Enhancing Profitability: Eight Factors to Consider

Source: Partner Insights

The following includes excerpts, reproduced with permission, from an article by August Aquila.

In today's competitive market, a firm's number one concern is maintaining and improving profitability. Most firms have already reduced overhead, but cutting expenses is never a long-term solution. Rather, firms need to focus on factors that have an impact on their profits:

1. Who's in charge? Often, managing partners or executive committees don't spend sufficient time overseeing the successful operation of the firm.
2. Isn't all work profitable? Pressures on firms to grow have encouraged partners to focus on revenue and not profits.
3. Who needs a marketing plan? All firms need a marketing plan, even the sole practitioner.
4. Are budgets really necessary? I fail to understand how an accounting practice, or for that matter any business, can operate without a budget.
5. Don't our partners know what to do? Unfortunately, if you just prepare a budget for the coming year, your partners really don't know how to maximize their efforts.
6. Aren't all partners equal? As much as some partners would like to believe, all partners do not contribute the same tangible and intangible values to the firm.
7. Do we really need a billing and collection process? Yes. The longer time stays in WIP the less likely it's collected. 
8. Are my billing rates too high? Unless 60 percent of your clients are complaining about your billing rates, they probably aren't too high.

Give your firm a financial tune-up now. Review your billing rates, your billing and collection policies, the type of work partners are doing, how you reward performers, and your leadership. Take the time to focus on what drives the bottom line. It's time well spent.

For the complete article, read “Are Your Profits Slipping Away?”

From Partner Insights, Aquila Global Advisors, LLC, August 2014, www.aquilaadvisors.com.