"We Sell Time" -- A Flawed Business Model

Source: Accounting Today

Ron Baker, founder of the Verasage Institute, suggests that the traditional business model embraced by professional firms is flawed. He describes the model using an equation: Revenue = people power x efficiency x hourly rate.

There are several problems with this approach, Baker explains, including:

• It adds capacity after revenue, which is the reverse of most industries, which add capacity before revenue.
• It overemphasizes efficiency, at the expense of innovation, customer service, investment in human capital, effectiveness, etc.
• It focuses on growth for the sake of growth – on getting more business rather than better business.

In Baker's next article, he will offer a better approach.

For the complete article, read “Avoid being a firm of the past.”

From Accounting Today, June 1, 2011, SourceMedia Inc., One State Street Plaza, 27th Floor, New York, NY 10004, 800-221-1809.