Monday, June 24th, 2013

The Basic MAP Stuff – On My Mind

This is one of my “On My Mind” type posts. I don’t do them often but I just want to ramble so that you can contemplate.

CPAs in public accounting love MAP (managing an accounting practice) statistics. They can’t wait until the newest survey comes out to find out if they are average – what a thrill (yes, like Sheldon Cooper, I’m not very good with sarcasm).

If you are a professional managing an accounting firm, don’t settle for being average.

The one statistic that I see so much of that is out-of-line is net revenue vs. number of partners.

I talk to so many firms, in person and via phone who tell me something like this….. “Our revenue is roughly $6,000,000. We have 12 partners.”

Firms keep adding partners when they are not adding revenue. If you are over a $2M firm, your net fees per partner should be over $1M per partner (per the Rosenberg Survey). The largest non-big four firms are nearing $2M per partner.

If you are considering adding new partners this year, I hope one of the requirements is that the firm revenue has grown to support them.

  • If you are a $6M firm with 6 partners, don’t add more. 
  • If you are considering adding a partner who has not proven they can generate business, think again.

I’m not saying that each partner has to manage $1M. Some of your partners can manage $1.5 and another can be responsible for $500,000, that’s okay. You do need a mixture of skills.

FYI – The newest Rosenberg Survey will be released in September.

  • "40% of CPA firm partners should not be partners."
  • Marc Rosenberg

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