To judge by the number of blog posts and articles I’m seeing on the topic of consulting these days, you might think advisory services have been widely embraced by accounting firms. But in fact, lots of talk has not materialized into lots of action. While firm leaders increasingly recognize the potential of consulting, that has not translated into engagements. In fact, consulting revenue still makes up less than 20 percent of average mid-market firm revenue.
The experience of my own clients suggests that the reasons are numerous, ranging from a lack of understanding of how to get started to a lack of incentives. I’ve seen the reluctance fall away, however, as firms gain more knowledge of what’s actually involved.
Let’s start with a definition of “consulting.” A helpful framework is threefold: recommending what your client should do; telling them how to do it; or doing it for them. When measured against that definition, I’ve seen firms discover large quantities of consulting work buried in audit and compliance service codes.
Pivoting from due diligence and compliance work to consulting is a marathon, not a sprint. It’s just hard work and a commitment to turn talk into action.
There’s lots to overcome
Factors particular to our skills and mindset make the switch to consulting especially challenging. The first is that it requires accountants and tax professionals to think and act in a very different way. So different, in fact, that some practitioners are highly successful, while others will be unable to make the pivot. In those cases, firms must do something else that accountants have not traditionally had to do — acquire talent with skills and experience that differ markedly from our own.
You may be thinking, “Wait a minute, I’ve done my time at college recruiting fairs, and that’s not what’s involved.” Firms have always enlisted promising accounting graduates, hired them, and assumed they’d stay forever.
But innovative human resources and the acquisition of experienced talent is not something for which our profession is known, especially when the talent required to build a successful consulting practice might have to come from outside the accounting field.
Also daunting to accountants is the possibility of merging in firms in areas that we know little about, like product development and technical specialties such as artificial intelligence or blockchain.
Some firms have avoided making the transition to advisory services because they find themselves relatively flush with work, especially around the Paycheck Protection Program and tax deadlines, and, as a result, they lack a financial impetus. Also, due to their compliance orientation, many accountants are simply unattuned to other potential client needs.
Content and process
With those challenges and caveats in mind, what will it take to transform your firm into an advisory powerhouse? Consulting consists of two primary elements — content and process. The content of a given engagement (e.g., CFO outsourcing, business valuation or cash flow projections) will vary by project and client. But the replicable process of consulting contains standard elements such as evaluations, assessments, advice, reports, etc.
I suggest starting your consulting initiative by compiling a thorough inventory of your past and current projects. Sweep people, projects and industries into a spreadsheet and review them against an agreed-upon definition of consulting and how items on the spreadsheet fit in. Through such a review, even firms that do not consider themselves consulting organizations typically identify a fair amount of “advice and counsel” project work already.
Next steps include:
- Conduct “research call” interviews in the market with leaders in various industries where the firm has a presence. Find out what the market wants. If there are resource gaps, evaluate and recruit personnel best suited for, or most likely to contribute to, your consulting team.
- Your interviews should identify target industries and buyer groups, and inform where to plant early adopters based on the intersection of services, target markets and channels.
- Develop an innovation toolkit to help replicate and scale the design, development and launch around new offerings. This can be used for all subsequent service launches within the firm.
Yes, you can!
In the tech industry, where I spent two decades, we were constantly launching a new business or service whose lifecycle could best be measured sometimes in months rather than years. While that pace will probably never be standard in our profession, it’s clear that change is in the wind for growth-minded firms. I’ve had the pleasure of supporting many as they made the game-changing transition to consulting. Are you ready to jump in? I believe you are!
