CREATING THE ONE-STOP SHOP.

[The Nuts and Bolts of Building Strategic Relationships]

ALL INDICATORS POINT to the one-stop shop as key to the CPA's future. A one-stop shop allows your clients to receive a full range of services via a foundation of customized strategic relationships. For some CPAs, this might mean working exclusively with one insurance agent; being committed to two securities brokers; serving as a value-added retailer for a line of computer hardware; or acting as an accredited service provider for a business software company. In each case, you and your strategic relations share a mutual concern and benefit--if they do well, you do well, and vice versa.

For CPAs, strategic relationships generally fall into three categories:

* Occasional relationships are one-time or random situations with other companies to assist clients. These could include services such as a specialty audit, compensation agreement, executive search or business valuation.

* Strategic alliances are non-partnership relationships in which parties join forces to better serve clients. This could include a CPA working with providers of insurance, investment management services or computer technology support. For example, an alliance firm might help your clients with computer needs beyond your firm's capabilities, or in the case of payroll processing, you may do the front-end work while the alliance firm does the actual processing.

* Strategic partnerships or joint ventures are true partnerships in which each party may have ownership in a separate entity or entities. Service opportunities here are practically limitless and run the gamut from financial planning to human resource management. Your role in this type of strategic relationship will vary on a client by client basis. For example, for major consulting work you may serve as the lead partner and run the projects, but in the investment services area, your strategic partner might be the controlling entity while you are responsible for the client's needs and perceptions.

Deciding on which type of strategic relationships to enter into is an intricate process based on many variables including your firm's goals and objectives, client needs, expertise, existing and future markets, administrative support levels and overall commitment. What's more, since each client is different, even once you've established a relationship with, say, an insurance broker, that relationship is likely to take a unique form for each client. There is no simple formula into which you can plug your clients and strategic relations.

EDUCATE YOURSELF

No one can deny that information technology is hot. But if your clients' IT needs or wants are already satisfied, it's a cold fish as far as you are concerned, and not an area worth pursuing as a strategic relationship. Once you've committed to entering strategic relationships, it pays to know the hot market opportunities. Still, you have to educate yourself about your clients and their goals, objectives, strategies, plans and more. By doing this, you'll be able to ascertain what services will provide them with the most value.

You'll need to approach clients proactively. This mandates increasing sales, marketing and interpersonal skills, as well as learning how to seek out and capitalize on opportunities for both your firm and your clients.

Fortunately, strategic relationships, since they provide you with additional resources, make it much easier to be proactive with your clients in a way that is self-assured and at the same time addresses your clients' needs at a broader level. For example, say you've experienced success in your partnership with a securities broker. If you've also learned that your clients are looking for high-return investments and are situated to endure some risk, you can share your securities broker success with your clients in an effort to expand your services.

A BLUEPRINT FOR SUCCESS

The intricacies of implementing and managing strategic relationships could fill a book. Just as your blueprint for a new office building wouldn't be complete without considering electrical, structural and plumbing issues, your blueprint for a successful strategic relationship isn't complete without addressing the following key issues:

Communication: Today's most effective mode of communication is next week's ancient history. Technology changes that fast. Since open, ongoing communications enable you to navigate successfully through the natural challenges that any project, major or minor, creates, you'll need to commit to learning, practicing and constantly enhancing good communication skills with your clients and strategic relations.

I have found in my firm's corporate reengineering practice that when we are able to work closely with our client's CPA, we can cut project time almost in half. The more involved the CPA is, the higher the quality of communication and the more effective the job. All of these factors generally make for a more satisfied client.

Establish a focal point: Although strategic partnering is a team effort, your firm should have one partner who oversees the firm's strategic relationships. This partner's responsibilities may include searching out relationships, working with attorneys, negotiating agreements, interviewing prospects, creating a budget and business plan, and championing the process. For example, my firm works with a partner in a medium-sized CPA firm who devotes 50 percent of his time to bringing his firm's strategic relationships to a level that totally supports their clients' needs. Since strategic relationships don't fit into a prefabricated mold, your arrangement for each client requires significant individualized attention.

Empower: Your firm needs to commit not only to the process, but also to the partner in charge of strategic relationships, and empower this individual to act on the firm's behalf. This means that the partner has the responsibility, authority and accountability to move strategic relationships forward to completion. Other partners can support the process as simply as saying positive things about the benefits of strategic relationships to clients and staff. Your partner's time spent working on strategic relationships needs to be viewed as an investment in the firm's future. This, along with expected accomplishments, has to be clearly agreed upon by all partners. Nothing kills a new endeavor as quickly as partners who don't vote with their feet and make negative comments about the evolving process.

Consider a consultant: To help provide additional focus in the short term, some firms use an outside consultant to assist in managing the process while the partner in charge of strategic relationships manages the overall and strategic duties. A consultant also might be able to assist with administrative issues such as managing the technical aspects of the agreements, compensation and formal communication.

