Over the recent break, I received a handful of emails from clients curious as to how the Australian Financial Review Top 100 results compared to the Good Bad Ugly 2017 results.
So I thought a short comparison would be interesting. In relation to collecting data, both surveys requested firms submit their information. The 2017 Good Bad Ugly saw 250 participating accounting firms, and 100+ participating in the AFR Top 100.
After analysing the results of the AFR Top 100, it is revealed that 114 Good Bad Ugly firms (who participated in the 2017 Good Bad Ugly and did not contribute to the AFR Top 100) would have made the $1.2m which was the revenue of firm 100 in the AFR Top 100, had they have contributed.
The range of firms who participated in the AFR Top 100 is extensive from PWC at $2,120m to $1.2m for DNM Group. Therefore in the comparison table below, the difference in size of firm (revenue & staff) is significant.
Bear in mind that the results below are outcomes of the leadership, process and relationships which drive the performance of these firms. Many of the top 100 firms are clients of Business Fitness and explain that they participate as a marketing exercise for their firm, as the exposure received is second to none.
With this in mind, here’s a comparison:
|KPI||2017 Good Bad Ugly||AFR Top 100|
|Firm Revenue (Median)||$2,261,979||$8,900,000|
|Total Staff per Firm (Median)||14||56|
|Revenue per Partner||$1,110,811||$1,250,000|
|Revenue per Staff Member||$160,094||$156,840|
|Leverage (People per partner)||5.4||6.8|
The data reveals that the AFR Top 100 partners are generating approximately 12% more revenue than the Good Bad Ugly data. Yet, the data also shows that Good Bad Ugly firms have great processes and people in place to generate a higher revenue per staff member result.
A further key result for the AFR Top 100 is on average they employee 1.4 more people per partner. Leverage is key and from 17 years of Good Bad Ugly data there is a direct correlation between leverage and profitability.
Although benchmarking against industry standards will always be important, keep these things in mind:
- It is crucial to benchmark your own firm result from year to year.
- Consequently, analyse the processes or relationships you are going to improve in the coming year in order to improve performance and growth
- Ensure that your growth strategy is not simply increasing client fees in order to increase revenue. Approximately 34% of Australian accounting firms use this strategy to improve the growth of their firm*, and while often successful, it is not the only strategy firms should be considering.
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Brad Geelan | Business Fitness
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