get your money’s worth from non-billable time

business development must be part of the firm dna.

by domenick j. esposito
8 steps to great

today, at many smaller firms, client service partners (defined as partners who devote 100 percent of their time on clients with no firm administration responsibilities), generate, on average, about 1,500 to 1,600 billable hours per annum.

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at most of the top 100 cpa firms, client service partners generate about 1,200 billable hours per annum. that should be the absolute minimum at the top 100 firms. without breaking much of a sweat, client service partner billable hours at the top 100 could and should easily reach 1,300 to 1,400 billable hours per annum.

regardless of the average number of client service partner billable hours at your firm, the question addressed here is – what are you getting for those 1,000+ non-billable hours? if you are not getting a respectable amount of new business originations, you probably aren’t getting your money’s worth.

every partner is unique and business development results will always vary because skill sets are different. some partners just don’t deliver much, if any, new business no matter how much training you expose them to. these partners are not good at new business, they don’t enjoy the experience, don’t know how to ask for a piece of business or simply don’t have enough gas in their tank to pursue it. some other partners deliver only an occasional piece of new business because they try and sometimes they succeed. and still other partners are good to very good at developing new business and see results of at least $150,000 to $200,000 each and every year.

“what you do with your billable time determines your current income, but what you do with your non-billable time determines your future.” – david maister

except for a handful of partners (usually the founders), client service partners at many smaller firms don’t deliver any new business for their firms. at most of the top 100 cpa firms, client service partners, on average, generate between $25,000 to $50,000 in new business annually. $25,000 to $50,000 truly is a very small amount of new business to deliver to a firm during the course of a year and is a pretty poor return on investment on 1,000+ non-billable hours.

client service partners with additional hustle, focus, accountability and firm emphasis could and should be generating, on average, about $75,000 to $100,000 of new business originations per annum. that’s two to three times more than you are probably realizing today! imagine the financial impact if you were able to improve your roi from those non-billable hours. it could be huge!

here are some thoughts that might move the needle at your firm:

new business origination is a state of mind. to begin with, a firm has to attract partners who have a blending of technical and business development skills and make it clear that a client service partner has the responsibility to both: (a) serve clients in a quality fashion and (b) develop new business. our observation is that many firms aren’t consistently delivering this basic message to their partners each and every year. worse yet, when these firms are developing new partners, they aren’t stipulating that new business development is part of the basic job requirement. as a result, business development is not part of a firm’s dna and the perception is that it is not important to their partner group. if it’s not important, a firm isn’t going to achieve acceptable results.
new business origination doesn’t result from turning a light switch on. like delivering high-quality client service, delivering quality, profitable new business has to be part of a partner’s everyday routine. when not thinking and acting on behalf of clients, effective partners are out in the marketplace nurturing personal and business relationships that bear fruit over a period of time.
a network of friends and contacts (lawyers, banker, consultants, etc.) is the major source of new business and these professionals are trying to do the same thing as your partner group – they are trying to originate new business on behalf of their companies and organizations. so, it is important to emphasize that cpa firms need to generate opportunities and reciprocate so that new business becomes a two-way street. anything less, and a referral source will be “one and done.”
eating lunch every day with the same partners is not going to generate a new client opportunity for the firm. sure, it’s ok to each lunch with partners from time to time but it should not be the daily routine. partners need to get some client, prospect and referral network lunches on the calendar each and every week. when possible playing golf or some other type of sports event is also a great way to generate new work. there is nothing more effective than deepening relationships on a personal basis and, whenever appropriate, get spouses involved – perhaps over dinner on a saturday evening. it’s magic!

if all else fails, try the “nuclear option,” which is to change your firm’s compensation system to one that has a heavy weighting on new business development bonuses. if a partner knows that a large portion (say 20 percent) of his/her compensation is based upon new business originations, you certainly will move the needle with those partners who can deliver more value from their non-billable time.

