Strategic Accounting MACE December 2012 Mark Nelson & Dan Gomez GGN GROUP, LLC Results Through Change™

GGN Group Three Things You Should Know About GGN 1.We are a group of business owners and executives with a history of starting, building and managing companies. 2.Our clients are business owners who want an outside perspective on making significant changes 3.We use disciplined and proven management processes to get results 2

Definition - Accounting Practice and body of knowledge Practice and body of knowledge – Methods for recording transactions – Keeping financial records – Reporting and analyzing financial information – Advising on taxation matters Accounting provides information on Accounting provides information on – Resources available to a firm – The means employed to finance those resources – The results achieved through their use Where the rubber meets the road 3

Definition – Strategy The art and science of enabling an organization to achieve its objectives A long term plan of action designed to achieve a particular goal(s). A series of top-level management decisions which help navigate the direction of the corporation Strategy answers the question of how a company will deliver its value proposition to its customers Where the rubber meets the sky 4

Accounting & Strategy 5 At the Intersection of Strategy and Accounting is Measurement

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7 Balanced Scorecard Balanced Scorecard – Management system – Translates strategy into measurable actions – Integrated set of performance measurements that require Data gathering Measuring Analysis and interpretation Communication

The Role of Accounting The Role of Accounting – Identify measurements – Collect and record data – Verify, summarize and interpret data – Report and communicate results 8 Definition of Accounting

Balanced Scorecard Overview View and measure organization from four perspectives – Financial – Customer – Business Process – Learning & Growth 9

Three Strategic Themes 10 Customer Intimacy InnovationEfficiency

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Actual Case 16 The Law Firm

Case Facts The firm has been in business for more than 25-years The firm has been in business for more than 25-years Many of the firm’s practice areas are highly competitive Many of the firm’s practice areas are highly competitive Much of the billings are contingent fee based. It’s either “feast or famine”. Much of the billings are contingent fee based. It’s either “feast or famine”. There is now a sense of urgency to build sustainable and transferable firm value. There is now a sense of urgency to build sustainable and transferable firm value. 17

Goals and Strategies Overall goals: – Create a business model with a more predictable revenue stream – Increase annual billings by XXX% over the next three years Strategic Theme – Client Intimacy / Efficiency – Make it easy – Do it quickly – Keep it affordable 18

Vision and Mission Vision – How we define success Our firm will be the region’s preeminent provider of We will be the firm that others refer their clients to. Mission – What we get paid to do Our mission is to help people successfully deal with crisis

Financial Perspective Significant growth in Niche Specialty Market Create sustainable and transferable firm value Client Delight – Make it quick, easy, effective Client Perspective Our Value Proposition Deal with the Crisis ASAP Value easily understood Quick and Easy to Implement Quick and Easy Intake Process Perspective How we deliver value Continuous Employee Training Continuous Process Improve Learning & Intangibles What knowledge do we need to operate our processes The Law Firm– Strategy Map AwarenessEducationAwarenessEducation

PerspectiveObjectiveMeasurementTargetsInitiative ReferenceFinancial Predictable positive cash flow Increased revenue Partners compensation Total firm annual revenue $XXX thousand annual compensation $X.X million total revenue Client Make it easy for clients Make it valuable Client closes per month Revenue per case Average X per month Average $X per case ScorecardScorecard

PerspectiveObjectiveMeasurementTargetsInitiative ReferenceProcess Educate and build awareness with aggregators Effective intake process Quick and Easy resolution “Productize” the process Number of referrals Days between intake and decision on qualification Days to resolve case Professional time per client 50-referrals per month 5-days Total elapsed time is 60 days Not to exceed 8 hours Learning Best known “Brand” SME Certification Hits to web site Public relations (i.e. published articles or whitepapers) legal staff certified 5,000 per month 4 published articles per year 100% of legal staff certified ScorecardScorecard

SummarySummary Accounting information plays a key role in strategic planning especially when it comes to measurements Measurement is critical to transforming strategy into actions Accounting information plays a key role in strategic planning especially when it comes to measurements Measurement is critical to transforming strategy into actions 23

24 Mark Nelson (215) Dan Gomez (610)