At Your Service: An Interview With Plante & Moran’s Bruce Shapiro
Mar 09, 2007
It’s the fastest growing industry, thriving despite the economic downturn. Pundits claim that it will be responsible for hiring more Great Lakes professionals than any other industry over the next few years. We’re speaking, of course, of the service industry. Why are service organizations flourishing to such an extent? Bruce Shapiro, who leads Plante & Moran’s Service Industry Practice, recently shared his thoughts on these and other important questions.
People describe the service industry in different ways. How does Plante & Moran define it?
For Plante & Moran’s purposes, the service industry comprises five segments: retailers, technology companies, business to business, professional services, and insurance. There’s a tremendous variety of companies within those categories — everything from law firms to franchises to hospitality organizations.
Why is the service industry doing so well despite the challenges inherent in the economy?
The service industry has always been an area of growth, but given the economy, it’s something positive that people can and should point to. One of the key differentiators is the low cost of entry. A lot of our clients began their businesses with $5,000 at their kitchen tables and today are generating millions in revenue with locations around the globe. The technological developments have been crucial to these companies’ success as well. What might have cost a million dollars not so long ago may only be a $500 software package today.
Which speaks again to the low cost of entry.
Absolutely. In addition, service companies aren’t always subject to the same level of competition that plagues other industries. Take a business that provides a highly specialized consulting service; it may only have a handful of competitors around the world versus a plastics injection molder who might have 100 competitors in metro Detroit alone. Plus, service companies tend to be flexible. If an ad agency loses a customer, they have the world marketplace at their disposal to replace that revenue.
But even though these organizations are flourishing, that doesn’t mean they don’t have their share of challenges.
Sure, but they tend to be related to growth. We’ve assisted clients with leadership development and demonstrated how to develop compensation plans to incentivize top performers and retain key staff. We’ve taught clients how to use behavioral-based interviewing techniques to get the right people in the right positions. We’ve helped clients focus on continuous improvement and made sure they’re getting the appropriate feedback from staff and customers. We’ve helped them gain market share through acquisitions, and assisted with ownership transition planning and strategy. We’ve assisted with multistate taxation issues and finding financing. The list goes on and on.
You recently formed a team dedicated to serving the service industry. Why?
The firm is organized in such a way that we maximize our ability to bring the collective knowledge of the firm to our clients. We focus on seven key industries, and the service industry is obviously a significant one.
I don’t want to send the message that serving the service industry is a new development. The dedicated team is relatively new, but our staff has been assisting the service industry for decades. Because these companies tend to be so unique, they really don’t have significant peer groups — no associations where they can talk to organizations facing similar issues — so they tend to use their advisors in a broader way than most industries do. We’re happy to be there to assist them.