Examining the right metrics will help you grow your business
When you’re working on building your perfect accountancy practice, it’s important to measure your progress. After all, how else will you know how far you’ve come?
Regularly keeping track also means you can make adjustments if some aspects aren’t going as well as others. Understanding what’s working and what isn’t will help you make the right decisions about which actions to take as you move forwards.
This very much depends on what you’re trying to achieve. As an accountant, you're great at measuring numbers, but don’t fall into the trap of measuring something just because it’s easy. Many of the accountants I speak to don't realise that there's more to it. What's important is not just measuring the numbers right; it's measuring the right numbers.
Turnover, gross-recurring fee income, profits and average fee per client are common metrics, but do these motivate and inspire you? Some of them don’t necessarily reflect success and some of them are simply the consequence of doing the right things. What’s the right thing for you?
Measuring things that aren’t important to you personally can leave you feeling unmotivated to change, particularly if the numbers aren’t really dire. But when your metrics are things that really matter to you, things that you’re emotionally connected to, you’ll be absolutely driven to improve those numbers.
Think about what really moves you, either positively or negatively. What do you want more of and what do you want less of? How can you replicate the things you want more of so they happen more frequently or on a bigger scale? And how can you reverse the things you want less of? These are your measures of success.
If one of your goals is to reduce your working hours so you can spend more time with your family, it’s pretty simple to measure. You just tot up your hours at the end of the week. (By the way, it’s also good to track trends with a metric like this so you can spot if your hours are starting to creep upwards again.)
Some goals may be harder to break down into measurable units and it can take some analysis to work out a meaningful metric. For example, when I spoke to a partner in a two-partner firm, he told me his passion was to make a profound difference to the lives of his team in their future careers and to the quality of life of his business owner clients. For him, his measure of success was the number of people who wanted to be part of his team and the number of prospective clients who approached him on the strength of his reputation.
If one of your goals is to get more enjoyment and fulfilment from your practice, you could perhaps rate your sense of satisfaction each week on a scale of 1-10, but this is subject to how you feel at that particular moment. An alternative would be to analyse what tasks and roles you enjoy and find fulfilment in, and then measure how much time you spend on these each week.
You’re measuring the wrong things if you aren’t driven to take action. Find what really matters to you, what tugs on your heartstrings and inspires you, and just watch how your progress accelerates.
There’s more about measuring your progress in my book, Putting Excellence Into Practice – download your free copy.
Shane Lukas is managing director of AVN, an organisation that helps accountants build a more effective practice.