CPA Success

For CPAs, budgetary call to arms grows louder

Round 1 brought about $280 million in mid-year budget cuts from Maryland Gov. Martin O'Malley.

Round 2, as promised, is considerably worse.

Gov. O'Malley has proposed an additional $454 million in budget cuts, and the latest reductions, according to The (Baltimore) Sun, "would cost 205 state employees their jobs and slash more than $210 million in funding for road maintenance, health care, community colleges and police funding in Baltimore and the 23 counties."

If you haven't seen it yet, you'll want to check out this line-by-line summary of O'Malley's latest budget cuts. It details exactly which areas are under the state's cost-cutting microscope. (And special thanks to the MACPA's Mary Beth Halpern for finding this terrific resource.)

We've talked before about the importance of getting involved in the legislative process. Given the state's budgetary woes, it's more important than ever -- and so is CPA Day in Annapolis, slated for Jan. 20. Save the date.

There will be plenty of other information on hand at the MACPA's 40th annual Chesapeake Tax Conference (set for Sept. 16-17, 2009) and the annual Advanced Tax Institute (Nov. 2-6, 2009). Each event will take a closer look at the state's fiscal issues and what they mean for you and your clients.

CPAs have the ability -- I'd go so far as to call it a responsibility -- to get involved legislatively this year. Lawmakers need guidance as they try to fix the state's finances. CPAs can provide that guidance. Get involved now.

Top 3 skills CPAs need in tough economic times

What are the top three skills you need to focus on in tough economic times?

A recent survey by Ajilon Finance found that accountants and CPAs had strong opinions about what "constitutes leadership in this economy."  The top three skills you need to focus on are:

1. Doing more with less.
2. Motivating the workforce.
3. Pursuing growth opportunities.

These are different than the top three skills one needs in a good economy, which, according to the survey are recruiting and retaining top talent (47 percent), pursuing growth opportunities (42 percent) and maintaining a competitive edge (42 percent).

Other key findings of the survey include the following:

Soft skills beat hard skills: According to the survey, 33 percent of accountants feel an ability to inspire and motivate is the most important quality of leadership in the 21st century, followed by communications skills (15 percent) and people management skills (13 percent), all soft skills. In contrast, accountants said hard skills such as global knowledge/expertise, financial acumen and keen decision-making were more rewarded leadership qualities at their organizations.

Training still a non-discretionary expense: Despite the downturn, workforce training remains an important investment for many companies, with 31 percent of survey respondents saying training is a non-discretionary expense at their companies. Other non-discretionary expenses include workforce flexibility (27 percent), succession planning (26 percent), leadership development (25 percent) and enhancing the company's brand (25 percent).

Accountants say they need time, more than anything: "When asked what they need most to be effective leaders, most accountants (29 percent) said more time. Only 14 percent of respondents said more money and 13 percent said more influence over others."

I was pleasantly surprised by the emphasis on soft skills (which I like to call "hard" or "performance" skills). Did you know that we formed our Business Learning Institute almost 10 years ago just to provide "soft skill" training to CPAs? Visit our BLI Learning Center to look at all of the upcoming BLI "soft skills" courses. Click on this link to see upcoming courses, or this link to learn how to bring these courses to your firm or company.

Speaking of "finding opportunities," I recommend our course, "Selling for CPAs: How to Use Your Problem-Solving Skills to Promote Pro-Business Growth," scheduled for Sept. 1 in Columbia and good for 8 hours of CPE.

Can't make our upcoming class? Learn at your desk with the Sept. 1 webcast Trust-Centered Selling," by BLI instructor Mark Slatin. The 10 a.m. webcast is good for 1 hour of CPE.

What soft skills are you investing in?

Bold predictions for technology's future

Saturdays at CPA Success are usually spent reviewing online tools that can help increase our productivity. Keep in mind that we do not endorse any of these services. We simply offer them up for your consideration. Do your own homework and find the service that best meets your needs.

"Life," as Ferris Bueller so eloquently put it, "moves pretty fast." But we ain't seen nothin' yet.

