Podcast Highlight: What Does It Mean to Build a Profitable Firm and What Are You Doing Wrong?

“Looking for profitability? First you need to define what it means for you and your partners, and then you need to get past some all-too-common misconceptions. No one knows better than accountants that profitability can be a slippery concept, but when it comes to their firms, you’d hope they’d be able to nail it down a little better. And yet many don’t”, says Dan Hood, editor-in-chief of Accounting Today, the leading information resource for public accountants.

Marc Rosenberg and Kristen Rampe sat down with Dan to talk all things profitability on the On the Air podcast.

“You’d think if there’d be any kind of a person or position in the country that could define profitability it would be a CPA, but such is not the case. There are three different definitions that we see firms use”, says Rosenberg.

1. What do the partners want to earn?
2. How hard are the partners willing to work?
3. How do your firms’ profits compare to other firms in benchmarking?

Our book, What Really Makes CPA Firms Profitable? Second Edition addresses ►the essence of CPA firm ►profitability ►benchmarking ►marketing and the bottom line ►strong management and leadership: the most reliable path to profitability ►25 best practices that move firms from good to great ►what does not seem to be important to firm profitability ►partner relations: happy partners are productive partners and ►40 great ways to improve CPA firm profitability.

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Defining profitability is a good start, but one that can be a challenge as it can be different for everyone. Other challenges include how do we actually become more profitable? And what common misconceptions hold us back from getting there?

One example Kristen Rampe notes is raising fees. “Some firms, even in today’s marketplace, are afraid to sufficiently raise their fees. Part of the equation of being a really profitable firm is having a strong fee structure”, says Rampe.

Beyond defining profitability for your firm, leadership, pricing, benchmarking and other practices are key in helping firms be as successful as possible.

Hear more from Marc and Kristen on how to actually increase profits and avoid common mistakes in the full interview here.