Leverage. One of our definitions of leverage is to use something to maximum advantage.
Opportunities abound (the world is one of unconditional abundance).
Pricing and pruning is happening at all firm levels from national firms, large regionals and local firms. This exercise has a number of implications including local firms are getting bigger and more opportunities.
We obtain leverage in three places in our firms. Price, Technology or People.
As you dig into your numbers (working ON your business) you need to consistently examine where you are getting leverage.
As we work on transforming our firms to the Succession phase (where you or someone else wants the firm) leverage is critical.
I was in a conversation last week with a well-known M&A consultant to our industry and he said the challenge with local firms merging into large firms is the partners don’t have enough leverage. His language.. “average charge rates aren’t high enough, partners aren’t doing enough of the right kind of work.”
ReNew business model questions before you take on a new client.
- Does this client meet our business model/client selection criteria?
- Where are we getting leverage?
- What does it require of me?
- Bonus question: Will my team be excited we are taking this client on?
The saying also applies to pricing.