EXECUTIVE SUMMARY

MARRIED COUPLE CPA FIRMS ARE FINDING SUCCESS on their own terms and learning valuable practice management lessons along the way. EACH INDIVIDUAL SHOULD HAVE AN INDEPENDENT practice area. Having autonomy over final decisions in specific areas prevents spouses from stepping on each other’s toes. In many cases, this division of labor develops naturally. COLLABORATION HELPS BUILD THE RIGHT CLIENT BASE. Before partners accept a new job, both must be comfortable with the client. Couples have flexible access to each other, so they can weigh in regularly about clients, staffing, marketing and growth plans. FINDING QUALITY CONTINUING EDUCATION requires extra effort for small firms. Helpful resources include seminars sponsored by state CPA societies, law firms, banks, chambers of commerce, colleges, payroll processing companies and the AICPA. Small firms also get a big-picture perspective at conferences. WHEN PARTNERS TAKE A VACATION TOGETHER, some prefer to leave midweek and return in the middle of the following week. That way, clients see their time away as brief. HUSBAND-AND-WIFE CPAs FACE the same challenges as any small firm—from staffing to growth to succession planning. It’s a mom-and-pop practice’s unified approach and mutual respect that keep things running smoothly. Viewing any small firm partnership as a marriage may actually be an excellent operating philosophy.

LYN MILLNER, CPA, is a freelance business writer based in Florida. Her e-mail address is lynmillner@mindspring.com.

ast April, CPAs Dina and John Kellogg, of the two-person firm Kellogg and Kellogg PC, packed up their laptops, cell phones and four-year-old daughter and left Fort Worth, Texas, for a six-week road trip along the East Coast. They visited friends in Maryland, saw Busch Gardens in Williamsburg, Va., drove the Blue Ridge Parkway, played golf in Hilton Head, worked when they needed to—and their business didn’t miss a beat. “We had continuous access via cell phones and e-mail,” says John. Even without a Fort Worth staff, “our clients didn’t worry that they couldn’t get us on the road.” The Kelloggs—who specialize in audits of privately held businesses—have built their practice around their lifestyle. They are married to each other, not to a firm.

Husband-and-wife CPA teams like the Kelloggs are finding success on their own terms and learning valuable practice management lessons along the way. Here six couples share their secrets for making it work. Small firm partners don’t have to be married to each other to put these tips to good use.

FIT GROWTH TO YOUR GOALS
Remarkably, CPAs Scott and Debra McKeown live on the farm where Scott grew up. They started their 10-person firm, McKeown & Kraai PC, in 1985. Unlike the Kelloggs, they chose to grow—an impressive feat considering their practice is in tiny Middleville, Mich., population 2,000. The firm serves small businesses, providing tax and audit services, write-up and “pretty much everything,” says Scott. About half of their business comes from Grand Rapids, 19 miles away.

One early mistake the McKeowns made was to accept government and not-for-profit work that, for them, required an immense learning curve. After that, they chose only engagements for which they were fully prepared. By 1996 they had to turn business away.

To increase capacity, they hired good people. “Don’t skimp on administrative staff,” Scott advises. The firm’s office manager, in particular, has made life easier. All the long-term employees have close ties to the small community and are like family, the McKeowns say (see “Get Smart About Staffing,” page 33). The addition of audit partner Jeff Kraai, CPA, in 1997, let Debra spend more time at home with the couple’s four boys.

CPA/ABVs Gary and Linda Trugman, of Trugman Valuation Associates Inc. in Plantation, Fla., have a different growth story. After 21 years as a small practice in New Jersey, they merged in 2002 with a Florida firm of 200. It seemed a perfect fit: A large firm wanted the Trugmans’ knowledge to grow its business valuation (BV) niche, and the couple saw a financial opportunity. The BV department expanded to include 20 staff, but the couple learned they didn’t enjoy managing—“We found that bigger wasn’t better,” Linda says. Within two years, they decided to go back out on their own, and they now run a six-person firm.

“A tip for the small firm is to know yourself,” Linda says. “Some people are entrepreneurial and do very well on their own. Smaller works for us.”

DON'T STEP ON EACH OTHER'S TOES
The husband-and-wife CPA firms in this article all say it’s essential for each partner to have an independent practice area. In many cases, that division of labor develops naturally. “You have to have autonomy over final decisions in specific areas,” says CPA Hope Igdalsky, of Igdalsky & Co. in Manchester, Conn. Hope specializes in tax while Alan, her husband, specializes in financial statements. Their five-person firm serves closely held businesses.

CPAs Sue and Rich Meehan, of Meehan & Associates in Moorestown, N.J., have a similar operation. They serve families and closely held businesses, with Sue specializing in tax and Rich in CFO services. “Specializing keeps us from stepping on each other’s toes,” Sue says.

