10 Essential Components of Your 2023 Business Plan – Part 3

Welcome to this second November news update. Here I continue with the series of articles looking at the 10 essential components of your 2023 Business Plan. 

In my first article we looked at the first two:

  1. The importance of having a written and agreed Business Plan on which you can deliver and resonates around the firm so that your team members fully understand the team plan, objectives, expected results and the milestones along the journey of the year ahead.
  2. The importance of your Talent Management and Recruitment Plan – Strategies That Deliver the Team Members You Require.

For a refresh – please visit this post

In my second article we looked at Clients and Client Service; Expertise Development; Technology and your Website.

To review this article please read here

We continue now with our 7th key future planning action…

7. KPIs

What are your Key Performance Indicators? The numbers that enable you to focus as you endeavour to create momentum and drive the firm forward. 

I discuss here my approach to determining the KPIs that were important to me and that enabled me and my fellow partners to motivate our team to achieve the heights of ever greater success. 

I first started monitoring my business performance using KPIs after I had been in business for about a year. So, for 40+ years I have employed KPIs as a way of directing myself in the direction that I considered important.


Never have any number as a KPI that you can find in the P&L Account or Balance Sheet.


I have never monitored any number as a KPI that appears in the profit and loss account or balance sheet. You might find that surprising and wonder why? The simple answer is that I find these numbers somewhat routine and boring. We serve clients by preparing or approving financial statements; it’s our bread and butter. But the reason I have never used these numbers is that I prefer to focus on the drivers of those numbers. How do we drive those numbers either north or south – dependent, of course, on the way they need to respond to our performance? 

Key Questions: 

  1. Do you have written and actively monitored KPIs? 
  2. Do they serve as drivers and motivators to enhance performance and results? 
  3. Are you achieving them? 
  4. Do you have personal KPIs as well as firm KPIs? 
  5. Do your KPIs need a refresh? 


While I was working with Dr Gerry Faust, an eminent Management Consultant based in San Diego he said this to me one day, “The only purpose of financial statements is to enable you to value the business today based on its historical performance.” I was somewhat taken back by this pronouncement given that my life to that point in time had revolved around preparing and auditing financial statements. Only recently a highly successful corporate finance Managing Director advanced the exact same proposition. Not so sure I have ever 100% agreed with that statement but it long time ago motivated me to find other numbers to manage other than those we find in our financial statements.

Key Point: One further lesson I gained from Dr Faust was this, “You can manage any business by managing 5 numbers – the trick is to find the right numbers to manage.”


Many years ago, when I started my own accountancy business, I formulated a series of just 5 KPIs. Even to this day I still believe they are compelling and essential numbers. Whenever I describe them in my lectures, I see attendees furiously writing away. So here are my five that I feel stand the test of time.

3.1 Chargeable hours

My target was always to require myself and my partners to account for 100 Charge Hours a month. I have previously written extensively on this subject. The purpose of a business is to meet the needs of its clients. 1200 charge hours is about 50% of the Total Hours that firm owners should be committing to the business. For many this is a tough not easy to achieve target – but your number is for you to decide. My recommend is that you build in a modicum of stretch to your current performance. I further recommend that you charge ALL client related hours. Remember that your time recording system is just that. A retail costing system. It is NOT a billing system.

KPI Key Purpose: Delivering client value. Delivering billable hours.

3.2 Non charge hours

My target was always 100 each month. That makes a total of 2400 hours (1200 + 1200) dedicated to the business. Those non charge hours include vacation, statutory holidays, sickness, training, firm management meetings. Again, if you account for ALL your non chargeable hours attaining 100 is, I suggest, fairly attainable.

KPI Key Purpose: To ensure a firm owner invests time in him or herself. Ensuring that firm owners contribute to firm management.

3.3 Number of direct meetings with clients

I used to call this KPI client meetings (i.e., face to face). But we have moved on. Now, meetings can be online or even by phone. If by phone they need to be substantial calls not just a short call.

KPI Key Purpose. Remember that ‘people do business with people’. Connecting one on one with clients is a core component of firm owners delivering value. Again, this topic has been covered extensively in my Client Service posts

3.4 Referral meetings

I discovered in my early pioneering days that other professionals as well as clients were a great source of new business introductions. I decided to intentionally meet with 6 referrals a month. Lunch, sporting events, home invites, cook outs/BBQs, theatre, coffee meetings and so on. I also took every opportunity to join with a client and attend appropriate meetings with their lawyer, banker or financial advisor.

KPI Key Purpose: Every time a professional makes a recommend, they are taking a risk. The risk that you might not impress or get on with their client. In order to minimise that risk, make sure you connect with them both socially, and if possible, professionally. 

Key Point: Make sure you give others recommends and remind the one to whom you have given the recommend that they are engaged with you in the ‘referral game’. It’s like tennis – you send a referral and, when they can, they send you a referral back.

