Benchmarking is useful to all forms of organizations because it’s a great way (though not the only way) to measure progress and success. By comparing your firm’s metrics to other comparable firms, it helps identify areas that are going well and areas needing improvement. Without benchmarking, firms will inevitably lead a provincial existence, blissfully unaware of what reality is.
It’s critically important to use a relevant, accurate and credible survey. Some tips:
1. At least several hundred firms should participate in the survey to make the results statistically sound.
2. Your firm’s metrics should be compared to firms (a) of your approximate size range
and (b) located in markets with a similar population as yours.
3. Make sure you compare your firm to those a level up from yours. Hopefully, this will inspire your firm to stretch your targets.
4. The survey you select should be compiled by CPAs experienced in practice management.
Important areas to benchmark:
- Income per equity partner
- Fees per equity partner
- Fees per person
- Ratio of client service staff to equity partner
- Average annual billable hours of client service staff
- Billing rates
Do you want your firm to be a nice, average firm? If your firm is way below the average, then the average may very well be a good target to shoot for. But if you’re close to average, you should strive to be above average. Don’t be content hitting averages.
To purchase a copy of the 13th annual Rosenberg Practice Management Survey, click here.