The fourth in a series of blog posts based upon The 90-Day Marketing Plan for CPA Firms: How to Create the Roadmap for Your Firm’s Growth.
There are three often overlooked items to consider when setting your CPA firm’s revenue growth goals:
- Non-recurring or lost revenue
- Cross-selling revenue
- Sales close rate
Here is an example of how to set your revenue goals.
Let’s say that you’re starting with $3 million in revenue. You need to figure out the amount of non-recurring or lost client fees and subtract that amount from your current fees. In this case, for this $3 million firm, there is $100,000 in non-recurring work that they cannot count on in the next fiscal year, which gives them a starting point of $2.9 million. The estimate for new clients is $150,000, and $70,000 from current clients (cross selling revenue). The result is an overall goal of $220,000 of new revenue needed to achieve 4% growth.
Then, figure out your average fee per client (part of The 90-Day Marketing Plan client analysis). In this case, the average fee per client is $15,000; 10 new clients are needed to achieve the $150,000 of new revenue. Cross-selling revenue is tracked separately.
Then, consider your close rate. In this example, this fictitious firm has a close rate of 50% so they need 20 opportunities for new business with the assumption of closing half, with an average fee of $15,000 to achieve the $150,000 new revenue goal.
Want to learn more about The 90-Day Marketing Plan process? Join me for a live webinar this Thursday, October 2, 2014, 12:00-1:15 p.m. Eastern and chat with me and other participants about your own challenges and opportunities, compare notes, get ideas, find out what works and what doesn’t at other firms.