More than ever, the common driving force for CPA firms throughout the country is figuring out the return on investment (ROI) for every change that happens. As you look at your firm and think about its perpetuity, the following areas require some additional attention as they relate to ROI.
Internal Transition. The next generation of leaders especially wants to know how their life will improve, how they will be more in control, and how they can be confident in their potential to realize increased income for every investment of money, time and aggravation—in other words, they want to know their ROI.
Technology. Advances are coming and the pace is accelerating. Setting the right timelines to recoup investment and the efforts required for the right return of time and money are essential.
Staffing. Team members want to understand what they will learn, how firm earnings will progress, and how their careers will grow with every change. Management should set defined targets for achievements—both technical (expertise) and developmental (growth, professional maturity)—and measure the results to help determine ROI.
Marketing. Certain expenditures are more ROI-oriented than others. Spending a percentage of top line is a guide. All marketing and business development costs must be justified with timelines, targets and a means of determining ROI.
External Transition. During an external succession, such as M&A, the successor needs to know how much revenue will be retained and how many new service dollars and economies of scale there will be to justify the cost of the practice, transition/integration, and conversion costs.
Like any investor, you need to set risk-reward criteria for all investments. Each firm has a unique set of circumstances so the desired ROI will differ, but the sooner you use ROI to gauge investments made into your firm, the sooner you enhance practice continuity.