In this episode, we're joined by Gary Shamis, Principal at Winding River Consulting. Gary has spent his career in accounting, growing his father's accounting firm from $225,000 in revenue to approximately $100MM before selling the firm to BDO.
Today, Gary shares his secrets to success, the challenges he faced along the way, strategy vs. execution, how to acquire top talent in professional services, operating in a virtual environment, and so much more.
How did you grow from $225K to $100MM?
"The number one thing to focus on is the ability to execute. Strategy is really easy, execution is really hard."
Gary found that everyone has the same access to the strategies. The ones who are most successful are the ones who take the time to execute. The most influential strategies that Gary executed on were:
1) Niche focused and vertically aligned - Gary focused first on the restaurant industry. This grew to become 20% of the revenue. Gary realized that the restaurant industry was the second-largest employer in the U.S. behind the federal government, and there was no dominant players for accounting and financial management. This is called a "blue ocean strategy". Independent pharmacies were another area that was under-served.
2) Service Line - which services do you offer to which clients? Gary expanded the service offerings quite a bit to include wealth management, tax, audit, payroll, retirement plan administration, and HR consulting.
3) Focusing on the Big 3 Cities in Ohio - Gary became the largest firm in Ohio, one of the only states with three major cities.
There was a degree of patience with the growth, it was never exponential. This process took over 20 years. Clients were added on a regular basis consistently over the decades. Gary never actually really targeted revenue growth, he targeted continuous improvement.
By studying what other firms are doing and gauging their success, Gary determined when and how to add service lines. He believes that strategy isn't exclusive, it's all about the execution. Being control oriented, Gary never started companies or service lines that weren't directly related to the core offerings.
Hiring Talent and Accountability
Success in accountability comes down to hiring the right people. Gary has always been a big believer in having the right talent. Gary created a program that enabled employees to invest in the company with a phantom stock ownership plan, interest paid on the growth of the organization. Upon sale, decades later, millions were paid out to employees. Gary wanted employees to be invested in the success of the firm.
"When you hire right people and you continue to hire great people, you just don't worry as much about keeping them in line and keeping them motivated."
Gary noticed that the Big 4 firms were not accommodating to individual needs or life responsibilities. A big example is women with children. Gary offered flexibility to this group and allowed for part-time work where applicable. By accommodating to life, Gary found himself with a waiting list of people who wanted to move to the firm.
Many metrics do need to be tracked and met, but Gary kept his focus on the clients and client experience. Gary prefers to make decisions based on clients vs. decisions based on metrics.
"The best way to make money in public accounting is to have the same person work on the same client year after year. The worst way to make money is to have a new client and a new person."
Originally, Gary was not interested in young new hires without industry experience - aka interns or recent college graduates without industry experience. As the firm grew, Gary had quite a bit of work and not enough capacity. He realized the college pool of talent was all ready to work, so they would hire 20 interns for a busy season. This turned out to be a great way to test people. This resulted in a very low turnover of 8%. If you covet your people and try and create that environment, you'll keep your people.
"It's about listening to the staff and giving something back to them, trying to create a better work-life balance going forward."
Our employees understood that the accounting world was screwed up and all the work happened in 3 or 4 months. They wanted a bit of the time back that they lost during the busy season. Gary and his partners instituted a Friday's-off policy from Memorial Day to Labor Day. All employees had three-day weekend during the summer! After establishing some rules and expectations, this was a home-run move.
"Accounting firms are owned by baby boomers and are populated by millennials, that was the biggest problem... [Redefining the culture]: things like dress, the quality of work we were giving people, being able to work virtually, understanding what advancement meant in the organization, learning and development was really a big items, we spent a lot of time looking to build this millennial culture, which reduced turnover and provided the potential for succession. Firms don't understand that. If they're going to be succeeded as an organization, they have to develop millennial culture, if not, they're going to have to sell the organization and close the doors."
What would you have done differently?
First, if there's an individual you really know you want to hire, you need to make the extra effort to make that hire. You can't let the best talent and culture-fit individuals get away.
Second, Gary would've spent more time growing the ancillary businesses, they were worth more. The sale of some ancillary businesses was worth larger multiples than the mothership accounting firm. Specifically, the payroll company and wealth management company were fully-functional, and high percentages of the clients
"The genie is out of the bottle on the virtual workspace. Most accounting firms didn't have a virtual strategy... This was supposed to be an evolution, but it was an event... Firms have got to figure out how to work in this virtual environment - those who do are going to soar."
Two things have changed forever. Now, talent is not based upon geography. Clients are also not based on geography. This is an amazing opportunity.
Learn more about Gary and his work: http://windingriverconsulting.com/