At least that's Rick Richardson's view.

For the past 16 years, Richardson -- a CPA, technology futurist and CEO of Richardson Media and Technologies -- has offered predictions about our technological future as part of the Illinois CPA Society's annual Midwest Accounting and Finance Showcase. Sometimes he's right (as when, in 2004, he predicted we would be able to store several gigabytes of data on a quarter-sized device within a decade), and sometimes he's wrong (as when, in 2006, he predicted that one-fourth of all software used on the Internet would be free and ad-supported by 2009).

But he's always entertaining, and this year's predictions were no exception.

Here are Rick's forecasts for 2009, taken verbatim from his Showcase presentation:

Within the next four years, the mouse (and maybe even the keyboard) will be replaced by touchscreen technologies.

A computer in the kitchen will become a standard appliance by 2012.

Mobile Internet device shipments will grow 50 percent a year through 2012 to more than 500 million devices.

Nokia's share of the smartphone market could fall from 40 percent today to 20 percent by 2013.

By 2011, online digital music sales will exceed traditional analog / physical sales.

By 2012, Blu-ray Disc sales will be greater than DVD sales at over $9 billion.

Online video sales in the U.S. will reach $5 billion by 2012.

By 2012, Internet advertising in the U.S. will grow eight times faster than the overall advertising market, surpassing newspapers, cable TV and broadcast TV, and second only to direct marketing.

The explosive growth of video-over-IP is likely to cause Internet service providers to push for Internet metering in an attempt to limit use of the Web by businesses and consumers who tend to be heavy video users.

By 2013, half of the world's homes (636 million households) will have digital television.

By 2011, dual-mode cell phones will surpass PCs as the largest category of Wi-Fi devices.

Globally, 2.1 billion wireless broadband customers will generate $800 billion in revenue by 2015.

And if those predictions aren't forward-thinking enough for you, Rick threw in three of what he called "far-out forecasts":

Within five years, everyone will have a virtual assistant to whom they delegate a lot of the menial tasks of their business and personal life.

Within six years, we will have a new Internet, possibly a parallel network, with less freedom but more safety and control.

Within 10 years, televisions will be fitted into contact lenses. A digital tattoo fitted to the viewer would pick up on the feelings of the characters and create impulses causing the viewer to feel the same as the character on screen.

Crazy? Heck, it's no more crazy than millions of people freely choosing to communicate in 140-character snippets.

We'll see if he's right in a few years. Stay tuned.

Dive deeper at the 2009 Tech Conference
The MACPA's 2009 Tech Conference, slated for Dec. 7 at the Sheraton Columbia Hotel, will take a look of its own at the future of technology and tie it directly to the CPA profession.

Designed for CPAs with an interest in IT and security -- and for those who consult with and advise corporate clients about their technology needs -- the conference also provides a great opportunity to network with your peers and keep up with the latest changes in technology.

Get further details and register here.

Network security brings greater risk. Are you ready?

As if CPAs didn't have enough to worry about.

Managing all of the technical, financial, staffing, environmental and disaster-related risks that come with running a CPA firm or finance department just doesn't cut it anymore. Today's CPAs also have to worry about:

• Network security: The risk is that your network infects a client's with a virus or is used by a hacker to gain unauthorized access to someone else's network. "If you failed to prevent the use of your network in this type of attack, the victims can sue you since the use of your network contributed to their loss," says Mark Silvestri of CNA, the underwriter of the AICPA's Professional Liability Insurance Program, which is provided by Aon Insurance Services and Willis HRH.
  
• Privacy: Specifically, how well are you protecting the sensitive information that your client has entrusted to you? And it doesn't matter if that data is online or offline; you're equally responsible. And it's a growing problem. According to Silvestri, the number of reported privacy breaches rose from 40 in the second quarter of 2005 to 932 in April 2008. The number of records compromised in that time jumped from 9.6 million to 315 million.

That's the bad news. The good news is you now know the risks and can get coverage to manage it.

So don't worry, plan and protect instead. Silvestri offers further details in this MACPA podcast.