Even when married partners share similar skills, dividing tasks and authority helps minimize frustration and increase efficiency. John and Dina Kellogg work as an audit team, but when there’s a technical issue involving auditing and accounting standards, Dina resolves it. John is the firm’s rainmaker.

Collaboration benefits other aspects of the couples’ operations, though—especially when it comes to building the client base. All the couples say that before they will accept a new job, both partners must be comfortable with the prospective client.

THINK STRATEGICALLY
None of the firms has a formal, up-to-date business plan. As couples, however, the partners have flexible access to each other and weigh in regularly about clients, staffing, marketing and growth plans. Most of them discuss strategy on a day-to-day basis.

Marlyn and Carol Felsing, CPAs, of Felsing, Rankin & Co. in Longwood, Fla., provide tax, estate and trust services, audits, small business consulting and investment advisory work. The Felsings hold an annual management retreat attended by the three partners, the firm administrator and, for some portions, the other six employees. They find retreats indispensable for strategic planning. Two initiatives that resulted from the last one, for example, are production-based bonuses for staff and a new formula for calculating partner compensation. “I’d be hard-pressed to name any facet of the business that hasn’t been helped” by the planning they accomplish during retreats, Marlyn says.

Small firms also get a big-picture perspective at conferences. Scott McKeown called last spring’s AICPA Practitioners Symposium “a wake-up call for me to do more managing.”

The meeting inspired the McKeowns to review their compensation-sharing arrangements and highlighted the importance of grooming younger staff members for possible succession. Some couples learn from peer groups such as the PCPS Small Firm Network, which the Kelloggs find very helpful (see “Resources”).

INVEST IN TECHNOLOGY
Technology lets small firms of all types run smarter (see “High Tech for the Small Office”). The CPA couples in this article use it to save on staffing, supercharge their marketing efforts and work from home or elsewhere. The specific hardware and software the firms use vary with their needs.

For their six-week East Coast trip, the Kelloggs stayed connected to Internet and e-mail with a PC card modem. Cellular reception gave them telephone access even on the road. When an audit client called to request documents, for instance, the Kelloggs scanned hard copies on their portable all-in-one printer/fax/copier/scanner and e-mailed them. They carried all programs and PPC research tools on CD-ROM—and made sure they backed up files on a regular basis.

The Meehans, who market extensively, keep their contacts organized with ACT!—a contact management software package with database capabilities.

To research technology before purchasing it, the Felsings consult the CPA Computer Report Newsletter (www.cpacomputerreport.com) and other resources such as the Journal of Accountancy. For a while Marlyn Felsing was host to a small firm technology discussion group that “met” via phone once a month to exchange ideas. Carol Felsing, who often works from home, uses Windows Terminal Server for remote access.

KEEP UP WITH CPE
The Meehans say their most pressing issue is keeping current. Both came from Big Eight firms with terrific CPE programs. On their own, they say, finding quality continuing education requires a little extra effort. They’ve found many helpful sources.

They attend conferences and seminar programs sponsored by the AICPA, state CPA societies, law firms, banks, chambers of commerce, Big Four firms, the Rutgers-Camden Quarterly Business Outlook and the Business Incubator, Lehigh University (their alma mater), Harvard Business School Executive Education programs, payroll processing companies and the Turnaround Management Association. They also find timely, relevant information in the AICPA’s Journal of Accountancy and Tax Adviser as well as the Philadelphia Business Journal, Money magazine and the Wall Street Journal. They scour the Internet for articles related to their respective practice areas and depend on the AICPA and state society Web sites to obtain the latest technical pronouncements.

LEAVE THE BRIEFCASE AT THE OFFICE
Keeping a healthy balance between work and home life is an ongoing challenge for married CPA partners. So how do they avoid discussing business all the time? Those with children say the problem of taking work home is solved by their kids, who demand their complete attention. In fact, before their four boys were grown, the McKeowns made a point of having lunch together as a couple whenever they could; Debra jokes that in those days her quality time with Scott was usually at the office rather than away from it.

Vacations pose another challenge for married partners, who both are absent from the office when they take time off together. The Igdalskys’ solution is to limit vacations to a week. They’ve found it helpful to leave for vacation in the middle of one week and return in the middle of the next. That way, they’re in the office part of each week, and clients perceive their time away as brief.

The Trugmans consider vacation an absolute necessity. At the beginning of each year, they sit down together and slate five or six weeks of vacation time throughout the year.

“When we’re away, no business is conducted,” Linda says. “We don’t use cell phones or talk about business from the time we leave until we get back.”

Underscoring the importance of quality R&R, Carol Felsing says: “Ten years from now, your kids will remember you went on vacation together. But clients will not know or remember that you stayed home to get something done for them.”

KEEP STRESS IN CHECK
Finally, married CPA couples become especially adept at spotting and mitigating each others’ stressors, something from which all partnerships could benefit.

