How Does Your CPA Firm Measure Profitability?

By: Michael Platt, publisher, INSIDE Public Accounting

FrontPageImageAs we wind down the 25th annual INSIDE Public Accounting National Benchmarking season, we wanted to dig a little deeper into the questions on everyone’s mind: How profitable is my firm? How do I compare against my peers? Seems like a pretty basic question, and given the fact that we are part of a community of CPAs, you would think that it would be a pretty simple answer.

But you would be wrong. After reviewing over 500 surveys, talking with managing partners around the country, and fielding questions on this for months, it is quite clear that “profit margin” means different things to different people.

If profit margin (net income as a percentage of net revenue) is the gold standard of measuring profitability, the fact remains that there are many variables that firms consider when coming up with their “number.”

View the 2015 Best of the Best

View the 2015 Best of the Best

The biggest variable comes in defining what net income consists of. Traditional measurements of net income assume that net income is measured before any compensation, draw, bonus or salary is paid to equity partners. INSIDE Public Accounting has used this measurement in its National Benchmarking Report for years. Why? Because there is little consistency among firms. Consider these various compensation strategies:

  • Pay a small livable wage as a draw and motivate partners by splitting up a larger piece of the profits at the end.
  • Assume that the firm will be doing well and pay partners a higher wage during the year.
  • Take profits and fund a deferred compensation program.
  • Reinvest in the firm by taking some profits off the table.
  • Distribute all profits to equity partners each year.

The flaw in the traditional measurement of net income is that it assumes the cost of partner labor is zero.

Leverage, therefore, plays a big role in defining profitability based on this approach. In firms with lower leverage, where partners are responsible for a larger share of the billable time, profitability will be significantly higher than in firms with greater leverage. Does that mean a low-leveraged firm is “doing better?” Maybe not.

By promoting a manager (where cost of labor is counted as an expense) to an equity partner (where cost of labor is not counted as an expense), profit margin will increase, and net income per equity partner will decrease (everything else being equal). Is the firm doing better or worse as a result? We need to find a way to level the playing field so that leverage does not skew comparisons inside firms and between firms.

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Many Ways To Calculate The Cost of Partner Labor

If partner labor is included as part of “cost of goods sold” in an accounting firm, it should give a clearer picture of true profitability. IPA’s National Benchmarking Report has used the traditional measurement of net income in determining profitability for years, but recently we began looking at this critical number in different ways.

Consider these three ways to measure a truer cost of partner labor:

Method 1 – Assign a flat rate per equity partner for a cost of their labor. If a senior manager costs the firm $150,000 a year, assign a flat rate for partner time of $200,000 per year as a cost of their labor. This is a simple, straightforward approach that approximates the cost of labor quickly and easily.

Method 2 – Calculate a cost to the firm of partner charge hours: For every charge hour billed by a partner, divide the billing rate by the selected billing multiple of the firm to determine the cost of labor for those billable hours, and only count the cost of billable time. For a partner charging $400 per hour, this would likely be around $100. The average equity partner may charge 1,000 hours, so the cost of that labor would be $100,000 per equity partner.

Method 3 – Calculate the cost to the firm of all partner hours: Presumably, non-charge hours are being spent productively and are of value to the firm, whether it is in relationship building, client acquisition, referral relationships, staff development and mentoring, etc. Take that same $100 and multiply it by total work hours of equity partners. For a firm with average partner work hours of 2,400, that would represent a cost of labor of $240,000 per equity partner. (Note: Often, partners wear their total work hours as a badge of honor, with some working 2,800 to 3,000 hours per year. The cost to the firm should reflect that total time commitment for a truer picture of partner labor, so $300,000 for those partners is not unreasonable.)

In my opinion, Method 1 is the simplest, and Method 3 is the most accurate. Method 2 discounts the value of non-charge hours and is not reflective of the value of labor provided by partners.

