The hallmark of any successful CPA firm is this: Smart people doing smart things and creating value. Whether you just want to make your practice more effective, or you are thinking about selling or combining, creating value is key. Here are five operational imperatives that will help your firm drive value in the right direction.
Disciplined Client Accountability. Service clients who meet defined profiles, and have them accept responsibility for performance — just like your firm is expected to. Information which is provided late or in poor condition must affect the financial terms or delivery conditions of a job. Define client responsibilities including payment timing, and define the consequences for non-compliance, such as suspending service, raising the fee, deferring work, or even terminating the relationship.
Engagement Controls. Budgeting projects and engagements over a certain hour and fee level and flagging the progress and variances can have a great impact on firm value. Programming your service platform so that you are hitting a target hourly rate and average fee for service level will prioritize your attention and set you up to employ minimum fees. The more you create value for your clients, the more value you create for your firm.
Personal Production Benchmarks. Condition staff members (including partners and owners) to track income and production based on a multiple of their compensation, rather than hourly. Define expected administrative productivity requirements throughout your firm, and be sure that you experience proper ROI for administrative attention.
Intelligence Processing. Routinely gather feedback and perspectives from clients, former clients, staff, former staff, and other centers of influence. Look to outside educators and analysts and process their research. What can you do better? Understand the competition. For example, what are other firms trying to accomplish? What services are they providing? Ask if your firm should explore these other services or shouldn’t, which is an equally valuable insight.
Owner and Staff Goals. Drive your team to be focused on the why and how of the profession – why are we doing X, and how can we do it better? Build goals around these two questions at every level in your business.
The more valuable your firm, the stronger your retention, the greater your recruiting advantages, and, yes, the better deal you will strike if you are looking internally toward succession or externally toward a practice combination.