• Subscribe to our podcast here, or search for "CPA Spotlight" in iTunes.

Additional security
The MACPA and G1440 also offer members a Web security product that can help you secure your Web site easily, without being costly. Get complete details here.

Five keys to enduring organizations

Everyday it seems we hear more positive news that indicates we are emerging from the depths of this recession -- everything from the green shoots of recovery to recent upward moves in the stock market. If your business or firm has weathered the storm, it is time to rebuild and refocus on the long-term once again.

I found this reviewing my notes from a talent / learning conference I attended back in 2008, but I thought it was right on point as a guide to "next steps" as we clear the debris from the recession's storm. Here are the five keys to building and maintaining an enduring organization:

1. Strategy: In these times of rapid change, you need a strategic plan that is capable of adapting to these changes and allowing you to make mid-course corrections. It needs to be constantly updated (at lease annually) and should form the basis for a strategic thinking system. (See our post on Insights to Action: strat planning that works.)
2. Management: Execution of strategy is critical. Management must be capable of implementing key initiatives that are aligned with the organization's strategy. They also must be able to function as a team based on a foundation of trust.
3. Leadership: You can't have good management without leadership. Are you building current and future leaders?
4. Learning: Do you have a learning culture? Are you investing in your team's capacity? Research shows that best-of-breed companies invest two to three times more than their peers in learning and development, and it shows in their growth. market share and profitability.
5. Systems and processes that support and accelerate the business strategy.

I sum it up this way: In this rapidly changing environement, your organization needs to learn greater than the rate of change in your industry (L>C), and at a minimum, greater than your closest competitors. That learning needs to inform your strategy which in turn needs to be executed and implemented.

Which of these are you weak on? What should be your immediate focus as you come out of the recession?

One thing to help CPA firms with the No. 1 issue

In the movie, City Slickers, the wise old cowboy Curly (played by Jack Palance) challenges Billy Crystal to find his one thing.

We have some advice to help you find your one thing that will help with the number one issue facing CPA firms -- client retention (and the number 3 thing as well). Read on.

We covered the PCPS national survey on the top issues facing CPA firms in our July post titled, Client  retention tops list of issues for CPA firms. Here is the list again.

1. Client retention
2. Marketing / practice growth
3. Tax law cjanges / complexity
4. New regulations and standards
5. Work / life balance

So what can you do about it? What is one thing you can do that will make the most difference?

I found this older post from last October that I thought was worth dusting off and bringing back. The answer it seems comes from thinking about "we."

Here is an excerpt from that post that deals with client retention:

Guest blogger Steve Yastrow, with his post The Downturn is a Rounding Error, emphasizes the 'we' and importance of focusing on relationships in a difficult economy. He challenges us to think with two questions:

1. What percentage of customers are giving you all of the business they possible can?
2. What percentage of your referral sources are giving you all the referrals they reasonably can? 

He went on to say, "Chances are the untapped profit in our existing customer relationships is much bigger than any economic downturn ..."

Point made. Treating our customers (members) like they are in a "we" relationship will give you more share of wallet and more loyalty (versus "us and them").

Is your team trained properly to look for the opportunities in your existing client base?

Do they understand all of the services your firm offers to look for thecross-selling opportunities?

Have they been trained in consultative selling and problem solving to work with your clients in a "we" relationship?

Come out to our fall town hall / professional issues updates to hear more about the top trends facing CPA firms and members in business, industry, government and NFP.

More resources:

• Upcoming CPA seminar, Sept. 1, 2009 in Columbia, Md.: Selling for CPAs: Using Your Problem-Solving Skills to Promote Pro-Business Growth
• PCPS National Top Issues Survey, 2009
• AICPA Economic Resource Center: Mark Koziel writes about the Top Issues Survey
• More about the power of "we," including a link to our podcast with Steve Yastrow

Seven keys to success in CPA firm management

Our friends at Bay Street Group LLC and Capstone Marketing, two leading marketing and market research firms to the CPA profession, recently released groundbreaking research into the critical success factors for today’s accounting firm. They identified seven keys to success in CPA firm management.

