In the second part of his article series, HPC Founder and CEO Bruce Phillips, CPA explores how to measure KPIs and truly set your firm up for success when it comes to investing in automation for your practice.
Once you define your firm’s key performance indicators and how you will measure them, you can begin to set targets. These include sales, number of new customers, the capacity of your firm, and the overall bottom line.
Devising a strategy for revenue is relatively simple. As opposed to charging hourly rates, HPC uses a flat-fee business model. This helps us in a couple of key ways:
Transparency. Flat rates are easy for our prospective customers to understand and give them a set of expectations. They know precisely what our deliverables are when we engage with them and a definite dollar amount attached to them. Having a mutual understanding of the services to be performed saves time and money by eliminating instances when a customer may dispute costs and delay payment.
Productivity. As mentioned above, HPC is unlike a traditional accounting firm that keeps meticulous notes on time spent on particular customers or projects. A flat-fee model incentivizes our team to be productive and have an efficient workflow, in turn giving us the opportunity to have a higher capacity of customers.
Capacity is more difficult to plan than revenue. Verticalizing our staff is a large part of how HPC automates its workflow. This method creates well-defined roles and delegates responsibilities to each team member for increased capacity.
It also enables for employees to be cross-trained and have a more comprehensive understanding of the overall work and processes HPC delivers. In turn, a new perspective can open up discussion on how to mitigate inefficiencies in how we complete work.
The segregation of HPC’s fixed costs is minimal. Here are three main areas:
SaaS costs. This includes tools like Xero and Karbon that are essential to our operation.
Cost of acquisition. HPC does not use a pay-per-click advertising approach. Instead, it combines an inbound marketing methodology while leveraging relationships with strategic partners around the world. Fewer marketing channels and spend make it easier to understand the cost of acquiring new customers.
Administrative staff as a percentage of production staff. The ratio of staff in these two functions is key when scaling a practice and examining operating costs as you continue to set new revenue targets.
ROI is evaluated for every internal decision. There needs to be consideration for each of the practice’s efforts, whether it be in marketing, the efforts of the sales staff, and the efforts of each production staff member that interacts with a customer.
Again, these efforts are not being measured by time, but by overall deliverables. What can we measure? We can examine how a team member automates processes to shorten the number of steps needed to deliver outputs.
We can examine whether or not a staff member can produce more than what is expected or projected from them. We can also measure whether they can provide more value with less effort.
A large metric for our success is the overall client experience, but we dig deeper into what aspects of the experience we can optimize. HPC uses the Net Promoter Score (NPS) as the methodology for measuring this type of success.