A firm of one's own: how firm ownership improved the quality of one couple's life.
How firm ownership improved the quality of one couple's life.
When Mike Brown was a senior tax manager on the staff of a large national accounting firm, he sensed that many of his colleagues worked until eight at night or on weekends simply to be seen keeping long hours. And, although he worked in the private business group, he was disappointed to find the time he could devote to some of the smallest clients was limited because of the relatively low fees they generated.
To find greater fulfillment, he and Cathy White, a senior on the same firm's audit staff, opened their own firm in Boston in January 1983. The partners started out with a PC, a typewriter, two desks, a library service--and one large client Mike had worked with at his former firm. Their initial capital investment was less than $10,000.
Their marketing targets were high income-net worth individuals, professionals and closely held businesses. One of their goals was to manage their commitments to allow more time to provide useful insights into clients' finances.
"At the large firm, as soon as you finished one project you were already late on several others," according to Mike. "You had some very talented individuals serving professionals and high-net-worth clients, but they also served corporate clients paying enormous fees. It was just too expensive to pick up the phone to give advice or go to a planning meeting, whereas now we can knock clients over with service."
For some clients, firm personnel function as controllers and tax managers. Clients that can't afford a chief financial officer can effectively pay for one on an hourly basis. A large percentage of their new business is generated by referrals from clients happy with the extra attention the firm gives them. Cathy says, "When we sit down with clients to explain financial statements, so many of them say, |No one has ever done this for me before.'"
Another of the partners' key goals in the new firm was to balance their personal and professional lives. Now married with three small children, they put a total of 4,000 hours a year into the firm but have more control over their work and family schedules than they did as employees. Cathy, the firm's controller, can leave at three to attend to the children and resume work at home in the evening. Mike also reorganizes his schedule for the family, coming to work late or leaving early after completing a project that has cut into his time at home. The Browns believe larger firms try to be sensitive to parents' needs but don't always have the flexibility necessary to succeed.
Their staff has grown from one secretary in 1983 to 13 people today. Most were recruited from large national firms because of the invaluable training these firms provide. Some sacrificed attractive perks to work for Brown & Brown. "We recruited an excellent CPA-attorney--a manager from a large firm who had had an office overlooking Boston harbor," Mike says. "When he first came to work for us, he had a desk in the file room."
In exchange for some of the benefits at large firms, the Browns try to offer a more relaxed atmosphere. "We expect a commitment to the career," Mike says. "But we don't have enormous overtime because it burns out the staff, increases turnover and affects the quality of the work. We're always a little overstaffed to reduce stress and to enable us to take on another project and turn it around quickly." This approach has a negative short-term effect on profitability, but the Browns believe it enhances growth and client service in the long run.
The couple make an effort to accommodate their staff's personal concerns. "We recognize there are more important things than just working," Mike explains. One parent on staff works three days a week; another will come in on Saturday if an emergency at home keeps her out during the week. The Browns have created a leisure bank that allows managers to work extra hours or on weekends in exchange for longer vacations if they achieve certain goals on time. One staff member had always wanted to spend two months touring Europe but had been too intimidated to ask for a leave at a large firm. "We told the staff we encourage them to take time off for personal interests and to cover for each other to make it possible," Cathy says.
Some simple innovations have had a surprising effect on staff morale. Last summer, staff members were allowed to wear casual clothes on Fridays if they weren't meeting with clients. "You'd think we had given them each a $10,000 raise," Mike says.
Brendan Smith, a manager who got his start at a larger firm, moved to Brown & Brown because it allowed him to deal directly with clients on all aspects of their businesses. The reduced overtime and more pleasant work atmosphere were other important factors. He believes smaller firms' informal structures make them more efficient. "In an eight-hour day, I think I get a lot more accomplished here than I did at the large firm."
REMAINING ON COURSE
The firm has three managers whom the Browns expect to promote to partnership as soon as they satisfy established goals for practice development and billable hours. Generally, however, they are cautious about future growth because of the downturn in the Massachusetts economy.
In addition, they want to preserve the qualities that led them to open the firm. "If you grow too fast, you disappoint too many people," Mike says. "In the early years, we had to tell some clients we could do their tax work but not their audits because they were too large for us. As businesspeople that was hard to do, because we worked all year to increase revenues by $150,000 and now we could do it in one fell swoop. But it would have been the old large-firm mentality of trying to juggle--and, if you throw one big ball up in the air, you drop all the others."
PHOTO : Cathy and Mike Brown (right) find that simple innovations have had a surprising effect on staff morale.
Ms. Anita Dennis is an employee of the American Institute of CPAs and her views, as expressed in this article, do not necessarily reflect those of the AICPA. Official positions are determined thorough certain specific committee procedures, due process and deliberation.
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|Publication:||Journal of Accountancy|
|Date:||Jun 1, 1990|
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