3.5 Lock up

My final KPI was to manage lock up (debtors/receivables) as a percentage of gross revenues. In my early days of managing my accountancy business this was tough – very tough. I was forever facing a lock up increase and this KPI was definitely not one I had under control. Consequently, I embarked on a long journey of how to drive this percentage down. I eventually succeeded, but it took time.

KPI Key Purpose: Focus. To ensure that lock up is minimised. Prompt billing and prompt collecting


In my own accountancy business, I required all of my partners to monitor these 5 KPIs. They focussed on firm growth, service and cash management. If I was managing an accountancy business today I would, I think, have the same. But then we are all different. 

Key Questions:

  1. What are your KPIs? (Be careful if having more than 5)
  2. Are they going to be firmwide? 
  3. Will firm owners be able to self-select?

Key Managing Partner KPI: Percentage of lock up to gross fees.


I have one client who combines two of my management recommends. KPIs and Vision Navigation. On the back of her office door, she has a chart that identifies her 5 KPIs and then every month she updates her performance. When her door is closed, she tells me that she has a continual reminder of what she has achieved and where she needs to improve. She tells me that this chart provides her with inspiration as to what she could do differently. My client also tells me that it has introduced a lot of fun thinking into her daily routine.


Now let’s convert this KPI plan into client revenues. 

In my many seminars with accountants I have oft ask this question – “How many of you have a written and up-to-date business plan? Empirical evidence at these events suggests that no more than 25% of accountancy business owners have such a plan. The following Lewis Carroll thought comes to mind – If you don’t know where you are going any road will get you there. So, if accountants are not great advocates of a business plan for their own business, with what great heart and conviction can they persuade clients of the merits of business planning?

I tell it like this. If you don’t have a business plan you MUST at least have a KPI plan. This is an opportunity for discussion with your clients. The trick here is to discuss with them which numbers to manage. Then, can you insert yourself into the monitoring processes? What do they need to know to drive the numbers in the right direction?

8. Profitability Planning

I have oft repeated myself by stating that I see the purpose of a business as being to meet the needs of its customers and that as a result of serving customers there will be a number of outcomes. One of those outcomes is profit

Do you have a profit plan? One that goes beyond the budget and defines how the business is going to drive the profit onward and upward. 

Allow me to focus on the increase of gross margin. In so doing I am going to bypass overhead – there is little that I can add here – you are an accountant. Further most of your overhead levels will have already been established.

So let’s look at a number of golden rules for maximising margin.

GOLDEN RULE 1: Increases due to inflation

With global levels of inflation on the increase you MUST ensure that your prices increase by a MINIMUM of the rate of inflation in your country.

Key Point: Increases prices by inflation – NO exceptions

GOLDEN RULE 2: Client caused extras

Identify the 10 most common recuring extras that arise. Establish a range of prices that will accommodate the time necessary to fix. Give managers the authority to agree the extra price with the client.

Key Point: Unforeseen overruns due to client problems are typical occurrences. Charging in retrospect for time rarely gives the return you deserve. Like the car dealership when your car is in for a service identify the extras and give them a price range.

GOLDEN RULE 3: Make sure you have the necessary records before the job is started. 

Key Questions: 

  1. Do you communicate with clients what is required for your team to undertake their work? 
  2. Do you check that you have received all the information ready before the work commences?
  3. Is there someone responsible for following up any missing records?

Key Point: This is the procedure I developed when managing my own accountancy business. The person charged with the checking in and follow up was not one of the accounting or auditing team members.

GOLDEN RULE 4: “Advisory work”

Are your staff on the look out for areas where the firm can be of further service to the client?

Key Strategy: Prepare a list of, say, 10 types of work that the firm can offer to clients? There is more on this in my posts on Client Service.

GOLDEN RULE 5: Fixing loss making jobs

Identify your top 10 loss making jobs and identify:

  • Are you performing work that is unnecessary?
  • Can you ask the client to undertake additional work to improve their records?
  • If not, then agree a higher price to cover these matters
  • If none of these work the firm’s Managing Partner needs to accept the ongoing level of write down, or
  • Move the client on

GOLDEN RULE 6: Engagement letter or price letter as a profit tool

May I suggest that price should be covered in a separate letter? This letter should prepare the client for cost variations. Your engagement may state the agreed price. In any event, you MUST state the basis for the price. Advise the client that you will make contact should additional work be required.

GOLDEN RULE 7: Do not fear

Do not fear losing the client. Be confident in your pricing and your value. 

Key Point: There are ALWAYS others who will do work for a lesser cost. That’s the way it has always been and always will be

9. What is your firm ‘Famous’ for?

All firms are mostly able to perform compliance services. But what is your claim to fame other than being in accountancy? You should either specialise by serve or sector. Again, there are other articles I have written in client service.

Key Point: Clients value specialist expertise and are prepared to pay a higher price.

10. Succession plans

Who will be in your firm of the future?
Who are you training?
Who will succeed you?

And Finally

We have covered 10 important Key Areas of Future Planning for 2023. You may well have others. Here are links to the first 8:

Working From Home Update and An Eye on the Future and Essential Planning
Opportunities, Staff Care and Retention Strategies