Posted on: September 10, 2014 Uncategorized

9.3 postThere’s an old saying that what is not measured cannot be managed. That’s why it’s so important for you to have a system in place that’s constantly measuring the crucial factors that make or break your practice.

Don’t forget that the Lifestyle Practice is a systemized practice that operates like a finely tuned machine.

You set high standards for the outcome of your systems and the logical next step is to have a process in place to measure your results.

In many accounting and tax practices, you’ll find the only performance measures in place track new clients, hours bills, and the difference between staff hours worked and hours billed.

Instead, I encourage you to develop Key Performance Indicators (or “KPIs”) that align with your strategic objective, operating principles, and working procedures.

As a CPA, I love to measure things. I could come up with literally hundreds of KPIs for my practice. But in order for KPIs to be an effective management tool, I want to be watching a small number of highly relevant KPIs. This will require some trial and error on your part.

I recommend starting with a minimum of one KPI for each of the following areas:

  • Marketing. For example, I track cost per lead, cost per sale, the number of leads received by my firm, and the lifetime value of each client.
  • Internal Quality. Here, you are measuring adherence – yourself included – to your guiding principles and operating procedures. I track my error rate and celebrate error-free periods.
  • Employee Happiness. How do I measure my employees’ happiness? I ask them! I will occasionally have them fill out a brief survey. I also solicit feedback at staff meetings and other, more informal employee gatherings.
  • Systems and Workflow. Here, you’re looking at your throughput for specific repeatable processes. For example, How long on average does it take to do a small business tax return, and is that number increasing or decreasing? It’s a balancing act to increase speed without compromising quality.
  • Customer Delight. The best way I’ve found to measure customer service is to routinely survey my clients.
  • Productivity and Profitability. Here, we’re looking at value created per dollar spent on labor, including your own. Profitability is the net profit of the firm. Divide your monthly labor cost by monthly revenues and track this measure over time.

What KPIs do you use to measure the important factors in your practice?  I'd love to get your comments.



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