Increase Your Firm's Profitability
Source: CPA Trendlines
The following includes excerpts, reproduced with permission, of a blog entry by August Aquila.
No profits, no mission, as one of my partners is fond of saying.
While leadership, balanced life, outstanding client service, and efficient processes are critical for success, they mean nothing if the firm is not sufficiently profitable. I want to focus on 10 ways to make your practice more profitable. [Editor's note: five are presented here.]
- Enhance revenue. Rates should be adjusted for inflation at least yearly and whenever someone is promoted. Another way to increase revenue is to provide more valuable work to clients. This requires that you and your people develop new skills and perhaps move into new or different niches. Finally, start doing more true value billing – i.e., throw away your timesheets and bill on what the value is to the client.
- Control engagement cost. An important element in your profitability is engagement management – having the right people on the job, giving everyone budgets, having efficient systems to move the work through and monitoring the entire process.
- Deal with unprofitable clients and services. You must know which clients and services are profitable. Take each one of your clients and determine the gross profit margin.
- Address under-performing partners and staff. Under-performers take time and energy away from more important activities in the firm. It's critical to have a proper performance management and evaluation program in place.
- Examine your marketing efforts and marketing ROI. Is your marketing targeting the right clients? Too many firms think that anyone who breathes is a potential client. No matter what size firm you have, it's important to know what your ideal client or clients look like.
For the complete article, read “The 10 Basic Ways to Boost Profits at an Accounting Firm.”
From CPA Trendlines, http://cpatrendlines.com, July 26, 2011.