A small-business (and that includes the bookkeeping business) owner’s compensation is generally driven by the value she has created in her business. Yet about 40 percent of a bookkeeper’s time is spent doing non-billable work so she can only bill for 1,200 hours a year. If she wants to see her hourly rate go even higher, she’ll have to start building processes that allow her to do more CEO-level work, and eventually hire another bookkeeper to take on the lion’s share of lower-value work. I tis the Effective Hourly Rate that is one of the metrics that matters.

A useful metric to track the value of your firm is to measure the MRR which is Monthly Recurring Revenue: it’s the gold standard for driving revenue. It’s like a run rate that looks at your current revenue, month by month, focusing on the change in its rate in order to determine growth. As an example if you increased revenue by just 3 percent each month, then that equates to a 42% p.a. growth. It pays too, to look at the fundamentals:

Revenue minus expenses equals profit.

Profit is an expression of the value the small-business owner has brought into the world through her business. It’s the proof she’s creating something people value more than it costs her to make it. This net value is what she puts in her pocket.

Profits live in the gap between costs and value; this is the key to increasing your effective hourly rate to levels you might not have believed possible.

Other metrics that matter

In the professional services world where points of difference between service provider can be minute in terms of the most common (e.g. compliance) services it is customer service and the measure of it – Customer Satisfaction Rating – that can spell the difference between keeping and losing a client. This could be defined as ‘the satisfaction gained from customers based on their experience of your services and products provided’.

In a similar vein, your firm’s system for acquiring clients (including active referral marketing) of can be the difference between growing your income and suffering a crippling decline in income. A New Customers metric is your measure of success when compared to the target set. This would be paired with the Leads Conversion metric; which allows you to track how effective you and your staff have been to convert leads to customers.