Many firms today are in the midst of “growth initiatives.” This, in its most basic of definitions, refers to trying to grow a firm from its current size to a larger size through increased focus and training on business development activities. Some firms achieve this through developing niche specialties; others find ways to develop more rainmakers and deliberately free up their time to drive new business. Often, it’s a combination of both. While the advantages of a growth culture and growing revenue can’t be argued, there should be a warning that comes with embarking on one of these initiatives: you can’t overlook the value of maintaining your current clients.
Do you have holes in the bucket?
I like to use the analogy of a bucket of water to describe what I see happening in some firms. They have a bucket of water that is half full. They embark on a growth initiative and make it a strategic priority to grow revenue – a very worthy cause. However, as they slowly turn on the faucet (new business growth) and add water to the top of the bucket, they realize they have large holes in the bottom of the bucket (client retention issues). So just as fast as water comes in the top, it escapes through the bottom. Ultimately, they still only have a half-full bucket of water to show for all of their efforts. That isn’t growth.
Why does this happen?
You can’t sustain growth if you don’t have a solid foundation. You can’t sustain growth if you’re losing clients because you can’t adequately service them. So even though it’s great you’re adding new clients, your long-term clients are now leaving because they aren’t receiving the level of service they’re used to getting. Your people aren’t as available for them. Then you replace those clients with new clients who may or may not be as profitable (especially in the short-term as you gradually learn their business or circumstances).
Usually one or a combination of the following three reasons drive the bucket phenomenon in firms:
#1 – The Reward System is Out of Whack
A higher priority and reward is given to new business, and no reward or recognition is given to maintaining current business and growing those accounts organically. We high-five and congratulate new “wins,” but celebrating client retention is an afterthought.
#2 – Our Foundation is Weak
We don’t have good processes and procedures in place to handle the increased workload. The firm is bursting at the seams to keep up currently, and as we turn on the faucet, those seams come apart. We didn’t build capacity and good systems into our firm to handle the growth.
#3 – Lack of proper skill-set alignment
Some people are great at bringing in new business. Others are great at maintaining relationships and servicing clients. Still others are great technically. We need a combination of all three of those skillsets to be effective as an organization. An over-emphasis or out-of-alignment approach to this triangle will cause the top to fall. Each skillset should be valued and properly assigned. Each is needed to maintain a solid foundation upon which to grow.
If you want growth, solidify your foundation first
If you are looking to grow your top-line, remember the simple principle that you can only grow as much as your foundation can support. Make sure that you have crisp and effective processes and systems in place to support new growth while maintaining excellent client service. As process improvement experts, we often find ourselves coming in after massive holes in the bottom of the bucket have been discovered. It would be better to patch those holes before turning on the faucet.
Make sure your people are properly aligned and in positions to capitalize on their strengths. You need people focused on the three points of the triangle: new business, maintaining current relationships, and technical competencies. Delegate or re-assign work if it’s in a weakness area of the triangle.
Finally, make sure you recognize and reward all three points of that triangle. You need all three to be successful and grow, not just one. That is a recipe for lack of sustainable growth. What a waste of everyone’s time!
About the Author:
Dustin Hostetler, Shareholder and Director of Lean Six Sigma Consulting at Boomer Consulting, Inc., is a pioneer in applying the Lean and Six Sigma concepts to public accounting firms. As a Lean Six Sigma Master Black Belt with extensive experience working inside a large regional CPA firm, he has taken proven Lean techniques and tailored them to bring ground-breaking value to public accounting firms. His innovation and passion has brought true efficiency to accounting — helping accounting firms improve client service, improve client retention, set the foundation for growth and build the bottom line.
Dustin holds a bachelor’s degree in finance from The Ohio State University, graduating magna cum laude, and earned both his Lean Six Sigma Black Belt and Master Black Belt certifications from Kent State University. Dustin is also a member of the CPA Consultants’ Alliance, a working group of thought leaders united in their efforts to further leadership within the CPA profession.