How to Increase the Profitability of Your Professional Services Firm

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To scale and grow business, service organizations require clear visibility of resources, customers, and projects. Here are five simple ways to increase profitability in a rapidly growing industry.

Benchmarking

Benchmarking is a powerful tool to maximize success in a growing business.  In a recent webinar, the CEO of Big Bang, Gabriel Tupula, correlates benchmarking with “Corporate Memory.” Benchmarking can help to create accurate quotes, minimize starting projects from scratch, and maximize revenue. Learning from previous experiences means less ramp-up time, avoiding pitfalls, and correctly forecasting the amount of work.  Many companies will add buffers to their quotes to protect the project from busting.  The problem with buffers is they can lose competitive edge.  By harnessing corporate memory, businesses can take more calculated risks and use past experiences to become better.

Real-time visibility

In today’s environment, it is crucial to have visibility of the numbers for rapid course correction.  It is no longer acceptable to wait for timesheets to hit financials at the month-end. Daily time tracking can trigger faster billing and thereby improve cashflow.  TSIA Professional Services (link) suggests that the number of fixed bid projects has increased by 50%, causing a higher risk of burning budgets.  With real-time visibility to tasks associated with the projects and the percentage of completion, key stakeholders can:

  • adjust the approach to avoid scope creep by putting the right resources on the project to meet targets, or
  • enter into a change request proactively and manage expectations.

Visibility to key metrics gives the C-Suite the confidence to make sound decisions and balance the workload.

Right customer focus

Focus on the right customers can ensure an increased gross margin.  Your noisy customers are not necessarily giving you the most profitability.  How often are the best resources overwhelmed with challenging customers who are delaying projects and busting projects on tasks not related to the project?  As a best practice, performing account reviews and continuous feedback sessions can uncover additional work with all customers, including the silent ones. Maintaining a focus on the right customers at the right time is paramount for improving profitability.

The power to always say yes

Having the power to say yes requires the discipline to know your resources skill sets, experience, and capacity at any given time.  Using capacity planning can allow the business to optimize resources for maximum throughput.  Growing companies often feel overwhelmed by the amount of work and begin to refuse projects because of the risk of not delivering.  Without an understanding of the true capacity, there may be resources sitting on the sidelines looking for work because it was difficult to accurately forecast.

Forecasting

Forecasting resources can be challenging.  Hiring the right resources with the right skill set will open the doors to new markets and sustain company growth. Employees come from unique backgrounds.  Knowledge sharing and shadowing will increase overall skill set. Knowledge sharing also means that resources can take vacation, and it promotes resource loyalty.  Service organizations dealing with non-tangible work need to have the right resources at the right time with the right skill set.

Final Thoughts

Corporate memory, real-time visibility, the right customer focus, gaining the power to say yes, and forecasting resources are all ways to increase service organizations’ profitability. How to get there?  There are several professional services automation tools available on the market to give incredible clarity to sustain growth and optimize profitability. Which tools and direction might be the right fit for your business? Complete our 360° Business Assessment. You can uncover opportunities concerning your people, processes, or technology with the global organizational assessment in just a few minutes.

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How to Increase the Profitability of Your Professional Services Firm

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