TFYW#030 Planning to Fail

Apr 7, 2023

This week I am getting into something I struggled with – planning.

When I started my firm, I didn’t work toward any revenue or profit targets. I focused purely on cash flow to cover my costs.

This approach did two things for me and my firm:

1. Caused a lot of anxiety and worry

2. Left my day-to-day actions up to whatever I was feeling like. I mostly retreated into client work because I had no other actionable plans.

At one point, I stopped letting this approach run my firm. I became more focused.

Fast forward four years later.

I saw the impact of that focus when I put my firm up for sale.

During the sale process, my advisor prepared my firm profile to take to market.

He asked me to list:

  • My clients;
  • The services they received;
  • The revenue per engagement; and
  • The number of years I had worked with the client.

It gave me a cross-section of my firm that I had never seen before.

The clients who had been with me longer generated less revenue (and profit) with varied services.

My newer clients generated more revenue (and profit) with a narrowed service offering.

That hindsight view was informative, and I want to leverage it now for your advantage.

Where Do You Want to Go?

My tagline on LinkedIn is ‘helping accountants take home $250k per year’. I will use this as the destination or target for the remainder of this newsletter. You may have different goals, but the process is the same.

If you want $250K of personal income, use that figure and work backwards through profit margins to revenue gen.

The profit margins for different services vary, so I will compare three general firm service offerings.

Metrics to Track

There are a lot of metrics to track in your firm.

Here is a benchmarking report for accounting firms in North America (not my resource).

Most of them are lagging indicators, meaning they report on the results of actionsLeading indicators are metrics that track actions – things that you can change directly.

If you don’t remember anything else from this week’s newsletter, remember this:


You improve nothing by monitoring revenues, gross margins or profit margins. You have to monitor actions: leads acquired, sales calls, and throughput.

Let’s break down the metrics from the above three scenarios.

In each service scenario you could offer, every figure hinges on two key drivers: Revenue and Margin. Everything else is noise.

Factor One: Revenue

This factor depends primarily on client size.

Bookkeeping and Tax

You won’t reach bookkeeping fees of $750/month or tax prep fees of $6,500/yr if the client’s revenue is less than $300,000.

Accounting + Tax Prep costs for any business should be 3-5% of revenue.

At $300,000 in revenue, total accounting should be between $9,000 – $15,000. If bookkeeping totals $9,000 ($750 * 12 months), that leaves $6,000 for tax prep.

While there are exceptions to every rule, $300,000 is the minimum revenue your prospects should generate.


For advisory services of $2,500/month, the client’s revenue needs to be higher. Effectively, they are hiring a $30,000/yr consultant or fractional CFO, offering strategic or growth advisory.

As a minimum, clients should be generating $1M/year to benefit from and afford strategic advisory.

At $1M, prospects should have an accounting team with regular reporting. If the client doesn’t have an accounting team, your role will be less strategic and more compliance-based; think fractional controller. You may get the desired revenue with a smaller business as a factional controller, but you won’t get the margin—size matters.


Getting the right size of clients will depend entirely on your marketing and selling efforts.

You will want to track:

  • Prospects per month
  • Prospects’ business size (by revenue)
  • Conversion rate


1. Prospects per Month: How many prospects are you getting in front of per month?

  • Paid Ads
  • Social content
  • Newsletter blasts
  • Podcast Interviews
  • Partnership referrals
  • Speaking engagements


2. What does your content + messaging say? Are you speaking directly to problems + scenarios that those minimum revenue clients encounter?

3. Prospect vetting questionnaire. Are you vetting your prospects to disqualify smaller businesses?

Factor Two: Profit Margin

This factor depends on your offer and delivery efficiency.

Build your offers on profitable engagement economics. You might find a perfect-sized client, but you won’t hit your margins if your offer is wrong.

Remember, you cannot automate yourself out of a bad offer.

An offer consists of packaging your services that clearly define what you will do and at what price.

That sounds oversimplified, but firms routinely change their services based on client requests. You’ll botch any projected margin by quickly committing to a service without working out the economics first.

With a fixed offer, you want to automate as much as possible. With our service-based offers, automation is your key to reducing errors, removing data entry, and exceeding client expectations.

Once I committed to a client type AND specific offering, I saw my own margins climb significantly by focusing on efficient delivery.

If you haven’t figured out how to balance fixed pricing with a variable timesheet-driven cost structure, check out my fixed cost model Newsletter #019.


Profit margins are controlled proactively and depend on boundaries.

You will want to track:

  • Margins on engagements- Track this before the engagement is signed (leading indicator). Retroactive review of timesheets (lagging indicator) leads to fluctuating margins.
  • Time from engagement start date to delivery date (Not hours spent, but time between the start and end dates).
  • Profit Margin by employee headcount.


1. Develop an offer with clear, repeatable service deliverables and perimeters. Your investment in automation will not be worth it if you only use a process for one client per month.

2. Break down your key workflows into tasks and start to automate them one by one. (1) Improve onboarding with web forms and portals. (2) Improve fulfilment with automated follow-ups with clients. (3) Improve engagement wrap-up with automated payments

3. Identify who will complete each task in the delivery so there is no mismatches between the skill level of the task and the skill level of the team members.

You’ll want to frequently review the actions that drive the metrics that create your high-level results.

Managing the internal actions and results is key to sustainable long-term growth as your firm evolves.

Simply focusing on client work will not get you there.

Build The Firm You Want.


P.S. Email with something that you want me to talk about. I’ll add it to the list. 

  1. Get tips and learn more about me on LinkedIn.
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