Academic journal article Journal of Accountancy

Risk Can Be a Good Thing

Academic journal article Journal of Accountancy

Risk Can Be a Good Thing

Article excerpt

It sounds like a contradiction to say; "Playing it sale can be risky." But, in fact, it's prudent advice, and too often ignored by the faint of heart and unimaginative manager.

The critical words are can be. Consider this scenario:

For some time, your well-established CPA firm, situated in a small Midwestern town, has been offering, in addition to basic accounting services, computer technology consulting. While your firm has faced some competition, none of the other local accounting firms has had the resources to challenge you in the technology field and it's become the business's lucrative cash cow.

Lately, the firm's conventional accounting business has been a bit sluggish; thus revenues from consulting have been critical. Your firm has been selling the same accounting software packages for many years, and you have been reluctant to make the investment required to take on new software products of even to develop the necessary expertise.

Then one day a client mentions another CPA firm has made a sales pitch focused on the benefits of the new, more powerful accounting software. The competitor, it turns out, had hired two CPAs who are recent university graduates with a specialty in computer technology.

Clearly it's decision making time. As managing director you confer with your partners to weigh the risks and opportunities of investing in new technology. Playing it safe is a rational choice; it conserves cash and doesn't cut partners' income. And who's to say that the tried and true software you've been selling isn't still good enough for most of your clients. …

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