To Improve Profitability, Go Back to Basics

Source: Partner Insights

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

I see too many firms chasing the next great opportunity. There is nothing really wrong with that if you are also paying attention to the basics of running the practice. See how well you are doing in the following 10 areas.

1. Align the firm's objectives with those of the client. No matter what your partners may say, the firm's mission is to serve clients.
2. Eliminate firm and individual incentives to simply bill more time. Focus on profitability as opposed to revenue and realization rates.
3. Know your cost of service and eliminate backroom inefficiencies. Don't ask the client to pay for the same work product twice; leverage your firm's collective knowledge to enhance the value/cost equation.
4. Find ways to communicate efficiently. Use email and electronic newsletters.
5. Reduce your costs of providing services. Implement a pay-for-performance compensation system and offer higher bonuses rather than annually increasing the base.
6. Develop new staff quicker. The more you invest in staff training, the more profits employees will generate.
7. Focus on your core clients. Identify the profitable core clients of the firm and dedicate as much resources as possible to serving them.
8. Implement internal engagement controls. Make sure there is one way to do things in the firm and look for “best practices.”
9. Use engagement letters. Clients do not like surprises when it comes to their bills. Rather than using a range, simply tell the client that it will be “X dollars.”
10. Take advantage of new technology. Invest in technology that will help you do more with less.

For the complete article, read “Ten ways to increase profitability.”

From Partner Insights, Aquila Global Advisors, LLC, August 16, 2011, www.aquilaadvisors.com.