
do this is by having the planning group rank
Third, you will need to make
a commitment to pursue these areas for a
significant period of time. You can’t change
strategic issues each year in the same way you
might get new software. To give your firm time to
fully develop the initiatives and strategies
needed, plan to address three to five strategic
issues over a several-year period.
don’t link strategic issues to a course of action
too soon. As you move toward solutions, you lose
the wider perspective and may miss opportunities.
Try to raise strategic issues as questions—for
example, “How do we attract and retain quality
staff?” as opposed to, “We need to attract and
retain quality staff.” By expressing the issues as
questions you invite more ideas and input from the
planners. “Wee Duit Awl’s Strategic Plan” sidebar
illustrates how this might work as well as the
progression described in the following bullet
Develop strategic objectives and
initiatives. Once you have
settled on a short list of strategic issues, begin
to map approaches to them. These are your
objectives, and at a minimum they must help you
exploit key opportunities, defend yourself from
key threats, leverage your key strengths and
remedy key weaknesses. Brainstorm to identify all
possible ways of addressing the objectives. These
are your strategic initiatives.
several related sets of actions will emerge. Some
won’t be feasible, but at this level you don’t
have to pin down who will do what by when. You are
using the process to search for linkages that are
clear and logical. Successfully implemented
strategic initiatives create competitive
Develop tactics and action plans.
The goal of this phase is to
establish the steps needed to accomplish the
agreed-upon objectives. Be specific. At this point
you will assign specific tasks to particular
people, along with due dates, deliverable outputs,
benchmarks and resources. If you have built the
case for your strategic direction and objectives,
members of your firm should know exactly how what
they are going to do will help achieve the desired
result. Make sure the participants clearly
understand the plan prior to implementing it.
Implementation and assessment.
If you’ve been thorough in the
preceding steps, implementation should be
straightforward. Choose benchmarks to measure
progress toward the desired objective, and monitor
progress during this phase.
success indicators are historical (lagging)
information. Some of them include measures of
market share (including comparative growth
factors, new billings and new clients per
partner); realization rates on client billings;
staff utilization rates; partner billing rates;
CPE hours per staff person; and percentages of
entry-level staff hired who are successful on
professional certification examinations. Firms
with more sophisticated planning may employ
leading indicators (performance drivers), too.
It is difficult to develop meaningful
indicators—historical or leading—in professional
service enterprises. In part, that’s because of
the subtlety and complexity of the business
relationships that underlie a firm’s success. So
before settling on a strategic measure, think
through how measuring a particular item will
affect the firm. For example, if too much emphasis
is placed on utilization rates, staff may ignore
training to their—and the firm’s—detriment.
IT WILL SERVE YOU WELL
strategic planning is a process, not a one-time
event. If you apply it to managing your practice,
allow time for fine-tuning before you judge its
success. If the firm hasn’t used strategic
planning before, adjust your expectations. Just
getting agreement on the strategic issues and
objectives can take longer than expected—and may
be the only outcome of a first effort. Recognize
the continuous nature of planning, and revisit the
plan at least once a year. Assess the critical
success indicators quarterly.
becomes part of the culture, partners and staff
will become aware of the strategic focus and the
firm’s objectives will guide their daily actions.
That’s the point at which you get to think about
other things such as how to improve the firm by
responding to the overall environment rather than
“stamping out fires.”
is disciplined, logical, self-reflective thinking
about your firm. Extend and refine it over several
years, and it will serve you well. The best time
to develop a plan is now. It’s an investment that
will pay dividends in the form of a more focused,
cohesive direction, your staff’s greater sense of
commitment to commonly understood goals and,
ultimately, better service for your clients.
A Destination Needs a Plan for How
to Get There
|Gary S. Hoffman, CPA
Weaver and Tidwell LLP
To create a goal without a plan to
achieve it is like choosing a
destination without choosing
transportation. “A lot of firms that try
strategic planning get frustrated,” says
Gary S. Hoffman, CPA, who considers
meeting targets the key to success. He
knows first-hand how strategic planning
linked to a time line can lead to
practical business benefits.
