Professions
Examples:
Lawyers, Accountants, Designers, Specialist Consultants, Engineers, Healthcare, Clinicians etc
INDUSTRY DESCRIPTION
The Professional Services sector provides various professional, scientific, medical and technical services to a range of markets. Expansion is largely linked to how these professions are built into a business model with team around them to assist them to leverage their skills. When this is done successfully, they’ll target more of the right work that is specialised and more profitable and less of the type of work that is more generalised and less lucrative. When this strategy is not implemented correctly, professions can have too much work but of the wrong type and without the team to support their ability to scale.
Professions can charge an hourly rate or contract rate that covers expertise, administration staff, office/specialist overheads. Charge out rates should also cover client acquisition expenses and unchargeable hours associated with pitching for work.
A common life cycle for a Professional Services business often begins as an individual or partnership that break away from a larger organisation by transferring or establishing themselves with a loyal client base. Alternatively they are started from scratch. How far the business expands will depend on the interest and intentions of the owners to add support staff.
If workflow is an issue because of too much work or poor prospecting and pitching disciplines, then the business will stall as the owner falls into the cycle of “do the work” then “chase the work”. Other issues come from too much work coming from large key accounts or from the wrong demographics. Then with client servicing on larger accounts, it stalls the amount of work required to acquire a stable client base. The objective of the business must be to bring on sufficient work to require them to add staff. Many professions stay at the 1-3 staff level when this is the case.
Practise management then becomes the focus that is done either by a Practise Manager or a Managing Partner. This person not only needs to manage such KPIs as billable hours etc, but also needs to monitor client attraction, referral management and acquisition systems in order to utilise the capacity of the Firm. Furthermore, managing team engagement and culture can sometimes be outside the scope of a typical practice manager whereby owners may need to drive this aspect. As such, Professional Services businesses get into trouble when these things are not managed.
If the business gets sufficient workflow, they will begin the process of scaling up. This usually starts with reception and admin support before moving to practice managers or executive assistants. This will progress with portions of the service packages being able to be done by other support or technical staff. Directors often end up with core clients and grow primarily by word-of-mouth or by attracting other professionals to join them and bring their clients with them. If mergers and acquisition strategies are followed, then the business will seek out other professional services companies to either “buy their book” or add a partner to the partnership.
When to get help
Professional Services businesses tend to need help from a Business Advisor to provide direction on how to break the cycle of “do the work” then “chase the work”. Typically we assist Professional Services businesses with an initial assessment of the capacity currently being utilised. Then we’re able to assist on how to optimise the current workflow before engaging in sales and marketing activities to drive profitability.