Definition (Rob’s) ~ well-developed firm
“A firm that has implemented a whole host of strategies that make a positive difference to the firms’ performance”
How well developed is your firm? How well do you implement anything? With what you implement do the strategies produce a positive result to your financial performance? If you want to change the performance of your firm, then you need to change the actions and strategies – or implement the ones you know you should!
As we coach firms we have them focused on key strategies that make a difference to their performance in 90 days or less. If they are the right strategies then you’ll produce an exceptional profit, create excess capacity and have solid, predictable annual revenue growth.
The outputs of profit, capacity and growth need inputs. The inputs are the key strategies that need to be implemented. To quantify how well-developed your firm is I created a scorecard with key strategies. I selected 30 of the best ones we know of that produce awesome profit, excess capacity and exceptional growth. There are 11 strategies for profit, 8 for capacity and 11 for revenue growth.
If you’re looking for suggested and achievable benchmarks on Profit, Capacity and Growth then the following would apply:
|Profit||It’s very easy to prop up profits in an Accounting ‘Practice’ – just get the partners to do more chargeable work. They have the biggest charge rates and anything they do goes to the top and bottom line. If you’re wanting to run a peak performance Accounting ‘Business’, then you increase profits with less Partner chargeable time!
Partners should follow the 30:60:10 rule and only be doing 3 things:
There are 11 strategies in the score card to drive your profits through the roof.
|>50% before partner salaries with average Partner chargeable time <30%|
|Capacity||The old way of creating capacity is to hire more Accountants. Yes, you can certainly do that. However, the issue is a) finding & training Accountants and then b) the sheer cost of the exercise. What if you could do it by being more efficient? What if you could create capacity by ‘taking time out of client work’ by focussing on technology and process.
Most firms I have met have around 50% capacity but they don’t know it. When they really focus on re-engineering the way that they do client work and focus on reducing time 50% can be achieved.
That means doing double the revenue with the same headcount. Most of the new revenue is pure profit!
There are 8 strategies in the scorecard to drive capacity without hiring more expensive Accountants.
|Ability to do >35% new work each month|
|Growth||Most firms grow by being reactive. They put their charge rates up a little bit each year and get 5-7% new clients each year by referral. Yawn, yawn and bigger yawn! Or they go on the acquisition trail and buy firms and proclaim they have grown by 18% per annum for the past 5 years!
True growth is organic growth. Which means new clients, higher prices, new services and making sure that all clients are buying all services they need that helps them achieve their goals. Organic growth over 10% per annum means focussed marketing and sales activity.
For organic growth, you need to know who your ideal client is, how you find them, how they find you, what you’re selling them and how you price what they’re buying.
There are 11 strategies in the scorecard which drive organic growth.
|Growing revenue >25% per annum organically|
As you go through the scorecard and rate your firm remember these 4 rules of the scorecard.
- You are scoring for your firm – not you personally
- You need to be brutally honest – it is what it is
- Score based on the exact description
- You need to follow the scoring rating scale at the bottom
When you’re done add up your score out of 300. Thousands of firms have done this test and the range is from 34 – 244. Approximately 5% score over 200 on their first go. There is a direct correlation between a high score and high profitability, capacity and revenue growth.
This is a guide of what you have do based on your score:
|Score range||Comments and actions|
|30 – 100||You’re just getting started or you’ve implemented very little that makes a difference. It’s time to decide – do you really want to be in this business? If so, then get serious about your goals, re-think your business model, allocate some resources and get busy.|
|101 – 150||You’re approaching half way. You’ve seen some early wins. Now it’s time to nail the low scores. Set some realistic goals over the next 2 years and work through each strategy. Look at the ones that are below a 5 and get committed to sorting them out once and for all.|
|151 – 200||You’re just above half way. Congratulations on what you have implemented so far. Don’t get complacent. You’ve still got a long way to go to achieve your potential. Get discipline, focussed and increase your ‘working ON’ time by double and smash through 200 this year.|
|200 – 250||You’ve implemented a lot. Congratulations. Your core numbers should reflect your implementation. If you are motivated, then it’s time to turn on the burners. Invest heavily in marketing, product development and niche markets. Time to grow the revenue by double or triple in the next few years.|
|250+||You are in the elite of the elite implementers. You’ve implemented many projects over many years. Extremely well done. If you haven’t already done so create a corporate model so the business can work without you. Partner chargeable time should be approaching ‘0’ and now you can enjoy a passive income business. You’ve now got a serious asset that performs.|