{"id":82568,"date":"2021-03-27t14:20:58","date_gmt":"2021-03-27t18:20:58","guid":{"rendered":"https:\/\/48e130086c.nxcli.net\/?p=82568"},"modified":"2021-05-18t10:32:22","modified_gmt":"2021-05-18t14:32:22","slug":"how-a-great-managing-partner-impacts-firm-growth","status":"publish","type":"post","link":"\/\/www.g005e.com\/2021\/03\/27\/how-a-great-managing-partner-impacts-firm-growth\/","title":{"rendered":"how a great managing partner impacts firm growth"},"content":{"rendered":"

\"\"<\/a>eight ways that firms benefit.<\/strong><\/p>\n

by marc rosenberg<\/i>
\nthe rosenberg practice management library<\/i><\/a><\/p>\n

there are two cases for heavy managing partner oversight in practice development.<\/p>\n

first case.<\/strong> cpa firms are very top-line-oriented businesses. expenses are largely fixed because most are for personnel compensation and benefits, so opportunities for increasing profits from cost-cutting are greatly limited. as a result, increases to the revenue or top line often fall directly to the bottom line. it\u2019s easy to see why, far and away, increasing revenue is the most effective way to increase profitability. because the managing partner is (or should be) responsible for the firm\u2019s profits, it makes total sense for the managing partner to play a major role in the firm\u2019s growth.<\/p>\n

more: <\/b><\/strong>10 ways to hold partners accountable<\/a> | five ways to evaluate partners<\/a> | manage partners with goal setting<\/a> | overarching authority that managing partners must have<\/a> | herding cats: advice for managing partners<\/a>
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second case.<\/strong> if a firm\u2019s staff is its most important asset (or at least tied with clients), then revenue growth is the firm\u2019s life-giving force. without revenue increases, firms become stagnant and die a slow death. therefore, revenue growth requires heavy involvement by the managing partner.
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\nsome managing partners are rainmakers. some are ok at bringing in business. some aren\u2019t skilled in practice development at all. it makes no matter because, as we’ve said repeatedly, the managing partner’s #1 job is the overall management of the firm.<\/p>\n

if a firm is blessed with a managing partner who is a rainmaker, it is fortunate. these rainmakers should not be unilaterally taken away from business development, but it may be a bigger part of the managing partner job than for those who are less skilled in business development. regardless of the individual business development skills of managing partners, their job is to make sure the firm<\/strong> is growing revenue.<\/p>\n

how cpa firms benefit from revenue growth<\/h3>\n

the obvious: growth increases profitability.<\/strong> revenue growth often drops directly to the bottom line because to a great extent, firms don\u2019t incur increased expenses every time revenue grows.<\/p>\n

growth energizes the firm.<\/strong> new clients provide exciting opportunities for the staff and enrich their jobs. some of these opportunities lead to promotions, always a good thing. all of this boosts morale because everyone (even the partners!) likes being part of a healthy, growing organization.<\/p>\n

it primes the pump.<\/strong> for decades, various pundits on growth have used a water pump as a metaphor when talking about bringing in business. before a pump will produce water, it must be primed. once the pump is primed, water flows freely, without much additional effort. firms that grow continuously find that regular future growth becomes easier.<\/p>\n

it replenishes lost revenue.<\/strong> ask the audience at a conference if their firms ever lose clients. very few will raise their hands because no one likes to admit it, but clients leave firms all the time. revenues also decline from year to year as clients merge out of existence or close down and one-shot projects such as estate plans, irs audits and mergers occur. a reliable estimate is that firms lose 5-10 percent of their revenues each year because of these causes. so if the firm\u2019s revenues are budgeted for a 7 percent increase, they really need an increase in new<\/strong> business of 12-17 percent to offset the 5-10 percent client loss. just to keep revenues even, the firm must bring in 5-10 percent new business.<\/p>\n

it avoids stagnation. <\/strong>the reverse of priming the pump is stagnating. when a firm experiences periods of flat growth or even revenue declines, it\u2019s very difficult to rev up that motor. just as revenue growth triggers many intangible benefits such as more challenges, opportunities and job enrichment, the opposite occurs at stagnating firms. who wants to work for a firm that is mired in mediocrity?<\/p>\n

it clarifies the firm\u2019s mission.<\/strong> bringing in business is the most critical duty of partners that is the most difficult. as legions of partners know, new clients aren\u2019t dangling from trees ready to be plucked by whoever comes along. business development needs to be a high strategic priority of the firm.<\/p>\n

it builds a critical mass.<\/strong> as growth and profits continue to rise, the firm builds a critical mass that enables greater sophistication in areas such as specializing, attracting larger clients, providing an edge in recruiting and launching more advanced firmwide marketing initiatives such as branding, promotion and hiring marketing professionals.<\/p>\n

growth helps you avoid merging out of existence. <\/strong>the cpa firm industry has been in a merger frenzy since 2005 or so. baby boomers retiring in droves, a woefully short supply of qualified staff and ineffective succession planning are the catalysts sparking hyperactive merger activity. there are no signs of this abating. firms that grow continuously will be much better positioned to resist having to merge out of existence to provide an exit strategy for the partners.<\/p>\n

how managing partners help the firm grow<\/h3>\n
    \n
  1. make sure the firm\u2019s personnel, especially the partners, are active in business development. the more at-bats, the more hits.<\/li>\n<\/ol>\n

    here are some tips from randy nail, managing partner of $50 million hogan taylor:<\/p>\n