By Ron Baker: The reigning paradigm of how to manage a CPA firm hasn’t changed for more than a half-century: Revenue = People Power x Efficiency x Hourly Rate
Unfortunately, this model has several limitations. First, it overemphasizes every marginal dollar of revenue—and hence any client—as beneficial. But low-value clients consume a disproportionate share of a firm’s precious capacity, while keeping it from reserving capacity for its most valuable clients.
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Source: Journal of Accountancy, November 2008. Copyright © 2008 American Institute of Certified Public Accountants. All rights reserved.