Internal and external analysis for revenue planning

Detailed data regarding your firm’s expenses and past revenue are two internal factors that inform decisions for your future revenue targets. Additionally, you’ll want to:

• Identify your target market — Which clientele would your firm like to reach based on the capacity of resources and services you provide?
• Understand current clients’ needs and preferences — For example, do your clients prefer in-person or online meetings?
• Assess any changes in accounting standards or procedures that may affect service offerings.

Revenue modeling should be reflective of the firm’s [business] strategy.  We need to have a pretty clear vision of who do we want to serve, what do we want to do for [clients].

External factors that will influence your revenue plan include:

• Market demand, which reflects a client’s interest in your firm
• Business and industry trends that show market direction
• Business indicators that reflect how your firm is performing
• Target audiences that determine clients
• State and federal regulations that affect the accounting profession

Another crucial factor is capacity, which is the ability to offer a service or the amount of services your firm can provide to clients.

Key performance indicators to stay aligned with your revenue plan

Metrics, such as a decrease or reduction in your client base, profit margins and return on investment for marketing campaigns reveal how effective revenue planning strategies are for your firm.

Calculating the revenue growth rate involves measuring how much your firm’s sales have grown during a particular time frame, showing you how your revenue planning efforts are helping your firm grow overall.

The revenue [modeling] toolkit offers some metrics that firms can look at regularly to give them some data … one of which is the pipeline report.

A comprehensive pipeline report should include an overview of your firm’s current revenue state, including the number of activities in progress, their stage of development, and the value of each one.

“Pipeline reporting is really one of the few leading indicators of success that firms have available. Everything else is kind of a lagging indicator, but our pipelines should help us look forward and say, ‘OK, do we have the right amount of activity inside of our pipeline to help us meet our revenue goal?’ ”

Aligning revenue plans with your firm’s business strategy gives you a clear vision of how you want your firm to grow, helping you develop revenue strategies that support your firm’s overall objectives. Firm leaders should communicate clearly with their staff to ensure everyone understands the firm’s strategic goals.

Firms sort of forget or miss their opportunity to really set clear strategies and make sure that everyone in the firm understands what they are. Revenue planning is most successful when there’s intent behind it, and that’s where the strategy comes in … everything needs to be in alignment and supporting each other.

The Revenue Modeling Worksheet is invaluable for firms planning or reorganizing their revenue efforts with intention. With this tool, you can effectively articulate your revenue goals and identify potential areas for improvement, leading to informed decisions that maximize your firm’s revenue targets.