Over the coming weeks, I and other experts from the consultancy world will be looking at how businesses can face up to the challenges of transitioning client needs in an evolving marketplace. We’ll be exploring the many economic challenges you face and sharing opinions and guides with valuable insights, designed to help you overcome them. In this blog I look at what the future holds for successful consultancies.
During the aftermath of the 2008 global recession, I saw many large consulting firms forced to become leaner just to stay afloat. Consultants who suddenly found themselves out of a job, used this as an opportunity to set up their own, smaller firms, offering the same services as their former employers. How does the picture look now? The consulting services industry is thriving.
According to International Data Corporation’s (IDC) 2014 research, consultancy firm revenue is up by 41% and profit margins have grown by around a quarter between 2013-14. However, with more smaller firms in play, competition is fierce. So how do you capitalise on this upward trend, gain the competitive advantage and grow your firm? It’s all about knowing your consultancy inside out.
1. Be A Metrics Driven Business
Understanding and constantly monitoring your business metrics and key performance indicators (KPIs) is essential to knowing your businesses. But how do you know which projects are profitable or which may be under or over resourced, or even without the right people or skills? Real-time performance management tools help you track your projects and people, as well as balancing workloads across teams. Helping you grow your business and margins by refining your working practices.
2. Track Margins And Risk
It’s also crucially important to keep close track of projects at risk. Analysing data from past projects helps you anticipate future project pain points that could impact your margins and plan to avoid them. Typically these include:
- resource availability issues
- delays in obtaining client feedback
- project management failings
3. Follow The Numbers
According to IDC, 41.5% of firms view customer lifetime value as the most important KPI of growth, ahead of net profit and customer retention (both 40.3%), and revenue growth (39.9%). Without strong sales, healthy repeat business and positive cash flow, business growth can be risky.
Successful consultancies are those whose leaders have ingrained a culture of constant evaluation through a mind-set of commercial project management. Only by staying up to date with the profitability of your individual customers and their projects, can you have full control of your business. It also gives insight into which ventures and clients are the most valuable to your consultancy. This helps you recognise new opportunities and which existing relationships are no longer beneficial.
When pitching to new clients or for new business with existing clients, detailed project analytics can also help you ensure that the business case remains credible at all times. From the initial blank-slate phase, through to realization of the client’s vision.
4. Have The Right Tools In Place
Having the right tools to measure performance, give the business leaders insight into how the consultancy is performing on a macro and micro level. Enterprise Resource Planning (ERP) software can deliver a fully integrated, real-time data solution that improves decision making and. With it, business leaders are empowered to build a truly metrics-driven business and deliver greater profitability.
So as you prepare to grow your consultancy, ask yourself: how is your business performing, are your employee resources being used correctly, and do you have the strategy and tools in place to manage growth whilst fending off the competition?
Your projects are your bread and butter. If you know how to run a truly metrics-driven business, you can not only grow your own consultancy, but outpace your competition.
For more help and expert advice on building your metrics-driven business, head over to our ‘What If’ site. We’ll be sharing articles, insights, e-guides and opinions for download on how, with total clarity, you can maximise your margins.