Adding this extra calculation to compare profitability from one year to the next internally, and in comparison to other peer firms, gives you a much clearer view of how well you are doing. It is well worth the extra time to get a much more accurate view of how profitable your firm is.

How IPA Can Help

The 2015 IPA National Benchmarking Report offers detailed information on CPA firm profitability, including a look at traditional profit margins as well as a measurement that includes a flat $200,000 labor cost to the firm per equity partner. The data comes from more than 500 firms across the nation and is presented by revenue band and by geographic region. Order the full report today or read the executive summary.

 

 

 

Platt’s Perspective: Shifting The Power Of Billing To Clients In Real Time

“Disruptive innovations.” It’s a phrase we continue to hear more and more often, as new approaches to old ways of doing things continue to be developed. One interesting innovation recently entered the legal profession, and is sure to have an impact in the near future on accounting firms as well.

For as long as the profession has been around, the billing process has been managed and controlled by the service providers themselves. Law firms (and accounting firms) enter hours worked in the time and billing system, review reports, write off time as they feel appropriate, issue discounts (or premiums) as they feel appropriate, and send the invoice out the door. Occasionally, especially in the legal world, clients are surprised by the size of the bill, object to the cost, and the firm adjusts the bill based on the client’s pushback. Sound familiar?

Mike Platt

Mike Platt

Enter a new generation of apps designed to shift the control to the client, removing some of the secrecy inherent in the traditional billing process. In the last 18 months, new disruptive products such as ViewABill, LeGuard and Apperio have  appeared, allowing law firm clients not only transparent access to the billing process, but also the power to “throttle back” the amount of work being delivered by the firm based on real-time access to hours in the online system. This collaborative approach between client and attorney is intended to help clients budget better and eliminate surprises when the bill arrives.

According to ViewABill, the first of these companies in the market, the initial response by law firms was fear that the software would drive a wedge between them and their clients. In an article earlier this year in Bloomberg Business, ViewABill reports that half the top law firms in the country are now using their software, helping the firms to promote a culture of collaboration with their clients. A marketing video for LeGuard  touts the “revolutionary way to control legal billing by holding lawyers accountable for the number of hours they bill to a client.” Apperio provides customizable dashboards to track time, provide real-time alerts based on spending thresholds the clients set, and compares performance to other law firms, encouraging the firm’s clients to “keep your eye on the ball.”

Based on the annual IPA National Benchmarking Report, more than 95% of the revenue generated in firms still comes from the traditional “dollars times hours” formula. It’s just a matter of time before this same technology innovation permeates the accounting profession.

  • Could this promote a culture of greater collaboration between firms and their clients?
  • Could it drive the profession to issue invoices in a timelier manner?
  • Could it eliminate those awkward after-the-fact billing questions from clients?
  • Could your clients demand that YOUR firm provide this type of access?

Whether this specific disruptive innovation is met with defensiveness or eagerness, the fact remains that it is here now, and is part of the growing trend empowering clients. Firms that embrace collaborative billing, prepare for it, create processes to maximize its potential, and appropriately communicate to clients, in my opinion, will win.

High-Value Ways To Deploy Idle Staff During The Summer

As leaders are taking time to recharge and plan for annual retreats, partners are discussing the future in meeting rooms across the country.

Mike Platt

Mike Platt

To help stimulate some ideas, I offer my list of ways to deploy staff this summer:

