Volume vs value: weighing up two ways to grow a firm

I think in the pursuit of growth, we sometimes forget that revenue = the number of clients you’ve got x the price per client. And that bringing in new clients isn’t the only way to grow.

Firms have some influence over the first half of the formula above, even if that influence isn’t always best utilised. What I mean is, firms can proactively market themselves and drive business development. But Sales isn’t where most accountants feel comfortable, so new business is often something that happens to a firm (through referrals) rather than something that happens because of their direct efforts.

When it comes to the second half of the revenue equation, firms have more control than many believe:

• You set the price of your services (within reason and within the constraints of price elasticity).

• You can deepen the scope of a client’s work to increase the value of the account (and your average contract value/ACV).

• You can choose to stop working with clients if they’re costing you too much in opportunity cost of time (or don’t want to pay your fees).

There’s plenty to be gained from improving the price per client of clients you already have. And so the firm grows through value, not through volume - like we did at flinder. Okay, we also grew through volume, of course, as we started with zero clients. But value is how we grew fast.