Growth by Strategic Alliances

Article excerpt

The year is 2003. Since the elections Of 1996, the Republican party has held control of the Presidency, the U.S. Senate, and the House of Representatives. The Federal bureaucracy has been streamlined and downsized. The U.S. budget has been balanced for the first time in many years. The complexity of the income tax code has been replaced by the simplicity of the flat tax. The information superhighway has more than 60 million travelers. Personal computer use by entrepreneurs has mushroomed because of drastic reductions in the cost of equipment and ease in using new software technology. The impact of these changes on the sole practitioner and small accounting firm has been devastating. Many practitioners have experienced a reduction in their income by as much as 30%. Sev eral national financial organizations such as American Express and Sears have been offering competing services to the general public for the past several years.

Surviving in the Future

How can the sole practitioner and the small accounting firm survive in the hostile environment described above? The answer to this question may come from the creation of a collaborative, cooperative strategy known as strategic alliances.

The field of accounting has become a mature profession-extremely competitive and specialty oriented. Today's clients are looking for fast, quality services at reasonable prices

As the new millennium approaches, knowledge and information have become a vital part of the success equation of businesses of all sizes. The people who possess and utilize this knowledge and information will succeed in the 1990s and beyond. Accounting firms can no longer operate as a do-everything, singleminded fortress jealously guarding their clients and self-developed practice systems and information. They must open all the doors and windows and allow a fresh new breeze to flow throughout the firm. A firm's inventory of competencies or skills bank can be shared with other firms to serve clients collaboratively.

Developing the Skills Our Clients Need

The first step in the three-step process of developing the skills our clients need is to develop a firm profile or skills bank. Analyze the firm's gross fee income for the last year and prepare a schedule of the core competencies by subject matter as a percent of the gross fee income. Por example, the firm may have developed skills in the following subject areas:

* Representation before the IRS

* Uniform capitalization applications

* Business valuations

* Divorce planning

* Executive compensation planning

* Computer applications and training

The second step is to identify the firm's various business or industry specialties as a percentage of the gross fee income for the previous year. For example:

* Physicians and dentists

* Automobile dealers

* Nonprofit organizations

* Construction industry

* Home owners associations

* Veterinarians

The final step is to identify the traditional services and value-added services that existing and target clients need. …