What Makes a Firm Profitable?

Source: Solutions for CPA Firm Leaders

The following is a complete reprint, reproduced with permission, from an article by Rita Keller.

In a recent post by Gary Adamson of Adamson Advisory on his blog, The Managing Partner Advisor, he focuses on two measures where the most profitable firms really make their money.

The two areas are partner to staff leverage and overall net firm billing rate. The top 54 firms in last year's Rosenberg Survey had a leverage ratio of 7.7 to 1, compared to 4.9 to 1 for all firms in the survey.

Leverage is easy to understand – the fewer partners you have the more you will earn per partner.
When you think about overall net firm billing rate, you might automatically assume that the most profitable firms have the highest billing rates, which is not necessarily true.

Check out Adamson's post to learn more.

For the original post, read “Where Profitable Firms Really Make Money.”

From Solutions for CPA Firm Leaders, the blog of Rita Keller, president of Keller Advisors, LLC, [email protected], September 9, 2011. Visit http://ritakeller.com/blog.