Consulting Firms Must Maintain Sustainable Profitability to Grow in 2019
The pressure to generate increased margins for consulting firms is intense. But financial success is not just about profitability, it involves the smooth and consistent running of financial processes and real-time insight that will determine where a business is going and how it can best get there.
As our new white paper, Every Dollar Counts: Gain a Competitive Edge and Get Control of Your Consulting Firm’s Bottom Line states: Success requires informed consistency – technology driven, data powered information that not only helps ensure profitability, but also that you are optimizing that profit while delighting clients and improving the quality of engagements you undertake. You must leverage technology to deliver effective operations and form a solid foundation for your client-focused work. If you don’t have that technology integrated into every aspect of your consulting firm, then you not only risk project failure, but organizational failure.
Let’s take a look at the important lever of controlling finances and how that impacts profitability in your firm.
COMPLIMENTARY PROFITABILITY WHITEPAPER
Every Dollar Counts: Gain a Competitive Edge and Get Control of Your Consulting Firm's Bottom Line
What Does a Financially Robust Business Look Like?
It’s no surprise that most successful consulting firms are more profitable than the rest: they generate more revenue per employee, project and consultant, and they keep revenue leakage to a minimum. They typically have greater focus on revenue and profitability targets, and have the right tools in place to manage resources, costs and project delivery. They ensure success by managing costs with purpose-built applications and by having a client-focused and collaborative business culture.
So, where does your firm stand? Does your firm drive toward successful or unsuccessful financial delivery – let’s take a look at the two a bit more closely and list out the key factors that make them up:
Successful Financial Delivery:
- Uses precise metrics and controls to manage the business
- Fully integrated financial, CRM, resource management, project management & reporting/analytics solution
- Has a detailed set of operating principles, tools and measurements
- Sets quantitative and qualitative goals for client acquisition, retention and penetration
- Has a complete set of financial operating controls and measurements, and real-time visibility into financial position
- Quantitative process improvement objectives are continually revised to reflect changing business objectives
- Initiatives are in place to ensure quality, cost control and client acquisition
- Unique problems can be addressed quickly without excessive bureaucracy or functional silos
Unsuccessful Financial Delivery:
- Budgeting and planning is considered a necessary evil
- The business environment is chaotic, or at least opportunistic, with a focus on new client acquisition and reference-building
- No feedback processes or ability to modify business plan based on changes
- Practices and procedures are informal and quality is based on individual experience and aptitude
- Few repeatable processes, or processes are not universally embraced
- Budgeting and planning is done by spreadsheet
- Limited financial visibility and control, and unpredictable financial performance – no real-time view of business intelligence
Much of the information above was gleaned from the SPI 2019 Professional Services Maturity™ Benchmark Report. So, which side of the financial delivery scale did your firm reside? Are there changes that you now see that must be made for sustainable growth within your firm in 2019? Do you have the right technology infrastructure to enable strong, real-time financial management processes?
Take the next step
We invite you to hear more on sustainable profitability within growing consulting firms by listening to the OnDemand Webinar below. ProjectManagement.com’s Andy Jordan, a consulting firm owner and industry expert, speaks to the key elements that contribute to an effective, streamlined business and the infrastructure you need to create an optimized environment for your firm now, and for the future.
Goal = Profitability: What Growing Consulting Firms Must Do to Go from Red to Green