Look toward the long-term: Most change that is profitable for firms doesn't happen overnight. If it does, its lasting power generally is called into question. Relationships take quality time and effort to establish. Imposing aggressive goals and objectives will only set up this process for failure. Your firm needs to regard its commitment to strategic relationships as a long-term investment of time, effort and money. Like any other marketing effort it will probably take at least three to five years to create a true complement of successful strategic relationships.

Create criteria: Your firm should generate criteria to guide the selection process for your strategic relationships. Although each firm will have its own unique measurements, the following criteria can serve as a basis from which to select your strategic relationships:

* Are they a highly professional firm with the necessary credentials?

* Do they have references from other CPA firms?

* Do they have extensive experience in relationship-based advisory work?

* Are they priced appropriately for your clients' needs?

* Do they have the track record to complete the job?

* Will they guarantee that the people selling the job will also be the people doing the job?

Interview: Just as you wouldn't hire a new tax partner without interviewing them, you'll want to interview all potential strategic partners from a true relationship perspective. Consider it a courtship. Rather than just sitting down and immediately negotiating, you'll want to engage in a relationship-building learning process. This might include breakfasts, lunches, formal meetings, client meetings and trial projects. Eventually, you'll engage in professional negotiation meetings that might even include the attorneys. See the sidebar on Page 25 for some key questions to consider while interviewing prospective strategic relationship firms.

BUILDING THE FOUNDATION

Once you've settled on a blueprint, the planning stage still isn't done. There are many other issues to evaluate such as:

* How will your clients benefit from your prospective strategic relationships? Again, it is essential for you to understand what services are most appropriate for your clients. Just because computer consulting is the hot button of the moment doesn't mean that is what your clients need or want.

* How will your firm benefit from the relationship? Some possibilities include additional billings from assisting your client during a joint assignment; more satisfied clients who are less likely to wander elsewhere for support; increased business via referrals from the strategic firm; a greater volume of off-season work; expanded firm resources; learning and growth experiences for staff; and opportunities to build on each successful strategic relationship and create more work.

* Who is empowered to manage these relationships? In each relationship someone will be in charge of the assignment process. This will vary on an individual client basis. When the alliance partner takes the lead, you'll need to come to terms with not managing the process. Sometimes CPAs, who are unaccustomed to taking the backseat, can sabotage the process by engaging in a power struggle that focuses on "my" client rather than "our" client.

Create clear agreements between parties. Sometimes during occasional associations there might not be any written agreement. Yet even in these instances, you'll want to consider the following components to ensure that your client receives the maximum value from the strategic relationship:

1) What will be the division of project responsibilities?

2) Under whose "label" will the project be presented?

3) Do all parties carry professional liability coverage that is commensurate with the associated risks?

4) How will confidentiality be maintained?

5) Will you guarantee client integrity via a non-compete agreement?

6) How will you ensure staff integrity?

7) How will you ensure proprietary rights for all parties?

* Evaluate previous strategic relationships to determine your abilities. In which areas have you been successful? Can you capitalize on those successes? If some strategic relationships have not lived up to your expectations, determine why. Are you comfortable being a strategic partner? Do you think you have the right skill set? Is it a matter of a poor match, a need for increased training or other situation-specific circumstances? Once you understand the root cause, you can focus on refining your skills or choose to discontinue certain relationships.

* Work with your attorney on written agreements. Anytime you collaborate with other service providers, there are inherent risks. Involving an attorney on written agreements can help minimize those risks.

Strategic relationships can be a powerful way to build new opportunities for your business. Make sure you start with a solid foundation.

Mark H. Fowler, CPA, CMC, of Santa Monica-based Stowe Management Corp., specializes in transitioning companies from challenge to achievement with a focus on enhancing revenues and profits. Fowler, a frequent author and speaker, is chair of the Education Foundation's Strategic Relationships Conference.

Questions to Ask Potential Strategic Partners

1) What kinds of experience have you had in this type of situation?

2) What training have you and your firm had in this type of service?

3) How have you worked with CPA firms and their clients before?

4) Describe your billing practices and how they might relate to a particular situation.

5) How do you monitor projects for quality and timeliness?

6) What is your insurance coverage and does it apply to this assignment?

7) What will you expect of our firm if you perform these services?

8) What have previous clients said about the quality of your work?

Learn More About Strategic Relationships

Is a one-stop shop the right direction for your firm? Attend the Expanding Your Practice Using Strategic Relationships Conference and find out. Topics to be covered include; new areas of revenue through strategic relationships; a step-by-step approach to strategic relationships; legal issues and risk management; and more.

Oct. 19-Los Angeles

Oct. 20-San Francisco.

If you want to position your firm to be more competitive and better serve your clients needs, consider the Expanding the Hole of the CPA: Became a One-Stop Shop Business Adviser course. This course focuses on developing and implementing a broader, more comprehensive services base to support your clients needs, while increasing your firm's profitability.

Sept. 22-Burbank

Dec. 4-Palm Springs

Dec. 15-San Francisco