I am so excited about the content I just presented.
You see, last week I was in the USA facilitating my signature coaching program ‘Boardroom’. Boardroom is where I invite 8 perfectly matched firms at a time to work with me (and each other) to dramatically drive efficiency, revenue and profit.
As part of my preparation I thought long and hard which ‘Key Result Areas’ (KRAs) the firms should be monitoring. After spending hours thinking about the most important areas to monitor this is what I came up with.
There are just 5:
- Average Hourly Rate – for all hours worked i.e.: Revenue / (all FTE people X hours worked)
- Net new clients of the type you want
- Average fee per existing client
- Revenue billed
- Profit before partner salaries
Then I came up with 16 of the best strategies (for each one) I know to positively influence the KRAs. These are the drivers. So, 16 drivers for each KRA means there are 80 big strategies to implement over time.
The reason I chose these 5 KRAs is because everything else looks after itself if we focus on these 5 outcomes. You’ll notice cash balance, WIP or receivables are not on the list. The reason is that one of the drivers alone takes care of them.
Here’s why each one is so important:
- Average hourly rate – all hours worked. It’s a measure of AHR client hours, admin mix, efficiency, productivity / utilization, write ups, pricing & value belief.
- Net new clients of the type you want. It’s a measure of growth, vitality, marketing & sales activity.
- Average fee per existing client. It’s a measure of pricing, packaging, sales process, clients’ goals met, creativity, retention rate & client happiness.
- Revenue billed. It’s a measure of vitality, growth, billing function, marketing and sales process.
- Profit before partner salaries. It’s a measure of value, efficiency, processes, leverage, teamwork, discipline & management.
The benchmarks are as follows:
- Average hourly rate – all hours worked. Heading towards, then beyond $250 per hour. Most are ¼ to ⅓ of that number when they start working with me.
- Net new clients of the type you want. As many as possible BUT any new ones must only be ‘A’ Class clients – only your ideal clients (best buyer) going forward.
- Average fee per existing client. Moving towards, then beyond $40,000 per client per annum. That’s an average for all business client groups. If they are A class clients and you’re servicing them properly with everything they need that helps them achieve their goals, then you’ll get it. Oh, you need to price differently as well.
- Revenue billed. As much as possible with minimal headcount growth. If you follow a different model than you still need humans – but not as many. The last thing we want to do is grow the revenue and grow the overheads at the same time!
- Profit before partner salaries. Heading towards, then beyond 60% before partner salaries. However, not by having the partners charge more client time. In fact getting the partner chargeable time below 500 hours per year.
Now, do not worry if you are not even close to the numbers I am suggesting. It doesn’t matter where you are at today. What matters is you take appropriate action to get where you want to go and the right numbers steadily grow. Every large business was once small.
Some food for thought as you build your business by design…Your Perfect Firm.
When you’re ready… here are 2 ways I can help you grow your Accounting firm.
- Join my implementation program and become a case study. I am helping a select group of firms in North America, Europe and Australasia to grow revenue, capacity and profit. There is a selection process to get into each group. If you’d like to explore if this will work for you then send me an email with “Boardroom’ in the subject line.
- Work with me privately. If you’d like to work directly with me and help you to go beyond $1M profit per partner than send me an email (reply to this one) and put “PRIVATE” in the subject line. Tell me a bit about your firm (size, issues, opportunities), what you feel you need to work on, and I’ll get you all the details!