By Kreston CEO, Liza Robbins.
How much of your business is taken by the Big 4?
Losing out on business to them hurts, doesn’t it – especially when you have a talented team you know can compete.
Depending on which region you are in, the Big 4 might secure a large part of the business you really want…
…and this is happening on repeat in China.
I recently had the pleasure of going to China for a Kreston conference and was struck by the huge opportunity to do business there.
It got me thinking… why should Kreston firms accept so much of that business being taken by our rivals?
You probably don’t know, but I have a deep connection with China.
My father was born in Shanghai and although I was born and raised in England, there was a definite Chinese influence on my childhood…
…So much so that I studied at university in the far East and even worked there for a few years.
The China I saw 20 years ago and the China of today are two completely different countries.
Back in the late 1990s, I visited a small, sleepy fishing village called Shenzhen, around 25km from Hong Kong, with no commercial ambitions. It was possible to walk from one end to another… though there was no good reason for most people to visit.
Fast forward to the Kreston conference a few weeks ago, which was also held in Shenzhen.
It’s now being called the city of the future – and rightly so!
I was absolutely floored by the levels of innovation, and most of all, by the way Shenzhen has embraced technology like no other city I’ve ever been in.
When I walked around the city, I saw robots delivering parcels and hotels now even use robots for room service – you can’t get more futuristic than that!
What’s more, the $3 trillion¹ Shenzhen Exchange is devoted to hi-tech, with over 8,000 tech start-ups based there.
This means that there are countless opportunities for growth in this market – including for Kreston firms.
So if you have ever considered China as a growth market – it’s time to start taking action.
Others are already there.
Whilst at the Kreston conference, it was striking how many colleagues from the UK and Dubai were speaking Mandarin, and how many Chinese colleagues were speaking English.
These same colleagues from Dubai, India and the UK also talked at length about how China is investing in infrastructure back in their home countries – so the opportunities flow both ways.
All of this showed me that cultural barriers are starting to fall, and there’s a real willingness to embrace linguistic and cultural differences to make business work.
The exciting part is that we have well over 15 Kreston firms in China and the wider region, that are committed to connect with other Kreston firms internationally.
And that’s why we’re creating a Kreston China Global Business Group.
The group will help us identify firms that want to grow their business in China, as well as Chinese firms looking to do business overseas.
It will help clarify what skills and specialities are available on both sides, provide bilingual marketing collateral, identify opportunities as they arise – and most importantly, help facilitate valuable business opportunities.
Of course this isn’t an overnight process. Building real relationships across borders takes time, which is why this group exists.
If we’re going to capture some of that Chinese business currently flowing to the Big 4, the time is now!
We have the skills, passion, people and connections to put your firm on the Chinese map.
- Published in Blog
By Kreston CEO, Liza Robbins.
“We all want to grow to the level of the Big 4, but it’s difficult to achieve with organic growth and takes a long time.
“So we concluded that the best route was to merge with another firm, and develop together going forward.”
That’s how Ganesh Ramaswamy, until recently a partner at Kreston Rangamani in India, explains his firm’s decision to merge with Kreston SGCO earlier this year.
What was his experience, what challenges did both firms face, and how did their employees and clients react to the merger?
Today, I’ll share their story with you through Ganesh’s eyes.
Sure, we’ve focused on succession planning recently, but the merger didn’t happen because of a lack of a succession plan. The firms merged primarily because they each wanted to take a bigger chunk of the market.
South-India based Rangamani planned expansion to the north, so it set up offices in Mumbai and Delhi. SGCO, based in north India, wanted to expand to the south, and opened an office in Bangalore.
“Instead of being competitors,” says Ganesh, “we decided to combine our strengths and contacts. Alone, it would take us 10-15 years to reach our goals organically.”
The combined firm is stronger than its individual parts.
“Kreston SGCO is a leader in transfer pricing, and Rangamani leads in outsourcing – which was an area SGCO wanted to expand into,” he added. “So we capitalised on our respective strengths.”
But there were other considerations besides market share and growth.