  1.  Work with your international network to send select staff on a once-in-a-lifetime overseas internship.
  2. Focus staff on day-long reviews of each of your top 25 clients to gather business intelligence and uncover opportunities.
  3. Embed staff in key clients’ operations for a “free” week to review systems and processes. This will inevitably result in a list of chargeable projects for the future.
  4. Assign staff teams to review your firm’s most utilized processes and recommend improvements.
  5. Ask staff to document case studies highlighting client problems and how your firm helped resolve them. Capture these case studies and compile them for a marketing effort later this fall.
  6. Encourage staff to participate in community service events. Volunteer service is a much-needed, deeply rewarding experience for your staff and an image-booster for your firm.
  7. Assign key staff with a new service or skill to make a presentation at a firmwide staff meeting. Have all staff weigh in on how to utilize those new skills to help the firm succeed.
  8. Upgrade your CRM intelligence. Your staff knows a lot about your clients’ wants, needs and preferences, as well as their quirks. Focus on capturing that information so the next time the CEO of your favorite client comes in, she is impressed when she is automatically offered the frozen iced vanilla latte she loves.
  9. Give your referral sources a fresh perspective of how your firm handles similar challenges. Have key staff spend a week at a law firm to “shadow” their counterparts in other professions. Direct them to share how your firm handles certain issues, and encourage a reciprocal “peer review” by inviting your referral firm’s employee to spend a week at your firm.
  10. Review staff and partners. Not all will end up as superstars. If they are a drag on the firm, counsel them out and find someone else who will be a stronger asset.

There are plenty of ways to deploy staff during summer that will bring significant value to your firm. Get creative with your ideas and you will have a stronger staff and a stronger firm, better positioned to take advantage of opportunities.

Platt’s Perspective: Connecting The Dots – Because Perspective Matters

It’s amazing how perspective changes a landscape.

At one time or another, all of us have gone up a glass elevator, looking out at the entire landscape unfolding before us. What looked like a cluttered mess on ground level reveals itself to be a manicured, well laid-out design that makes sense only when seen from above. The trees, the landscaping, the water features, the roads, the sidewalks – everything is in order and all the pieces come together to form a harmonious landscape.

seeing-the-bigger-pictureAs a partner, you most likely enjoy this higher-altitude view of your firm. The “cluttered mess” makes sense when you rise above it. Your “landscape” includes the long-term vision, strategy, values, the various departments, services, niches, technology, staff, referral sources, client approaches, compensation, community activity, training, marketing, leadership development and all the other components that together create a harmonious landscape.

But staff rarely get a chance to ride that elevator to catch a glimpse of the total landscape. They are hacking through the weeds on the ground, not always sure of where they are going or how close they may be to getting there.

Remember that scene toward the end of the movie “The African Queen” when Humphrey Bogart and Katherine Hepburn all but give up on their long journey down the Ulanga – stuck in the reeds unaware that open waters are just yards away? The camera pans up and the audience can see that they are so close – but the main characters at water level despair and lose hope.

That’s not dissimilar to what may be happening in your firm. Staff may not know that they are contributing to the success of the firm and its clients. They may not recognize that they are on the right track and moving toward “success.” They may not see the open waters just beyond the reeds and they bail out – looking for other opportunities, even though they were “so close” to getting there in your firm.

Your responsibility as a leader is to help your staff see the well-manicured landscape. Take them for a ride in the elevator every now and then and show them the view. Connect the dots for them so they can see the well thought-out design behind the seeming chaos at ground level. Show them how close they are to achieving their objectives so they stay motivated to break through the reeds and get to the open waters ahead.

What’s the risk? Yes, they may find out they are afraid of heights. But they may discover that they get very excited about the view.

Mike Platt

Mike Platt

Mike Platt, managing principal of The Platt Group, has been working with firms since 1985. As a past executive of two accounting firm associations and co-founder of AccountingWEB.com, Mike has helped large local and regional firms across North America grow and thrive. Mike continues to bring fresh ideas, approaches and information to firms across the globe. A frequent speaker, Mike specializes in benchmarking trends and analysis, and dispute resolution services. Mike’s 30-plus years of hands-on experience and interaction with firms gives him a unique perspective on what works and what doesn’t inside firms.

