You may be too close to changes in the accounting profession to appreciate them. These changes include Sarbanes-Oxley, outsourcing, urgency of succession planning, staff shortages, paperless office initiatives, increased competition, and the Internet. How has your firm changed in response to its changing environment? Perhaps it has not.

August Aquila ([email protected]) says it is time for you to control your destiny.

Success, says Aquila, depends on how well you comprehend your client base, and on how you determine what your client base should be.

Most firms are involved in too many market segments. (Examples of market segments include real estate, auto dealers, physicians, banks, high-net-worth empty nesters, etc.) For every market segment you serve, ask the following:

• Are you really interested in this segment?
• Do you have the requisite skills to serve it?
• Is the segment large enough? Or do you need to expand your geographic coverage?
• Is it growing?
• Is it profitable?

Next, determine how profitable or unprofitable your clients are. Calculate the gross profit (collections minus cost of time, including partner time, to serve each important client). Gross profit should be about 66 percent.

Next, pick and choose from the client base. Use a four-quadrant chart with the following sections:

1. Profitable clients in your target market—These you should keep.
2. Nonprofitable clients in your target market—These need further consideration. Can they be made to be profitable?
3. Profitable clients not in your target market—Keep them if they don’t detract from serving target clients.
4. Nonprofitable clients not in your target market—Fire them immediately.

From Accounting Today, July 24, 2006, SourceMedia Inc., One State Street Plaza, 27th Floor, New York, NY 10004. For the complete article, click on the following link: http://www.webcpa.com/article.cfm?articleid=20905&;pg=acctoday.