Blog submission: VSCPA Northern Virginia Chapter
Author: Ira Rosenbloom, Chief Operating Executive, Optimum Strategies
Date: October 19, 2020
Living an ROI Business Culture
Accounting firms continually make investments in talent and resources to be able to perpetuate and elevate success—and the COVID economy hasn’t changed that. However, now more than ever, CPA firms must be committed to establishing, nurturing and celebrating a culture based on return on investment (ROI). This includes not only the return you seek, but the timeframe, as well.
As you and your associates become ingrained in the ROI mindset, here are some important focus areas where ROI can loom large.
- Internal Transition. The next generation of leaders especially wants to know how their life will improve, how they will be more in control, and how they can be confident in their potential to realize increased income for every investment of money, time and aggravation. In other words, they want to know their own ROI.
- Technology. Advances are coming and the pace is accelerating. Setting the right timelines to recoup investments and the efforts required for the right return of time and money are essential.
- Staffing. Team members want to understand what they will learn, how firm earnings will progress, and how their careers will grow with every change. Management should set defined targets for achievements—both technical (expertise) and developmental (growth, professional maturity)—and measure the results to help determine ROI.
- Talent Development. What skills do you want your people to develop to maintain or expand the level of client service you wish to attain? How do you qualify the value of that development and what is the timeframe that will help achieve that value? Budgeting for the investment and measuring the results and progress are essential.
- New Services. Assess your current service model to ensure you are meeting the needs of your clients and filling those needs with your current team. Are there gaps and/or do you have a desire to expand services into new areas? Over what period of time would those new services become profitable? What kind of profit margin do you want? Take a look at services you can provide with internal team members and those to which you’ll need to turn to outside collaborators, contractors and partners.
- Marketing. Certain expenditures are more ROI-oriented than others. Spending a percentage of top line is a guide. All marketing and business development costs must be justified with timelines, targets and a means of determining ROI.
- External Transition. During an external succession, such as M&A, the successor needs to know how much revenue will be retained and how many new service dollars and economies of scale there will be to justify the costs of the practice, transition and integration, and conversion. The right successor will be making a business decision where the return will carry a lot of weight.
Like any investor, you need to set risk-reward criteria for all investments. Each CPA firm has a unique set of circumstances so the desired ROI will differ. But the sooner you use ROI to gauge investments made into your firm, the sooner you can enhance practice continuity and ensure success over the long term.