Remember the parable of the boiling frog? Drop a frog in boiling water and it jumps out immediately. But place it in cold water and slowly turn up the heat, and the frog won't perceive the danger until it's too late.
If you're an accountant, you're the frog. And the water has been heating up for years.
The Lathams Wake-Up Call
In 1993, Lathams Chartered Accountants was a profitable but ordinary accounting practice in Northern England. The partners were working harder every year, adding more complexity to their services, yet feeling increasingly trapped.
They had all the classic symptoms of what we call "tax season misery":
- Partners pushed beyond exhaustion every April
- Compensation that didn't match the effort
- Clients who saw them as a necessary evil rather than a valued advisor
- A nagging feeling that something had to change—but no clarity on what
Then they did something radical. They scored themselves honestly on what they called the "3 Ingredients of Business Success." The results were sobering. Their story is detailed in The Art of Proactivity, but we’ll dive deeper into it below.
The 28% Problem
Lathams created a simple formula based on three elements, each scored from 1-10:
Vision (clarity about where you're going) × Plan (detailed roadmap to get there) × Desire (drive to execute) = Potential for Success
The maximum score: 10 × 10 × 10 = 1,000 points
Their honest assessment:
- Vision: 7/10 (they had some decent clarity)
- Plan: 4/10 (essentially winging it)
- Desire: 10/10 (plenty of ambition and drive)
Their score: 280/1000 = 28% chance of maximizing business potential
To put that in perspective, you have a 50% chance of getting heads when you flip a coin. They were literally worse off than a coin flip—and they weren't even trying to maximize potential, just continue running an "okay" business.
Would you bet your firm's future on a coin flip?
The Eight Brutal Truths They Faced
The Lathams partners admitted some uncomfortable realities:
- Over-reliant on individual partners - If one person left, major revenue walked out the door
- No clear target client definition - They'd work with anyone who knocked on the door
- Inconsistent sales message - Each partner pitched differently, hoping "mud would stick"
- Charging by the hour - Penalizing efficiency and rewarding slowness
- Poorly defined scope - Never sure when to stop working on a project
- Terrible scheduling - Clients waited too long; cash flow suffered
- Poor collections - Constantly debating hours charged after the fact
- Lacking direction - Running like professionals, not like a business
The critical realization? Their accounting firm was no different from any other business. They needed to stop acting like "professionals" and start acting like business owners.
The Accounting Firm Business Roadmap
Lathams mapped out what they called the "Standard Business Roadmap"—growth phases that all businesses move through:
Start-Up Zone → Entrepreneurial Zone → In-Between Zone → Properly Managed Zone
Their epiphany: They'd been operating brilliantly in the Entrepreneurial Zone. They were master "plate spinners"—passionate, zealous, enthusiastic, able to knock down brick walls and make things happen.
But here's the problem with being a great plate spinner: it's finite. Eventually, you spin one new plate and another comes crashing down. You hit a ceiling.
They'd moved into the dreaded "In-Between Zone" without realizing it. That's where entrepreneurial skills stop working, but you don't yet have the processes and systems of a properly managed business. It's business purgatory—and it's exactly where most accounting firms are stuck today.
"What got us here won't get us there." The partners realized they were stuck in Einstein's definition of insanity: doing the same thing over and over and expecting different results.
Their passion, zeal, and plate-spinning skills represented only about one-third of what they needed to escape the In-Between Zone. They called that third "desire."
The other two-thirds? Vision (crystal clear) and Plan (detailed and robust).
Here's where most accounting firms fail: They think they can solve a structural problem with more effort. Work harder. Work longer. Hire more people. Push through tax season one more time.
But you can't plate-spin your way out of the In-Between Zone. You need different skills entirely.
The Target Client Revelation
One of Lathams' breakthrough moments came when they realized their biggest problem wasn't winning new clients—it was winning the wrong clients.
They created a new filter for every potential client: Score their desire from 1-10.
If a business owner scored their desire to grow or change as anything less than 9/10, Lathams wouldn't take them on. They'd literally say: "Come back when you're ready to really work hard and show the desire to grow your business."
This was revolutionary. Most accounting firms are scared to turn away revenue. Lathams realized that taking on low-desire clients was destroying their business.
Why? Because Lathams could inject Vision. They could inject Plan. But they couldn't inject Desire—that had to come from the client.
Working with clients who lacked desire meant:
- Constant pushing to get information
- Plans that never got implemented
- Advice that got ignored
- Frustration on both sides
- Low profitability
They wanted winners, not losers. And once they started being selective, everything changed.
The "Elephant Sandwich" Philosophy
The partners knew the transformation wouldn't happen overnight. They called big business problems "elephant tasks"—far too large to consume in one sitting.
The solution? Elephant sandwiches. One bite at a time.
"Think about eating a large turkey at Thanksgiving. You wouldn't consume it in one sitting. Over a few days, you make turkey sandwiches and turkey stew until it's gone. Business problems are even bigger—they're the size of an elephant. The only way to tackle them is slowly and methodically, slicing them into sandwiches and consuming them over weeks, months, and years."
This wasn't about quick fixes or silver bullets. This was about systematic, consistent change over time.
It took them eight years of what one partner called "blood, toil, tears, and sweat."
But it worked.
The $45 Million Payoff
In 2001, Lathams sold their business to a public company for approximately $45 million.
Let that sink in. A traditional accounting practice—an industry where firms typically have almost zero capital value—sold for $45 million.
How? They'd transformed from a backward-looking compliance firm into a forward-looking, proactive advisory business. They'd moved from the In-Between Zone to the Properly Managed Zone. They'd built:
- Repeatable systems and processes (not reliant on individual partners)
- Clear target clients (successful business owners with high desire)
- A compelling value proposition (helping clients maximize business potential)
- Two distinct businesses under one roof (compliance factory + planning boutique)
- Specialist transaction departments (M&A, corporate recovery)
- A team-based approach (where the team was the hero, not individual partners)
They didn't just build an income stream. They built capital value.
The Water Is Boiling Now
Here's the uncomfortable truth: when Lathams started their transformation in 1993, most accountants saw their problems as Latent (hidden, emerging) and their need to change as Aspirational (nice to have).
Today? Every accountant knows the problems are Blatant (obvious) and Critical (urgent).
The water isn't warming anymore. It's at a rolling boil.
The difference between 1993 and now:
- Then: Change was optional, competitive advantage
- Now: Change is mandatory, survival requirement
The good news? The transformation that took Lathams eight years of intense effort can now happen much faster, thanks to technology, proven frameworks, and existing resources that didn't exist in 1993.
Three Questions to Ask Yourself
Take Lathams' approach and honestly assess your firm:
- Vision (1-10): How clear are you about where your firm is going in the next 3-5 years?
- Plan (1-10): How detailed and robust is your roadmap for getting there?
- Desire (1-10): How strong is your commitment to making fundamental changes?
Multiply those three numbers together. What's your score out of 1,000?
If you're under 500, you're worse off than a coin flip. If you're under 700, you're leaving massive potential on the table.
Maximizing business potential is a choice. You can continue spinning plates, working harder every tax season, watching your perceived value decline as technology commoditizes your services. Or, you can acknowledge that what got you here won't get you there. You can score yourself honestly. You can eat the elephant one sandwich at a time.
The water is boiling. The question is: are you going to jump, or are you going to keep telling yourself it's not that hot yet?
If you’re ready to take the next step, read this.
