Lomness CPA shifts to advisory services with Practice Forward

Lomness CPA firm profile and background

Established in The Woodlands, TX, this distinguished accounting firm currently employs 13 professionals. The firm experienced a significant leadership change in 2016 when Katie Lomness took the helm. More recently, in 2022, Lomness CPA began participating in the Practice Forward program, underscoring its commitment to embracing progressive accounting practices. Luca Pacioli Accounting Awards recognized this forward-thinking approach in 2023 when they named Lomness CPA Firm of the Year.

Initially, the firm was predominantly compliance based with low-dollar returns. Katie's vision was to shift toward offering advisory services to better meet future client demands. This case study highlights Lomness CPA's transition to an advisory firm using the Practice Forward methodology and the significant revenue increases it has achieved.

Initial challenges

When Katie first took over the firm from her predecessor, she faced several challenges.

First, having primarily worked in smaller firm environments, she felt an acute experience gap and found herself initially unprepared for the complexities of managing a larger organization. Additionally, the firm focused heavily on low-dollar compliance work, a model she recognized as unsustainable for long-term growth and success. Resource constraints compounded this realization; at the outset, the firm did not have the necessary team or resources in place to make a strategic transition toward an advisory model.

The turning point: Thomson Reuters Partner Summit

Katie attended a partner summit in 2017, which solidified her vision for transitioning to advisory services. However, it wasn't until 2022 that the firm had the right team and resources to fully implement this vision. Katie took her management team to another partner summit, where Thomson Reuters introduced them to the Practice Forward methodology. This experience was pivotal in their journey.

Implementation of Thomson Reuters Practice Forward

Upon returning from the summit, Katie and her team immediately began implementing the Practice Forward methodology. They focused on the following steps:

• New client strategy. They decided that all new clients would have to go through advisory services, or they would not take them on.
• Service packages. Using the Practice Forward materials, they developed structured service packages with clear pricing, tools, and delivery methods.
• Client conversion. During tax season, they identified existing clients who would benefit from advisory services and began converting them.

Client and team management

To successfully navigate the transition to an advisory model, Katie emphasized the critical importance of team alignment and a supportive culture.

First, she ensured that the management team was actively involved in both the planning and implementation stages, which helped secure comprehensive buy-in across the organization. Then, recognizing the necessity of client compatibility, the firm adopted a rigorous vetting process for new clients to ensure they were well-suited for the advisory model.

Lastly, refining the client base involved disengaging from existing clients who did not align with the firm's new vision. This strategic approach allowed the firm to focus more effectively on clients they are compatible with and could benefit from the advisory services, thus aligning client profiles with the firm’s long-term goals.

Impact of Practice Forward

Revenue growth

The transition to advisory services profoundly impacted the firm's financial health. In the first year of focusing on advisory services, the firm sold $225,000 worth of engagements with just 30 clients. These services included advice and value they had previously given away for free.

Lomness CPA has seen significant improvements in its financial metrics after implementing Practice Forward. The average monthly billing per client increased by 109%, rising from $146 to $305. Similarly, the average first 12-month billing for a new client saw a remarkable 700% increase, growing from $573 to $4,588.

Annual advisory services revenue experienced a substantial 473% increase, jumping from $12,891 to $73,846. In addition, the firm's overall yearly revenue increased by 55%, from $801,130 to $1,242,806. These results highlight the positive impact of Practice Forward on Lomness CPA's financial performance.

Operational improvements

The firm experienced operational improvements resulting in clarity and efficiency:

• Process documentation. One fundamental improvement was the thorough documentation of processes coupled with clear role definitions, which streamlined operations and significantly boosted client satisfaction by ensuring consistency in service delivery.
• Efficient processes. The firm also leveraged the Practice Forward methodology to further refine its operations. This approach allowed them to develop structured advisory packages, which included suggested pricing and effective delivery tools.

Cultural transformation

The firm underwent cultural shifts that notably enhanced employee satisfaction and promoted a healthier work-life balance, fostering a more supportive and flexible workplace culture.

One significant change was the fostering of enhanced team collaboration, characterized by a culture of knowledge sharing. This empowerment enabled staff to manage larger projects more effectively, helping distribute workloads more evenly across the firm.

The shift toward providing advisory services also resulted in better-prepared clients, reducing stressful interactions and contributing to a more positive work environment.

The firm also implemented a flexible work environment where employees could set their own schedules and benefit from unlimited paid time off (PTO), greatly enhancing work-life balance.

Moreover, the introduction of a hybrid work model allowed for remote work options, and a casual dress code further improved employee comfort and satisfaction.

Client service shifts

The firm also experienced service changes, resulting in better client experiences:

• Transition to advisory services. Shifting from a compliance-based model to offering comprehensive advisory services provides clients with tailored financial guidance and strategic advice.
• Client onboarding process. Implementing a detailed discovery form and a two-meeting approach to thoroughly understand each client’s unique situation and goals leads to more personalized service.
• Proactive client management. Identifying and transitioning suitable existing clients to the advisory model ensures they benefit from the firm's enhanced services.
• Enhanced communication and education. Establishing ongoing coaching sessions for clients and educating them on tax efficiency and business operations reduces stress and fosters an informed client base.

Conclusion

The transformation of Lomness CPA under Katie's leadership is a testament to the power of vision, strategic planning, and leveraging the right resources. By adopting the Practice Forward methodology, the firm not only increased its revenue but also created a sustainable, client-focused business model with happy staff who enjoy a healthy work-life balance.