Hope and Alan Igdalsky stay tuned in to stress, especially where clients are concerned. If Hope sees a difficult client is causing problems for Alan that he doesn’t realize, “that’s where [I] come in,” Hope says. “I may have to say to Alan, ‘This client isn’t working.’” Alan is grateful for the insight. “Sometimes when it’s your client and you’re trying hard to make sure the client is happy, you may not see the stress it is causing,” he says.

TAKE A UNIFIED APPROACH
Being married to your partner may make it more difficult to separate work and personal time, but taking a unified approach to the business is a clear-cut operational advantage. Any firm works best when the partners work toward a common purpose.

Here’s what three husbands from the interviewed couples say they like best about their wife partners:

Scott McKeown says that in Debra he knows he has “somebody at the firm who cares about our clients as much as I do.”

Marlyn Felsing says the best thing about working with Carol is “being able to get each other’s counsel on whatever the question of the day is.”

Gary Trugman says, “I have the best partner I could ever imagine—someone with such a vested interest in succeeding. I trust her implicitly.”

Husband-and-wife CPAs who run small firms face the same challenges as any mom-and-pop business—from staffing to growth to succession planning. It’s their unified approach and mutual respect that help them keep things running smoothly. In fact, viewing any small firm partnership as a marriage could be the ideal operating philosophy.

Landers & Landers AC
Huntington, WV 25701

Landers & Landers AC’s president and managing officer John T. Landers, CPA, and his CPA wife Cassie, founded their six-person, three-CPA Huntington, W. Va., firm in 1975. The firm has strong niches serving small contractors and closely held businesses with sales to $20 million, and in tax and tax planning. About 57% of its operating budget goes for salaries, 3% for marketing, 27% for overhead and 13% for profit sharing and employee benefits. Marketing consists of phone directory ads, a Web site, newsletters and sponsoring charity functions. The firm’s ties to the community are strong, and both partners serve on various boards.

“Clients have come to us after getting to know our children through their own,” says Cassie.

Here, John and Cassie Landers share a few details about their professional and personal lives.

John: Practicing as husband and wife had a few drawbacks in the early years, when we had three small children at home. We’ve mellowed and learned to better deal with stress and to leave work at work. We do butt heads on occasion; however, after 34 years of marriage, we tend to butt more gently. When we cross the line, we make up quickly.

Professionally, our work overlaps to some degree, although we have our own areas of responsibility. I oversee the firm’s operations, for example.

Our best start-up resources were a sound education, experience, a business plan and a strong network of extraordinary people. As a firm the best thing we did was to hire Renee Stinnett, CPA, who has been with us 21 years. The worst thing we did was wait too long to get out of auditing and to purchase our own building.

Since we are the firm, if any one of us is not at our best, the entire organization is affected. Cassie, Renee and I all have had health or personal setbacks over the years. As a consequence, we make every effort to be sensitive to each other. My door is always open. Not feeling alone is a great healer.

Probably the biggest issues we face are changes within the profession (standards) and the transformation of the U.S. economy. Years ago tax laws and accounting standards were relatively stagnant. Now, they seem to change frequently. We read and attend seminars and conferences to stay in tune nationally as well as locally. We discuss changes and issues, formulate an operational policy we believe will be successful and act upon it. Flexibility is essential—not every policy works.

Our local economy doesn’t even resemble what it was 30 years ago. Today profit margins are much tighter. As a small firm, we have been forced to specialize, and it has been good for us. For the future we see lots of growth opportunities in areas we enjoy professionally: planning, advising and helping our clients grow their businesses and preserve greater portions of their estates.

A succession plan is a very high priority in the next few years. I hope to keep my mind active and never to stop entirely, but I intend to slow down. The prospect of bringing in younger practitioners who share our professional philosophy and serving as their mentors is exciting.

Cassie: Besides John’s list, I’d say small business consulting and compilation and our own form of elder care are strong practice areas for us. Deciding to forgo audit services was absolutely the best thing we did since starting. The worst experience we had was uncovering a multimillion-dollar embezzlement that ended in a murder. A CPA career isn’t always tame.

The practice is always changing, so we plan to add two CPAs and a paraprofessional to help handle new business and allow us to concentrate on practice development and play more. It’s hard not to get overextended. Sometimes we have to say to a potential client, “You need X, and we don’t do that. We can help you choose someone who does.” We’ve found it important to have a trusted network of other professionals who are highly competent in areas we don’t cover.

Due to joint and several liability, partners must have similar moral and ethical standards and must trust each other completely. Shared values, goals and ideals are pretty important in marriage as well. We respect each other’s talents and trust each other to do what is right.

Our profession helped us raise three great kids: a teacher, a Naval Academy graduate who is also a doctor, and a medical school student. I’m proud of them for their strong work ethic, compassion and decency—although I may be biased.

At the end of the day, golf helps us both leave work at the office. Oh, yes; John can make anything funny. At our office—and at home—we laugh a lot.