The Platt Group’s Perspective

We all snicker this time of year. Don’t get us wrong, we respect the profession we choose to work in and with. It’s just that every conversation over the past three months with accounting professionals – young, old, in person or by phone – always starts with them taking a deep breath and saying, “I’m so busy right now, call me after April 15,” or “Yup, I survived another busy season.”

businessman-buried-in-paper_645x400We get it. Workload compression, procrastinating clients, long hours, being away from family, unique problems popping up, cranky staff, technology challenges, and no time to deal with everything else weigh heavily on the profession and you’ve earned the right to be a little punchy after April 15.

We know you have business clients who work 50-70 hours a week 52 weeks of the year, year in and year out. For them, there’s no “finish line” of April 15, glowing on the calendar like a siren calling your name in the fog, beckoning you to get to the final destination.

Many clients work long hours, are away from their families, encounter problems with staff, technology, and have little time to deal with everything else. They’re worried about making payroll, growth, succession, training, hiring the right staff, finding time for R&D, investments, retirement planning, marketing, business development, competition, governmental regulations, taxes – and the list goes on.

TAx Stress

How many times have you seen images like these, titled like, “You’ll Make It,” “Hang In There,” or “How to Survive Tax Season?”

Rather than complaining about the long hours during the 100-year tradition of a three-month tax season, shift your firm’s focus to the problems and challenges you share with your clients.

Make it a firmwide goal to ease your clients’ challenges of long hours, 12 months a year; make it your goal to help them with the issues that challenge them. Don’t wait for them to reach out to you next year. Do they know you can provide guidance at any other time of the year? Sit down with them, talk about all the issues, and find one that you can help them solve. Surprise them. Make a difference in their lives.

Are you your clients most trusted advisor? All of us at IPA have an incredible amount of respect for the profession, and know most people in the profession have the capacity to step up and truly “walk the talk.” Only by jumping in, proactively identifying a pain point, and bringing a valuable solution to the table will you become the go-to person for all issues, truly earning you the right to claim the title “most trusted.” You’ve got time. Pick your clients, identify a challenge and change their lives.

Platt’s Perspective: What We Can All Learn From The Donald Sterling Debacle

By: Mike Platt

As I write this, the reaction to L.A. Clippers owner Donald Sterling’s clearly outrageous remarks is less than a week old. For the record, I had never heard of Sterling before this week. I have come to know of him only from the collective outcry over his outlandish, absurd comments that were caught on tape for the world to hear.

While I agree with the majority of the criticism over Sterling’s actions and ignorance, it made me stop and think: Is someone guilty if they simply think racist thoughts or acknowledge internal biases against others? Or are they guilty only when they say what they think out loud? Or are they guilty only if they act on their prejudices?

Mike Platt

Mike Platt

Or are they guilty only if what they say is recorded for all to hear.

We all have biases and make quick judgments about other people – it’s been hard-wired into our brains for 100,000 years to help quickly identify friend from foe. Whether stirred by race, ethnic backgrounds, perceptions of age, gender, weight, whether someone is vegetarian or drives a certain kind of car, where someone went to school, or where someone comes from – all of these drive internal judgments, thoughts and biases that most of us in a civilized society try not to act on. So where in the spectrum do we cross over from “being human” to being the subject of intense disdain? In Sterling’s case, it seems obvious that he crossed the line. But where is that line?

If, as a leader of your firm, you can look in the mirror and see someone with absolutely no biases or prejudices staring back, congratulations – you’re one in 10 million. But chances are, most of us make judgments about people based on something other than the facts of a situation.

Is it acceptable to think bad things toward the person who cuts you off on the freeway? Most of us would say that our thoughts are our own. But when it comes to actions, a line between right and wrong comes into focus. Some of us may yell at the bad driver, but would you start chasing the car? What if you caused an accident? At what point is the line crossed?

Think about your role as a leader. Do you recognize any internal biases against any of your team members based on something other than performance? Do you look at that short guy with Coke-bottle glasses differently than his taller, less optically challenged peer? Do you think people who think like you are naturally better at what they do than others who may think differently? Does the mere act of thinking these thoughts make you guilty of unfair biases or prejudices?