it is hard to understand why so many cpa firms put so little attention to the huge cost of non-billable time. conversely, a tremendous effort is dedicated to increasing billable time but year in and year out, average billable hours don’t deviate much from 1,100 to 1,200 a year. if we know that this is more than likely not going to change, perhaps it is time to shine the spotlight on the 1,100+ non-billable hours that, if used more effectively, could have a big impact on your firm’s future.

posted on may 14, 2017

dom esposito

about the author

domenick j. esposito was the ceo of grant thornton, vice-chair of bdo, and national growth director at cohnreznick.

he is the author of "8 steps to great: the eight essential strategies driving success at the world's largest cpa firms. and how to apply the lessons at firms of all sizes," published by 卡塔尔世界杯常规比赛时间.

a life in public accounting

in 2016, esposito, then a former ceo of bdo, moved from a 46-year career in public accounting into the next phase of his professional life – consulting to cpa firms, launching a boutique advisory firm, esposito ceo2ceo, that provides advice to ceos, managing partners and other senior partners of cpa firms focused on the mid-market throughout the u.s.

with the launch, esposito authored “8 steps to great," a guide for ceos, managing partners, and other senior partners on how to move their firm to the next level.

cohnreznick national growth director

esposito was one of the most qualified individuals in the country to advise cpa firms on growth and profitability. through 2015, he was national practice & growth director and an executive board member of cohnreznick, llp, a mid-market sustainable brand and the tenth-largest cpa firm in the united states. he oversaw cohnreznick’s go-to-market industry specialization and consulting and advisory service lines. he was also intimately involved in the firm’s mergers and acquisitions and strategic and tactical activities for its public company and capital markets initiatives. dom joined the predecessor firm of j.h. cohn in 2002 as the chief operating officer and executive board member.

dom was also an independent director of ethan allen interiors inc. for several years (through 2014), dom was a member of the nasdaq listing and qualifications committee to the organization’s board of directors. he formerly served as the leader of the new york state society of cpas committee for large and medium-sized firms practice management. he also was an adjunct accounting professor at c.w. post/long island university.

bdo and grant thornton

through october 2002, dom was vice chairman at bdo, a mid-market sustainable brand and the seventh-largest international accounting and consulting firm in the u.s., with almost 50 offices and 3,400 employees. during his brief time with bdo, he was responsible for the alliance distribution network (at the time consisting of over 80 cpa firms, 10 law firms, and 25 consulting firms). he was also responsible for attracting and servicing a number of clients.

from 1979 through 2001, dom was with grant thornton, another mid-market sustainable brand and the sixth-largest international accounting and consulting firm in the u.s., with over 50 offices and 4,500 employees. he joined grant as an audit manager, became a partner in 1981, led the long island office from 1984 to 1986, became assistant managing partner of the new york office in 1986, and from 1988 to 1999, led the new york office. in 1999, esposito became a regional managing partner and for two years, through 2001, was the firm’s chief executive officer.

cpa, partner, mba, leader, influencer, media celebrity

between 1996 and 1998, and while he was ceo, esposito was on the partner board and was also on the board of grant thornton international – the worldwide umbrella organization. in these capacities, he developed strong experience in strategic thinking and execution, international relationships, corporate governance, partnership matters, branding, expense control, client relationships, and new business development.

as ceo, he took grant thornton to record earnings, consummated the largest line-of-business sale in the firm’s history, developed a major joint venture with axa financial, and made the largest practice acquisition in the firm’s history. from 1969 to 1979, esposito was with price waterhouse (now pwc), servicing ibm when he was promoted to manager in 1976.

dom was a cpa, has been quoted in national and local media, and has appeared on radio and cable tv.

esposito also testified before the securities and exchange commission.

he received his m.b.a. from st. john’s university and his b.s. from ferris state university. accountingtoday, one of the leading trade journals for the accounting profession, named esposito one of the most influential people in the profession for two consecutive years.

he passed away in 2021 at the age of 74.

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