Six specific examples, plus benchmarking norms.
By Marc Rosenberg
How to Bring in New Partners
These four metrics are key to any analysis of CPA firm profitability.
- Fees per equity partner. The firm’s billings divided by the number of equity partners. This is one of the ways we measure leverage. The more billings each partner can manage, the higher the firm’s profit margin.
MORE: The Business Side of CPA Firms | Public Accounting as a Business, 101 | 16 Steps to Creating a Partnership Path | Six Ways New Partners Differ from Managers | The Four Essentials for Every New Partner
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On average, partners do 10-15 percent of all work performed for clients; the remaining 85-90 percent is performed by staff under the partners’ supervision. The higher the percentage of client work the partners perform, the harder it is for them to find the time to build their client base and help the firm achieve a high fees-per-partner ratio. To manage a large client base properly, partners need to delegate as much of the client work as possible to staff.
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