One was efficiency. They could close the small offices they had opened, and achieve economies of scale by sharing resources.
With bigger teams, they were also more appealing when pitching for new business…
…And less likely to lose existing clients.
“Some of our clients moved to larger firms when they grew, because they didn’t think we were big enough to audit them,” Ganesh told me. “The merger means this issue has now gone away.”
But the merger didn’t come without challenges, mainly around cultural differences between north and south India. Ganesh, who is responsible for international business in the new entity, explained:
“In the different regions, there are different reporting systems and employees’ levels of authority are different. Each firm had much debate about this!
“In a joint meeting, we openly discussed how we’d manage differences in culture. Many mergers fail because of cultural issues, so we knew we had to tackle it early.”
To address these concerns, the firms decided on one reporting structure – that of Kreston SGCO, which was by far the larger firm.
SGCO sent staff to Rangamani’s offices, to train them in the reporting formalities, and Rangamani in turn seconded staff to north India.
This cross-training led to a deeper understanding of how each firm works, opening crucial dialogue and creating personal relationships right from the start.
No doubt, over time they will create a new, joint culture that everyone buys into.
Of course, it helped that both firms were already operating under the Kreston brand.
Not only did they have auditing standards and much else besides in common, their clients already saw them as part of the same group.
So when they merged, their clients didn’t feel the change.
As for staff, they were excited about the new opportunities to develop their careers. Ganesh was very proud to tell me that they saw no employee attrition through this process!
The combined firm, under the name Kreston SGCO, will have around 450 employees, four offices, and 17 partners, four of whom are originally from Kreston Rangamani.
So you see, a merger can be a smart decision when you want to grow your firm quickly. You can take more of the market and expand your services quickly.
- Published in Blog
By Kreston CEO, Liza Robbins.
Benjamin Franklin supposedly once said: “If you fail to plan, you plan to fail.”
But the reality is, sometimes even the best plans don’t work out as expected…
Take the topic of succession planning, which we’ve been talking about lately.
Succession planning doesn’t always guarantee a successor will be in place when you’re ready to retire.
Things can (and often do) change over time…
Junior partners may adjust their plans and leave the firm, or be forced to through unforeseen circumstances. Or maybe you had a plan for promoting younger employees to middle management, but no clear contender for the lead role.
If there is no solid successor for leadership in sight, it’s easy to start feeling uncertain about the future of your firm…
This is where a merger might be a solid option to consider.
It doesn’t surprise me that mergers and acquisitions were a key theme at the fantastic CBIZ conference I went to recently in San Antonio.
Mergers are a viable way to ‘buy in’ talent and more contenders for leadership positions.
In fact, when other firms struggle with succession, it’s your opportunity to snap them up and groom their young talent to lead your firm in the years to come!
There are other reasons to consider mergers and acquisitions, as well.
As you know, the market is changing at breakneck speed…
Many firms are moving away from focusing on tax and audit, and towards growing their advisory services.
And whether you want to or not, you have to adjust… or risk being left behind.
With the market changing so fast, it can be difficult to find talent internally to create and grow advisory services.
Often, the quickest way to do it is to buy talent in.
Since it’s easier to compete when you are larger, it’s also a good way to grow and stay competitive.
I was really excited that the 600 people from CBIZ, plus the 12 other firms at the conference, shared this understanding of how the market is evolving and how accountancy firms need to change.
It really felt like we were on the same team!
One important take away from the conference was to proactively look for firms that want to be bought or to merge.
But you need to be strategic about which firms you approach.
For example, you’d want to look for firms that are a good cultural fit… ones that fill the gaps you have in skills, verticals, location and services… and those that align with your overall growth strategy.
Also, keep in mind that you don’t have to always buy the whole firm.
You can offer to purchase specific pieces of it, which allows you to bring in the talent your firm may currently lack.
At the conference, I was really impressed to learn that CBIZ have a head hunter actively looking for firms ready to sell – how’s that for focus on market consolidation!
This isn’t just theory.