Now think about how these biases or prejudices affect your actions. Would you hesitate to bring someone to a client because of the way they look? Are you more eager to encourage, promote and develop a superstar who shares your hobbies or religious beliefs or pedigree over someone who comes from a different background? Do you find yourself not bringing that short guy with the Coke-bottle glasses to your best clients because of the “message” it might send?

We can all agree that if you made some stupid Sterling-like comments at a firmwide meeting you’ve crossed the line. People would have a legitimate reason to judge you and question your leadership authority. But what about just thinking these thoughts? What about subconsciously acting on these thoughts?

Unconscious biases are complicated. For the most part, as 21st century successful business men and women, we have evolved a lot over the last 50 years when prejudices were more common in the workplace. But as human beings we still make internal judgments about the people we work with and either consciously or unconsciously may still act on those biases.

It takes a consistent effort and a fully aware leader to acknowledge his or her own biases, and once you recognize they exist, you are capable of pushing against them and ensuring that they do not influence your actions. Let’s all learn from the Sterling affair. Let’s look in the mirror and figure out what we need to do to become better leaders because of it.

Platt’s Perspective

Your Success Might Be Your Biggest Blinder
By Mike Platt

Mike Platt

Mike Platt

I was cleaning up my office the other day, and came across a book I was first introduced to more than 20 years ago. “Future Edge” was written by Joel Barker, a pioneer in the discussions of paradigms and their impact on how we all resist new ideas. The book, and the video training that accompanied it, focused on examples of successful businesses that were so caught up in their own filtered view of how the world worked that they missed major technological or process innovations simply because they couldn’t see the change happening in “real time.”

I started thumbing through the book and was reminded of the fundamental question Barker posed: “What today is impossible to do in your business, but if it could be done would fundamentally change what you do?”

The book has withstood the test of time. It discussed how paradigm shifts – both positive and negative – have evolved over the last few decades. But even after seismic changes that occurred as a result of The Great Recession, the fundamental challenge of seeing the world “as it is” versus “as you want it to be” is still an issue in American business in general, and I believe, in many accounting firms in particular.

We encounter firms every day that are quite satisfied providing the same services in the same way to the same clients using the same tools they have always used. The nose-to-the-grindstone approach may feel like you are working hard at what you are doing, but “doing things right” is not the same as “doing the right things” when it comes to client service and building your firm.

Let’s return to Barker’s fundamental question: “What today is impossible to do in your business, but if it could be done would fundamentally change what you do?”

Consider what the future of your firm would look like if . . .

  • Real-time auditing was a reality (and an expectation)?
  • Books could be closed and tax returns prepared within a week of year-end?
  • Just-in-time staffing was perfected?
  • Outsourcing of tax returns overseas overcame many of the psychological and security barriers that are encountered today?
  • Menu pricing were to replace hourly billing systems?
  • Partners were required to be re-elected after serving a three-year term?
  • An Orbitz-like website existed for buying audit and tax services?
  • Knowledge sharing among your team was absolute?
  • You paid staff for their results, not time worked?
  • Communication within the firm was clear and universally understood?
  • “Relationships” became virtual – no “face time” needed?
  • Staffing models shifted to people who chose to work for you for no more than four years?

What would these changes do to your selection of services?

Your pricing system?

Your staffing models?

Your physical space needs?

Your technology investments?

Your management style and structure?

For many of us, even contemplating these farfetched hypotheticals seems like a recipe for a massive headache. After all, things are going OK now, so why rock the boat? However, there are firms that are not only exploring these changes as possibilities, but have started making moves to bring some of these concepts to life. Barker said it 20-plus years ago but it still rings true today: “Watch for people messing with the rules, because that is the earliest sign of significant change.

As you start planning partner retreats to examine the future, consider posing Barker’s fundamental change question and let your imagination run wild. Recognize that innovation is happening everywhere by those who are willing to reject their filtered view of the world and ask, “What if . . . ?”  Shouldn’t your team benefit from that exercise too?