Hoffman is the consulting services
partner-in-charge of CPA firm Weaver and
Tidwell LLP of Dallas-Fort Worth, which
has met its niche-development goals in
strategic planning, profit enhancement
and succession planning. Over time, the
firm has grown—by either bringing in
partners who have specific areas of
expertise or being brought in. That was
how his firm joined with Weaver and
Tidwell in 1998, when that firm’s
strategic plan to grow by acquisition
and expanding nontraditional services
led to its purchase of Hoffman, McBryde
and Co. Marion McBryde now heads the
business valuation niche.
Hoffman tells the history, crediting
Weaver and Tidwell’s plan for
specificity: “We envisioned in mid-1992
how we wanted to grow and how large our
offices would be in the year 2000,”
Hoffman says. To that end, in 1995
(prior to the merger of his former
firm), Weaver and Tidwell had acquired
Tannebaum, Bindler and Co. and charged
Samuel Tannebaum with leading the
financial advisory practice (securing a
desired area of niche expertise).
Weaver and Tidwell had clearly
described its goals, set out a detailed
action plan for achieving them and named
the people responsible for specific
steps in the process. Benchmarks to
measure the plan’s success used
indicators such as a targeted number of
partners and offices, increased fee
revenue and new services capability.
Then the firm aligned its goals with its
organizational structure and laid out
A failure to include
an action plan can spell doom, Hoffman
says. “Without the processes that
guarantee action and implementation,
partners usually find themselves a year
or so later wondering why things haven’t
gone according to plan,” he says. The
procedures to implement a strategic plan
require the following:
For each goal, delineate
the necessary interim steps.
For each step, name the
person responsible for performing it.
For each goal and step,
make a timetable.
Now that the
2000 strategic plan is history, the firm
is embarking on a five-year plan and
expects to set interim goals annually.
|Marc L. Rosenberg, CPA
The Rosenberg Associates
Marc Rosenberg, a consultant to
CPAs through Rosenberg Associates, says
that for a while the economic boom kept
firms too busy for things like planning
(which makes time a strategic-planning
problem all its own). “They’ve been able
to practice their favorite form of
marketing, which is waiting for the
phone to ring,” he says of the past few
One firm Rosenberg worked
with used strategic planning to tackle
time and wound up with a new advisory
business and organizational structure.
It came about because the firm wanted to
add estate planning and had a partner
with experience in the field—but with
1,700 billable hours a year, he was too
busy. In the planning process, it became
clear that he should cut back to 1,200
billable hours, delegate the extra 500
hours to staff and use that chunk of
time to establish the estate-planning
practice and supervise staff.
Just as important was what the
process revealed about the firm’s
leadership structure: It didn’t have
one. The partners didn’t want to wait
for future strategic planning sessions
to identify the need to change. “How do
you change anything? Through good
management and leadership,” Rosenberg
says. The firm added a managing partner
position, and now has someone with the
authority and backing of the other
partners to lead the firm in its chosen
emphasizes the need for an action plan.
His pointers are
Don’t just plan to increase
estate-planning revenue; set a number,
say from 1% of fees to about 5%.
Don’t just tell partners to
spend more time on management concerns.
Limit billable hours to an agreed-on
number over a specific period of time
and delegate the rest to staff members.
Rosenberg thinks partners should have no
more than 1,200 to 1,300 billable hours.
Don’t tell partners to do
one thing and then pay them for
something else. Build compensation
systems around firm goals. Pay partners
a bonus if they reduce billable hours by
a certain increment each year. Rosenberg
notes that it can take several years to
reduce billable hours to a manageable
level if you’re now billing as much as
1,700 hours, as some overloaded partners
Rosenberg has been
experimenting with spending ever-shorter
amounts of time with his clients on the
“vision” aspect of the strategic
planning process. He divided his
consultation engagement with a
17-partner, 80-person Chicago CPA firm
into two parts: brainstorming, which
took half a day, and the how-to-do-it
part, scheduled for a whole day. In
between, he asked the partners to e-mail
to him at least three ways to achieve
any of the goals. “Strategic planning
isn’t about predicting change,”
Rosenberg says, but it can help a firm
deal effectively with change.
Victoria M. Zunitch is a freelance
business writer based in New York. Her
e-mail address is VZwriter@hotmail.com