CPA firm partners have never been accused of being marketing geniuses.  While many understand the importance of differentiating their firm from others, few can execute – actually explain what sets their firm apart from others.

Recently, a small east-coast firm engaged me to merge their firm into a larger firm.  After an initial screening, we called a few firms in for a round of face-to-face interviews.  The two partners did most of the interviewing with me in attendance.

One of the firms invited was a very successful, reputable and profitable firm.   Its MP spent 45 minutes very articulately and passionately describing his firm, their capabilities and how they were organized.  My client fired one question after another to this firm and received eloquent responses.

Then came crunch time.  It was the bottom of the ninth and the bases were loaded. The MP had a shot at a grand slam.   My client asked:  “What differentiates your CPA firm from other fine firms?  What makes you special?  Why should we merge with you instead of another firm?”

He was speechless.  The proverbial cat had his tongue.  The look in his eyes said  “Help.  I don’t have a clue how to answer this.  I’ve just lost the beauty contest!”

After the shock of the question wore off, the MP proceeded to mumble things like:  “Our people.”  “The quality of our work.”  The commitment we have to our clients.”  “We have low staff turnover, which shows how much people love our firm.”

Of course, everyone sitting around the table thought the same thing:  “Wouldn’t EVERY CPA firm say the same about themselves?”

The MP didn’t or couldn’t give a good answer.  Unfortunately, he struck out to end the game.

I’m sure many of you reading this are familiar with the Practice Development 101 drill of memorizing how to  respond when an unexpected opportunity to pitch your firm presents itself.  However you do it, do it in a way that shows how your firm is different.

In defense of the flustered  MP, it’s hard for most firms, especially those under $10M in annual fees, to differentiate themselves from their competition.  Hundreds, perhaps thousands of these firms are profitable, are brilliant accountants and enjoy stellar reputations.  But they remain hard-pressed to set themselves apart  from other firms.

The honest fact is that there are many more similarities than differences among competing CPA firms.  The vast majority can be described by ALL of the following:  Profitable, knowledgeable, high integrity, generalists, partners have 30+ years of experience, etc.

So, what’s a firm to do?

It seems to me there are two choices:

• Find ways to be different.  It’s hard but by no means impossible. Here are a few examples I hear from my clients:  (a) We specialize in XYZ industry. (b) Starting at an early age, our staff are required to teach technical accounting and tax courses because we feel that when you teach something, you have a better understanding and command of the material.   (3) We guarantee client satisfaction – if you are not completely satisfied with our performance, we’ll refund your fees.  (4) We are committed to developing a strong bench – a big part of the compensation to our partners depends upon their proven excellence in mentoring specific staff under their supervision.

• Bite the bullet and be honest.  “We know our firm is one of the best CPA firms in the market.  But honestly, there are other very fine firms out there.  We are friends with many of them.  I don’t expect you to believe me when I brag about my own firm.  Most clients hire us because of one or both of these two reasons: (a) a recommendation or referral from a credible source and (b) a sense that there is a good personality and cultural fit.  I would like you to visit our office, see how we are organized, meet some of our people, talk to some of our clients, talk to our bankers and our attorneys.”

So, make sure you have a story to tell the next time you meet someone in the elevator or at the dinner table at a wedding reception or a cocktail party for your alma mater.  Follow the Boy Scout motto:  Be Prepared.

Identifying what sets your firm apart from the competition is critically important to the strategic planning process.  This step and dozens of other pointers and suggestions are addressed in our monograph Strategic Planning and Goal Setting for Results.

Michael Gerber wrote two highly acclaimed books in the 80s and 90s:  “The E-Myth” and the “E-Myth Revisited.” 

“The E-Myth (‘E’ for Entrepreneur),” Gerber wrote,  “is the flawed assumption that people who are expert at a certain technical skill will therefore be successful running a business of that kind.”

Those of us who read this landmark tome learned a lot about how to properly manage a CPA firm.  Many of you probably don’t think of your firm as an entrepreneurial business, but it most definitely is.

Gerber schooled his readers to “work on your business, not in your business.”  This saying spawned the sentiment that “CPA firms need to be run like a real business.”

He taught us that there are three key people in a business:  (1) The Entrepreneur- the visionary, the dreamer; (2) The Manager – without the manager, there would be no planning, no order, no predictability; (3) The Technician – the doer, who always lives in the present. 

Gerber said “small business-owners work far more than they should for the return they get.  The problem is not that they don’t work; the problem is that they’re doing the wrong work.”  Put in terms that CPA firms can relate to:  Partners work too often as a technician and not enough as an entrepreneur and a manager.

The E-Myth’s Model: Sarah’s Pie Shop

Gerber taught us by telling the story of his friend Sarah, who owned a pie shop.  As a child, Sarah learned how to bake pies from a dear aunt.  She loves baking pies and everyone told her that her pies were the best ever.  She dreamed of owning her own pie shop and made the dream come true.  But three years into it, she found that the business wasn’t really about baking pies. It was really about work.  She found that the work she used to love more than anything else became work that she hated. Sarah said: “I get to the bakery at three in the morning and bake the pies, open the shop for business, take care of my customers, clean up, close up, take the money to the bank, have dinner and get the pies ready to bake for the next morning so I can start another long day.  And this goes on 6 days a week, year-round. ”

 And as if this wasn’t bad enough, Sarah didn’t make much money.

As you might suspect, Gerber mentored Sarah and taught her how to run her business like an entrepreneur and a manager and hire technicians to do most of the other work.

Real-life model in Evanston, IL: Rose’s Wheat Free Bakery and Café has done business for the past five years in the Chicago suburb of Evanston, a mile from my home.  Rose, the owner, recently announced that she would close Christmas Eve unless she raised $100,000 to resuscitate her shop.  Rose struck an eleventh hour deal with a successful businessman, Marcus Lemonis, to keep the struggling confectionary open. He will infuse the necessary capital into the business and, as its new part-owner, will guide it toward a sustainable business model.  Said Lemonis:  “This is a woman who epitomizes a great baker, but maybe not all the business skills.”  Lemonis went on to say that “some things inside the business can be fixed very fast to make the bakery profitable.  For example, we will buy some new equipment that will speed up the process for some of the bakery’s most popular items.” 

What a great story.  A wonderful bakery stays in business.  Customers will continue to have a source for scrumptious gluten-free goods.  Rose’s dream stays alive.  And, of course, yet another illustration of how effective management saves the day.

By the way, if you haven’t read the Gerber book, you should pick up a copy.  When I read it, it seems like it were written with CPA firms in mind.