Productivity In Practice: ‘Above Average’ Status
Apr. 01, 2005
FIRM NAME: Kive I. Strickoff, PC, CPAs
Kive Strickoff, CPA, has a personal and business philosophy that has guided his firm through 30 years. ‘Any financial gain at the expense of our integrity is a loss,’ reads the credo, which is posted in several locations around the Merrick, New York, offices of Kive I. Strickoff, PC (www.strickoff.com). And he pays more than lip service to this mission; it’s reflected in his practice.
At a time when most accounting practices strive to grow larger, continually increasing clients, staff, services and, ultimately, profit margins, Kive has adopted a different business strategy in an effort to better leverage technology and the skills of his staff to better serve his clients and maximize efficiency.
‘It’s taken me a very long time to grow my practice this small,’ Mr. Strickoff said. ‘I had a profitable firm before, but 80-hour work weeks left no personal life. I had to find a better way to run my business.’ That’s right, the business has grown smaller, and the principal is more than happy with the accomplishment.
In the nearly 30 years of the firm, it has provided a variety of services, from traditional write-up, accounting, tax and payroll services, to specialty projects such as forensic accounting and, more recently, with financial services. And the practice was successful; revenues continued to climb. But through the evolution of the firm, Mr. Strickoff realized that size isn’t necessarily the best measure of the success of a firm. By 1992, he says, the firm had grown too large.
‘I reached the point where I wasn’t really enjoying my job anymore,’ he said, noting that as
the firm had grown he had to spend more time with office and personnel management instead of servicing clients. So he set out on a mission to maximize the efficiency of his firm by focusing on providing higher-margin client services. Aside from wanting a little more family time, what prompted him to put a plan into motion?
‘The most wonderful thing happened, I lost a major client,’ he said. Once again, this is not the usual response from the owner of any business. The loss of this large client cost the firm about $180,000 in billings, but he says it helped him realize the areas of his practice on which he wanted to focus. To start with, he realized that the commoditization of routine accounting work would require his practice to find other specialty services.
‘One of the biggest challenges in the profession is the overly competitive and predatory pricing for tax preparation and some accounting services. As a result, margins for these routine services are harder to maintain, especially as overhead goes up.’ In other words, with everyone and their brother offering tax preparation and traditional accounting services, the price Mr. Strickoff could charge didn’t keep up with increasing staff costs. He didn’t want to give up offering these services entirely, but he wanted to find other areas where he could help his clients more profitably.
So Mr. Strickoff started providing an array of financial services, including investment strategies and management, IRAs, life insurance and retirement planning. His staff includes several CPAs, and he has his Series 7 and 66 licenses, as well as certification to sell insurance. But Kive knew that just changing the services the firm provided to its clients would not necessarily help him control the growth and efficiency of his practice. So he turned to technology to help him in his mission to maintain a more compact and organized practice. The firm has been using computer technology since 1983, but he says the key to efficiency was implementing integrated accounting and office management programs. As a reflection of their effective use of technology, his firm earned a score of 330 on The CPA Technology Advisor’s Productivity Survey. (The Productivity Survey is available at www.cpata.com/productivity.)
In addition to utilizing wireless devices, remote access and setting up a plan to minimize paper in the office, Mr. Strickoff has just installed a three-monitor setup that he says greatly increases his ability to work smoothly in multiple applications at the same time.
As for the future, Mr. Strickoff acknowledges that managing growth and maintaining control over the firm will always be a challenge, but he believes that using technology strategically will help him achieve these goals and help him better serve his clients. The firm’s staff of nine currently has about 160 individual clients and 110 business clients, with about 80 percent of the firm’s revenue coming from accounting, tax services and special accounting projects. He would ultimately like to bring the 20 percent he currently realizes from financial services closer to 40 to 45 percent.
‘I love my job and I love my profession, so traditional accounting services will always be a key part of my practice,’ he said. ‘But to be profitable today you have to seek out the higher- margin services and exercise greater control over the firm environment. The challenge is getting the right fit of staff, clients and technology.’
More About Kive Strickoff, CPA:
PRODUCTIVITY SCORE’: 330
Long Island University, Brooklyn, NY
FIRST PROFESSIONAL JOB: Junior accountant at NY firm of Laventhal Krekstein Horwath and Horwath, August 1971
LAST BOOK READ: ‘Dead in the Water’ by Stuart Woods
TOTAL FIRM STAFF: 9
FIRST CLIENT: Monthly write-up for house painter.
FAVORITE PIECE OF PROFESSIONAL TECHNOLOGY:
New triple monitor LCD displays mounted on an Ergotron DS100 stand.
FAVORITE PIECE OF PERSONAL TECHNOLOGY: Treo 600
WHEN HE RETIRES: ‘I currently work 65 to 68 hours per week. Working 40 hours per week would be a ‘stage one’ retirement for me, and I hope to do so in four years. A ‘stage two’ retirement would be for me to scale back to 25 to 30 hours per week by age 68. And that’s where I would want to continue forever thereafter. I never want to fully retire. I enjoy my professional life too much. Frequent vacations at that point would be just fine.’
Productivity In Practice: An Explanation
The Productivity Score’ is calculated using a proprietary algorithm owned by Selden Integrated Systems and developed and implemented by The CPA Technology Advisor. Answers to a series of over 50 questions in four major categories are scored by awarding (or subtracting) points based on the relative importance of the specific question. Some answers are additive only, while others are subtractive.
The questions and their weighting are modified from time to time, but the base scoring algorithm remains constant and allows ongoing comparability. Some answers result in very small changes to a score while others change the overall score quite significantly. [Hint: It’s not a good idea, either technologically or for your Productivity Score’, to have computers still running Windows 95!]
Certain questions are paired and their answers scored based on their combined answers. Final scores range from 0-600, although no scores are reported below 150. Finally, note that scores are calculated against an overall ‘best practices’ standard, so values of 150 to 300 are quite common while those over 450 are extremely rare. Later this year, we will begin reporting overall, firm size and geographic averages.
If you’d like to have your firm considered for a future “Productivity In Practice” column, please contact us at editor@CPATechAdvisor.com.