It is no longer breaking news that the economic outlook is brighter every day. And yes, it is all very positive and in particular for companies working in the consulting sector. But how do we profit from this opportunity and turn rapid growth into profitable growth?
A recent survey from international analyst firm IDC provides a profitable pointer to where you should put your efforts to manage your business for growth. Top 3 priorities as seen by decision-makers in more than 250 European and North American consulting firms:
Increasing your revenue – but how to do it profitably?
Clearly, when you operate in a growth climate revenue will be at the top of your priority list. Now is the time to accelerate your service offerings and with them your business. Your clients are more willing to spend that precious budget which a few years ago was impossible to be included in. However, you need to carefully manage how you accelerate your business. Let’s say that new business runs in like an unstoppable fountain. But suddenly you realise that you lack the numbers of headcounts to complete the new projects and, as troublesome, the skillset of your current staff does not fully meet the requirements of your clients’ needs. In short, increasing revenue may be a top priority but making sure to have the correct headcount and skillset to satisfy current demand is as important – in order to manage your growing revenue to also be profitable.
Tip: Make sure you are able to detect when a subcontractor/freelancer needs to be turned into a permanent employee and maximise those margins
What is an effective project?
When you have the right skillsets it is easier to ensure the effective project execution that the research found as priority no.2. And hand in hand with this efficiency goes margin control of your projects or simply project profitability. The economy has made the starting signal of the optimism race and your business is ready to race along and see your revenue increase at a rapid pace. Life is good – and so is your business if you know how to steer your projects with a sound project plan, realistic milestones and a just as realistic budget. At the core of any profitable growth in a Professional Services firm is your ability to ensure profitability on as many as possible of your projects. And that project profitability starts with an effective project execution.
Tip: Make sure you understand which projects may be veering off piste and to be able to reduce and ultimately stop the leak of additional time to minimise any potential margin impact.
Why people matter
It is IDC’s belief that any modern consulting firm runs their business from a lifecycle approach towards customers, projects, and employees: from prospect to customer and retaining that customer, from project proposal to completion, and from employee hiring to retiring. Focusing on hiring and not least retaining the right people is crucial to a business living from – its people. Any management literature would cite that your employees are your primary asset and nowhere is this as true as in Professional Services. That is why hiring and retaining talent will probably always be on the Top 3 of priorities and why I also see that as not only a priority but a main challenge in any consulting firm.
Tip: I am pleased to look at the length of service of our consultants and know that we have a strong team that buys into our Deltek Values of delivering for the client while enjoying working with one another. Make sure that you recognise your employees, e.g. at Deltek we have a ‘Champion’ award to help promote and communicate those great achievements the team deliver for our clients.
All talk about increasing revenue and making your project delivery more effective and profitable will get a worrisome end if you don’t have the right people onboard – and keep them there. To operate like a modern consulting firm means taking a lifecycle approach to your customers, projects, and employees. How? By making sure you have the right tools in place that support your unique business processes. With that approach in place you can turn today’s economic growth into your business’ own profitable growth.
Do you want to see what the decision-makers rated as their Top 3 challenges in the survey? Download the IDC survey free of charge here.
Paul Tomlin, Sr. Director, Consulting, Deltek UK & Central Europe