Platt’s Perspective: It’s A Jungle Gym Out There

junglegymOn my annual vacation, I typically select one or two business books and one just-for-me book to read during my shutdown time. This year I chose Lean In by Sheryl Sandberg as one of my business books. I have no doubt you’ve heard about it. The gist is she encourages women to “lean in,” define their ambitions, and not let anything hold them back as they pursue their goals.

I read the chapter, “It’s a Jungle Gym, Not a Ladder,” from my window seat somewhere over the Pacific. This chapter resonated with me. I thought, “I wish I knew this when I entered the workforce.”

Ladders are limiting – people can move up, down, or off. The jungle gym model benefits everyone.”

The traditional analogy for moving up in the workplace is the corporate ladder. But Sandberg notes all that is changing – for women and men – in favor of the jungle gym. Rather than climbing up, down, or staying put, people are exploring different paths on the way to the top.

I understood what Sandberg was saying. I, too, have taken the jungle gym path. There was no ladder in my future, so I thought. I had no idea how I could contribute to the corporate world. I had no path. I had no strategy. I just needed to make a living, and I let things happen.

Sandberg also says, “We need to start talking about how women underestimate their abilities compared to men and how for women, success and likeability are negatively correlated. What this means is that as a woman becomes more successful in the workplace, she will be less liked. Women need a different type of management and mentorship, a different form of sponsorship and encouragement than men,” she says.

  Sandberg on Leadership

“As traditional structures are breaking down, leadership has to evolve as well – from hierarchy to shared responsibility, from command and control to listening and guiding. You’ve been trained by this great institution not just to be part of these trends, but to lead,” she says. Sandberg goes on to say, “The workplace is a difficult place for anyone to tell the truth, because no matter how flat we want our organizations to be, all organizations have some form of hierarchy.

“Think about how people speak in a typical workforce. Rather than say, ‘I disagree with our expansion strategy’ ” or better yet, ‘this seems truly stupid,’ they say, ‘I think there are many good reasons why we’re entering this new line of business, and I’m certain the management team has done a thorough ROI analysis, but I’m not sure we have fully considered the downstream effects of taking this step forward at this time.’ As we would say at Facebook, three letters: WTF,” she says.

According to Sandberg, making the best decisions in business today is challenging due to the fact that no one tells the truth anymore; people lie about ideas, opinions and feelings about something.

There is a solution: “In being able to understand that the truth is subjective for everyone, and that people may very well have very different notions of “truth.” Because of this, individuals need to create a dialogue in which each participant feels comfortable sharing his or her idea of the truth. Empowerment comes from not only being able to listen to the opinions of others, but also from being able to take full responsibility of mistakes. Authentic communication demonstrates the power of an open mind,” Sandberg says.

Platt’s Perspective: Five Years After The Lehman Brothers Collapse

Shortly after the 2008 Lehman Brothers bankruptcy led to the world financial system almost going over the edge, futurist David Pearce Snyder told an audience at the AICPA that “this is not your father’s recession,” and “it will be five more years before the economy returns to a new ‘normal.’ ”

So now, five years later, the obvious question is, “Are we there yet?” The quick answer is, “Not quite, but we’re making progress.”

The profession has made adjustments. Initial belt-tightening and layoffs occurred early and led to preservation of income for the firm. “Right-sizing” and getting rid of underperforming staff came next. Leaders learned how to calm a nervous team – they offered open, honest dialogue, and a plan for going forward. Stepping up accountability came next, leading to elimination of some under-performing partners. Mergers became the quickest method of growth, with many firms in the “buy” mode. This coincided not only with paltry growth among smaller firms but also the pending retirement of a generation of Baby Boomers, which fueled even more acquisition activity. Strategic business development efforts took hold in many firms, supplementing “opportunistic” growth with “intentional” growth. Sales training for partners re-emerged and recruitment efforts stepped up for the expected additional work, which has started in a number of areas around the country.