One big trend I’m seeing right now, especially in the UK and US, is firms merging and consolidating.
If you want to remain a viable contender in a fast-moving market, you need to think out-of-the-box. And that might include considering merging with, or buying, firms with the right talent and tech to support you.
Mergers can get you there far quicker than organic growth ever will.
That’s one lesson learned by two Kreston firms in India who are in the final stages of their merger.
Their decision to merge wasn’t fuelled by a lack of succession planning. Rather, they each wanted to take a bigger chunk of the market, and a merger got them there.
- Published in Blog
By Kreston CEO, Liza Robbins.
Last week I received an email from the chair of a large Kreston firm, telling me that he had stopped going to our conferences.
You would think I would be worried… or disappointed… or upset….
But I wasn’t, at all – because of his rationale:
“I loved those conferences,” he wrote to me, “and I believe I was still highly effective at them. But I deliberately stepped down so that the change in our leadership should be seen, with [our younger leaders] leading the Kreston relationships.”
In other words, he was willing to set aside his own ego, to allow the younger leadership team to develop their own mark on the Kreston relationships.
That’s true leadership!
As I wrote last week, you need a proper succession plan in place, so that your staff and clients are not left struggling when you retire.
A key part involves nurturing your younger staff, so that they are well-equipped to step into your shoes one day.
Recently, I spoke to several young Kreston leaders, including Michael O’Brien of Kreston Reeves in the UK and Mark Winiarski of CBIZ MHM in Kansas, to get their perspective on this.
I also talked to David Levi, senior managing director of CBIZ MHM in Minnesota and Andrew Griggs, senior partner at Kreston Reeves.
Here are 3 essential takeaways from our conversations.
1. Don’t expect leaders to emerge without guidance
Many firms assume that their next partners will simply appear, ready to lead…
…And then there is disappointment and frustration when the next generation is not up to the job.
But amongst the leaders I spoke to, there was widespread agreement that leaders aren’t born, they are developed.
And they need you to show them the way.
Ideally you should have a structured programme to help talented staff members gain the skills they will need to eventually take over.
Let them experience all parts of your firm, so they have an intimate understanding of how it works.
A mentorship programme, where they can watch the way you operate up close, is also a good idea so they can see good leadership modelled to them.
So what is the most important thing to teach them through these initiatives?
See point 2…..
2. Focus on teaching future leaders ‘soft skills’
When leading a firm, technical accountancy skills alone don’t cut it.
The big question is, can they lead others?
This requires what we call “soft skills” – the ability to:
• Inspire and motivate a team
• Develop long-lasting relationships with clients and other stakeholders
• Build a long-term vision for the future of the business
• Make decisive decisions
• Foster a network of peers, who can be called upon for support, advice and for business development purposes
This is what you must help them develop.
And that is exactly what the Kreston Future Leader Programme is for.
The highlight of this programme is an annual interactive workshop where future leaders receive training on the skills needed to lead a high-functioning team.
Launched in 2017, the conference includes breakout sessions and hands-on learning.
Delegates also network with future leaders from other Kreston firms, building connections that will serve them for decades to come.
Please do get in touch if you have promising young leaders who might benefit. I’d be delighted to give you more details!
3. Create a work culture which attracts young talent
Last but not least, foster an atmosphere in your office which young talent wants to be part of…
…Otherwise they will simply move to another firm.
With life expectancy increasing, a typical workplace can include people from the age of 18 or 19 right through to 70 or 75.
This is an enormous range, and each generation will have its own working style, its own attitude to productivity and its own preferences for communicating.
If you try and force everyone to conform to the same style of working (…yours?), it can create misunderstandings, division and unhappiness.
And younger staff might not be able to visualise themselves fitting in, long-term.
So be flexible in your management style, and accommodate the expectations of the younger generation (without alienating others).
This might mean encouraging flexible working, as millennials value a strong work-life balance….
Allowing a business-casual dress code…
Or adapting to tech trends like social media and video….
…In short, developing a culture that these future leaders are enthused about.
- Published in Blog