Why you can't predict growth by looking backwards

For any business owner, success is only possible if they know their business inside and out. Knowing what makes your practice tick, where the money comes from, how staff are performing, and how much you are getting out of every resource is all critical knowledge.


The answers to these questions have always been found through lag measures such as utilization and realization. But these common metrics came about in the age of desktop software, time-billing, and pen-pushing-only work—so the question must be asked: are they still relevant? Are these traditional KPIs still leading indicators of where your business is headed? Do they surface the critical issues that require your attention?

Calculating these have always given partners the in-depth knowledge they need to know how their business has been performing, along with enough detail to know any areas that need improving. But looking backward with these measures does not suffice anymore.

The world has moved to a subscription-based economy. The difference for many accountants switching to new pricing models is that this transition brings with it not only process change, but a whole new set of metrics for senior team members and staff alike.

Darren Glanville, Kandoo

Accounting has changed to a subscription-based service. You are witnessing first-hand how much the industry is evolving, with improved processes led by cloud software and a greater focus being placed on service delivery, output and client relationships. Traditional metrics are no longer sufficient for the modern accounting firm that implements value-based pricing, has a remote workforce, is doing away with timesheets, is collaborating with global or remote clients, or is conducting most of its work online. Today, you need to not only understand exactly where you are currently, but you also need to look forward and predict where you will be tomorrow.

If your practice has new skills or your team is virtual in any way, has reduced geographical dependence, or uses modern technology, you must measure your practice in ways that give you greater visibility and meaning than what traditional metrics, such as profitability and revenue, can provide. To survive the accounting revolution, you need new KPIs for success, output, performance and progress.

There is now one characteristic above all others that your firm must be striving for: scalability—the extent to which your firm can do more with less.