What kind of firm you are running.
WHAT FORMS EXIST
Legal practice Accounting and audit Consulting and advisory Engineering and architecture Surveying and valuation Marketing and creative agencies Technology and development consultancies
WHAT THEY SHARE
Revenue derived from people's time and judgement Capacity limited by qualified people Reputation as the main asset Professional obligations to clients Liability for advice given
WHY REVENUE FROM TIME MATTERS
It caps growth at the number of hours qualified people can work.
WHAT THAT MEANS
Growth requires more people, better rates, or work that is not sold by the hour.
WHAT DETERMINES PROFITABILITY
- Utilisation: chargeable time as a proportion of available time
- Realisation: what is actually billed against what was worked
- Collection: what is actually paid
Rate Cost of delivery
WHY THOSE FOUR
The gap between hours worked and cash received is where practices lose money without noticing.
WHAT MOST FIRMS DO NOT MEASURE
Realisation and write-offs.
WHAT TO ESTABLISH FIRST
Actual time spent per engagement, against what was billed.
WHAT PROFESSIONAL REGULATION ADDS
Licensing, conduct rules, continuing education and sometimes mandatory insurance.
WHAT TO TREAT THIS CATEGORY AS
Practice management guidance, with professional conduct requirements taken from your own regulator.