What we don’t yet know is how strong the comeback will be, and what a new normal will look like. Temporary employment agencies are reporting a surge in part-time and temporary positions in the marketplace, leading many to question whether there is confidence that growth is sustainable or concern that it is fleeting.

Firms that have institutionalized a “do more with less” mentality as well as a culture of making tough decisions and acting on them are showing strong growth and profitability. One in eight firms reported organic revenue growth of over 10% this year – that number was 63% in fiscal year 2007. Almost one-fourth of firms are reporting double-digit income growth this year – that number was 55% in 2007.

Now, as then, one-third of participating firms show profitability above 35%. Fees per employee among the IPA 100 – after all the adjustments in staffing – are now about $15,000 higher than they were in 2007. After the mega-mergers of the last few years, minimum fees to get into the IPA 100 are still hovering around $30 million, as they were in 2007, showing the next group among the IPA 200 continuing to grow and rebound.

Words like “normal” are fairly subjective, and we’re still too close to determine if things have completely settled into the “new normal” as Pearce Snyder suggested. But signs of growth are encouraging and more consistent than in the recent past, and the future looks bright for those who make bold, intentional decisions and refuse to settle for the status quo.

Platt’s Perspective: Rock Stars, Passion And Keeping It Real

The Rolling Stones can teach us a lot about business, and I don’t mean branding, marketing or making millions upon millions of dollars.

The Stones can teach us about passion and business smarts. Now celebrating 50 years of performing, even the most diehard fan wonders what keeps them going. They certainly don’t need another tour to build their fan base, make money, or any other reason bands hit the road. They’re old. They’ve GOT to be tired of playing “Satisfaction” over and over again. So why bother?

Norm Brodsky, in a recent “Street Smarts” column in Inc. magazine, raised this question and concluded that passion – the internal drive that says ‘I must do this to feel alive’ – is what keeps the music playing for the Stones. I couldn’t agree more. I see that kind of passion in many firm leaders I’ve had
the pleasure of working with over the years.

Brodsky’s column got me thinking. MPs come from many different cultures, they take different approaches and have different personalities; there may not be one trait that separates them from the rest. However, I believe that successful leaders are engrossed in the “business” not the “work.” In other words, they’re not focused on getting the audit report out the door, they’re thinking about innovating and re-inventing the business so it can grow and succeed well into the future.

I believe there are many similarities between successful firm leaders and the front-man for the Stones, Mick Jagger. He has solid leadership skills, passion and the ability to adapt to changing trends and opportunities. Just as band members “get each other,” they know their strengths and weaknesses, and have a defined role to play in the band’s success – so do successful firms and firm leaders.

Great leaders understand that the entire group needs to be at the top of their game. If clients don’t get their money’s worth, everyone suffers. Partner groups need to be cohesive like a band, but if unsolvable problems arise, new “band members” must be brought in. The Stones take breaks from the business to re-energize, create new products, and create new opportunities – so should firm leaders.The band’s financial success hinges on it being run like a corporation. Foundation drummer Charlie Watts is an employee of Jagger, as is guitarist Ronnie Woods.

According to a fortune article, Jagger said, “It’s all very corporate, but in a fun, loose, New York  ad-agency sort of way.” The financial success of the band is no accident. It is the result of astute planning and strategy, thoughtful fund management and good old-fashioned hard work.

One thing I know for sure, the band understands Jagger’s passion. They see firsthand when they tour, the reason they are doing what they are doing. Like Jagger, I bring passion to my work daily. I have a passion for contributing to the profession. I want to give back something that firms can benefit from. I’m energized by that. When I wake up in the morning, that’s what motivates me, and keeps me grounded.

Firms that continue to evolve and challenge themselves to work toward a higher purpose are the firms that will prosper. These are the firms that connect with people on an emotional level and can therefore distance themselves from every other firm. With passion, hard work, a good team and excellent work, you can be a star in your own profession.