Running a business

Measure once, cut twice: How to measure your firm’s performance

As we prepare for the upcoming QuickBooks® Connect conference, I will write a series of blogs about firm management, precisely the critical performance indicators and measurements. Part two of this series can be found here, and part three here.

Whether you work in client accounting services, tax, or financial planning, any practice owner should think about, and constantly measure to understand, the performance—or lack thereof—within their organization.

So I will start with this question in this series: Would you drive a car if its dashboard lights didn’t work? I know what you’re thinking …. no! It’s dangerous to think what would happen if you drove a car and couldn’t tell how fast the vehicle was going, or if it was overheating, out of oil, out of gas, or the brakes didn’t work. It would be one dangerous ride, and you might say that you have a great chance of running your car into the wall or the ground.

If that’s dangerous, why would anyone run a practice without dashboard lights? There’s no way to measure how fast your company is going, no way to determine if your people are burnt out, if your clients are happy, or if the whole model is working.

I think we all can agree that a dashboard that measures performance and monitors your firm is necessary for survival. As we head to QuickBooks Connect, I ask you to think about what you are monitoring, and what actions occur in your firm that you should monitor, to ensure that your organization is operating on all cylinders.

When operating the firm, you should understand that there are more areas/phases of the organization than just profitability. It’s more than sales and growth, and believe it or not, it’s more than QuickBooks Online reviews. LOL. I say this because 11 years ago, I had the same limited perspective and lens that I see some using today—they are only using half of the dashboard when it comes to sales and growth.

Just like a car, I understand today that a firm has different phases, and when all are operating efficiently and effectively together, it can have compounding results for quality growth, quality earnings, and quality teams. When looking at your firm, you should outline the organization’s operations into small phases that are separate, but work with other systems of your organization to drive business.

I determined that the seven phases of a firm/practices operations are:

  1. Sales
  2. Client satisfaction
  3. Marketing
  4. Firm management
  5. Profitability
  6. Liquidity
  7. Growth

In my experience with working for small firms (1+) and global firms, I believe the seven phases are notable for all firm sizes. The difference in size from one firm to another is fundamentally based on how often the seven phases simultaneously operate at their optimum levels. As such, in the months leading up to QuickBooks Connect, we will briefly touch on these seven phases and how useful dashboards are to ensure that your firm operates efficiently and effectively. Stay tuned—and see you at QuickBooks Connect!

Editor’s note: If you’re registered for QuickBooks Connect, sign up for Jeff’s session.

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