Today, I am returning from a presentation where I witnessed a firm that embraces these, especially No. 1.

Here are the seven keys to success. (You can get the full report here.)

1. Leadership
2. Technology
3. Learning organization
4. Marketing and business development
5. A great place to work
6. Client service and satisfaction
7. Strategy execution

Yesterday, I presented the closing session at Kennedy & Coe LLC's inaugural leadership academy in Wichita, Kan. The firm has created a leadership academy that is one of the best I have seen in the profession. I presented the trends and issues facing the CPA profession and how to deal with these rapid changes on an ongoing basis.

The leadership academy was the brainstorm of firm CEO Kurt Siemers and Amy Shoemaker, director of talent development. Amy researched leadership development programs and worked with firm members on key needs. They then developed eight two-day sessions over eight months (around tax season) featuring nationally recognized speakers and facilitators. The programs is open to firm members (partners) and managers who were selected through an application process. The intent is to rotate all of their members and managers who are interested through this intensive program.

Having built our own leadership academy over the past five years and participated in the AICPA's leadership academy, I can tell you this approach is the right way to go. Yes, it is costly, but research has shown ROIs of 10 times can be expected from solid leadership development programs -- not to mention the benefits of recruitment, increased retention, higher morale, succession planning and increased customer service.

It was great catching up with Kennedy & Coe CEO Kurt Siemers, with whom I worked during the CPA Vision Project. (No wonder he is a visionary leader.) Kurt was the Kansas Society of CPAs Vision delegate to the national meeting that combined the research and developed the basis of the CPA Vision report. Much of my presentation tied in concepts of leadership, change management and strategy that were developed during the massive research phase of the Vision Project that are still relevant today.

Here is a copy of the CPA Vision report.

In another example of the leadership category, Kurt also has boldy gone where no other Top 100 firm has gone -- into the value billing arena, as featured in a recent Journal of Accountancy article. As he puts it, the transformation is not easy but it is necessary to focus the firm on value creation for their clients.

Congratulations to the 2009 graduates of Kennedy & Coe's leadership program!

What are you doing to develop leaders?

Budgetary drama grows in Annapolis

We knew more pain was on the way. Now we're starting to hear rumblings of what might be on tap.

For those just tuning in, the budget situation in Maryland is bleak. Gov. Martin O'Malley proposed almost $300 million in mid-year budget cuts in July, with promises that another $470 million or so would have to be slashed sooner rather than later.

Well, sooner is knocking at the door.

In a speech to the Maryland Association of Counties, O'Malley warned that "reductions in state funding for police, health departments and community colleges" could be up next, according to The Baltimore Sun. "Depending on how they're structured," writes Laura Smitherman, "the reductions could mean library closings, fewer road improvement projects and other cutbacks in Baltimore and the 23 counties that benefit from state aid."

Meanwhile, O'Malley has dusted off the inactive Maryland Economic Development Commission and put it back to work. According to The Sun, the governor is asking the group "to help shape business policy, regulations and legislation. The group will create a 10-year strategic plan for Maryland's economy, gather input from businesses statewide and advise the governor on business issues."

Widespread cutbacks, a commission offering advice on legislation and regulation -- they sound like the ingredients for a busy 2010 legislative session in Annapolis. And with government officials seeking increased guidance on business, tax and economic issues, the expertise that CPAs possess is becoming increasingly valuable.

The MACPA is monitoring events in Annapolis, and as lawmakers seek ways to raise revenue and cut costs, we'll be ready to advise them on the benefits and consequences of their actions.

But we'll need the help of the state's CPAs, too. Every CPA who gets involved makes our profession's legislative voice that much stronger.

Get started by attending one of our professional issues updates and getting up to speed on the issues. Then plan to join us at the Governor Calvert House on Jan. 20 for CPA Day in Annapolis.

In the meantime, stay tuned. Things could get awfully interesting in Annapolis in the coming months.

