If you’ve ever wondered whether your firm’s profit margin is where it should be, you’re not alone — it’s one of the most common questions I get.
But the honest answer is that the number itself only tells part of the story.
In this episode, I want to share a framework for thinking about your margins that a lot of firm owners haven’t considered yet.
Listen below.
0:50 Profit margin without context can be misleading. A 40% margin sounds impressive until you learn the firm owner is working 60 hours a week to get there.
1:58 In many of the high margin firms I come across, there’s a catch. The margin is high because it’s either a very small firm or one that’s heavily dependent on the owner.
3:53 Some firm owners I’ve coached had convinced themselves they were investing in growth when really they were just breaking even year after year.
4:49 When it comes to margins, pricing is the biggest lever. Specifically, ditching hourly billing or flat menus in favor of a value-based, three-tiered approach.
5:50 Peace of mind has a dollar value, and many firm owners dramatically underestimate it. When you start pricing from that angle, the numbers look very different from what a time-based formula would produce.
7:49 Selling Xen Accounting and transferring my responsibilities to the team made me realize how much I could have delegated years earlier.
8:22 There’s no one-size-fits-all margin for accounting firms. The right number for you depends on your growth stage, your goals, your ideal hours, and how much the business can run without you.