Mobile security: It's time to pay attention

We all have computers in our offices, and all of those computers are running some type of anti-virus software, right?

And if your answer is, "No," someone will be over shortly to slap you silly. As CPAs, you know better than to leave your sensitive data vulnerable to attack. Of course, you're protecting it.

Now, a quick show of hands: How many of us are running similar software on our mobile devices?

My guess is, not very many of us. But we should be.

That's the gist of a National Public Radio interview with Baltimore's NPR tech wiz, Mario Armstrong. In it, Armstrong says mobile security is a hot topic these days, and with good reason: We're all carrying these gadgets around, and many of us have loaded sensitive data onto them. It's a market that's rife with opportunity for high-tech ne'er-do-wells.

"People in America carry three things -- your wallet, your keys and a mobile phone. So there's a large enough market for hackers or those to want to attack these devices," Armstrong said. "It's just a matter of time before we see some type of major outbreak."

Before we panic, though, Armstrong says we need to keep a few things in mind.

First, it's difficult for hackers to launch a coordinated attack on mobile devices, given all of the different service providers and mobile operating systems out there.

Second, says NPR, "in the past five years, there have been about 500 mobile virus attacks, compared with millions against PCs in that same period." In other words, a little perspective, please.

And third, Armstrong says a lot of the hype about mobile security is coming straight from the folks who make anti-virus software.

That said, mobile security is not something we want to ignore. Indeed, as business becomes more mobile, security will become increasingly important.

Listen to NPR's interview with Armstrong in its entirety.

Is your mobile device running anti-virus software?

Want to know more about network security?
Listen to our podcast featuring an interview with Mark Silvestri of CNA, underwriter of the AICPA's Professional Liability Insurance Program, which is provided by Aon Insurance Services and Willis HRH.

MAP survey shows room for growth in recession's wake

Compared with the rest of the world, CPAs seem to have escaped the recession largely unscathed. Unemployment in the profession is running significantly lower than the rest of the population and financial results for 2008 -- while not as robust as in years past -- weren't disastrous, either.

A closer look tells a different story, though.

The annual Rosenberg Survey, an acclaimed practice management survey that's now in its 11th year, finds that the recession brought an abrupt end to a six-year run of remarkable success for the CPA profession.

According to the survey, annual net fee growth fell from 10.8 percent in 2007 to 8.2 percent in 2008. Average income per partner also fell from $369,000 in 2007 to $365,000 in 2008, with the earnings at larger firms falling by about 8 percent.

What's more, "(t)he full effect of the recession didn’t have a big impact on CPA firms in 2008 because by the time the economic woes surfaced in the fourth quarter, most firms’ revenues were collected, invoiced or booked," survey creator Marc Rosenberg said.

And that makes one wonder what 2009's results will look like. Indeed, the firms surveyed predict growth will continue to fall in 2009, perhaps to 3.1 percent. Said Rosenberg: "Roughly 20 percent of all surveyed firms are projecting a revenue decline as their clients struggle to weather the recessionary storm."

Here's the problem, according to Rosenberg:

The years after Enron and WorldCom "created a huge surge in demand for CPA firm services, allowing firms to virtually become order takers." Throw a staffing shortage into the mix and you had firms that were busier than ever, with little or no time to spend on practice development.

When the recession hit, their shortcomings in that area were magnified.

The staffing shortage is on the verge of ending, so that should help.

But the really good news is this:

“The recession is now focusing CPA firms to address these failings, thereby strengthening and ‘right-sizing’ their firms to position themselves for the healthier business climate that will surely follow the recession,” said Rosenberg.

There are plenty of tips out there to help them get started. Tom Hood has offered advice for how CPAs can weather the economic storm time and time (and time) again.

We've also mentioned a few BLI programs that teach business leaders how survive and thrive in tough times and thought they might be worth mentioning again.

• From Slow Death to Sweet Success: Seven Survival Strategies
• Surviving this Recession
• How to Survive Negative Times by Using Positive Communication
• Challenge Thinking to Succeed

Most of all, remember: With a little hard work and planning, this, too, shall pass.