With the recovering economy, professional-services businesses are no longer struggling to survive; they’re struggling to manage growth and workflow.
While it’s a lot nicer to be hiring people rather than downsizing, growth can easily become a poisoned chalice for a professional-services business. The increased personnel costs that accompany growth present a challenge, and what would have been a trivial problem when you managed a smaller business can quickly become life threatening. The good news is there are now better ways to keep an eye on potential side effects and avert them before they become detrimental.
Related: What to Consider Before Your Business Expands
1. Bigger projects can be taxing. The professional-services industry is about winning and delivering projects. And as your business grows, they're probably going to become bigger and more frequent, which is great! Bigger projects tend to involve more people and run for a longer period of time.
But the longer a project runs, the more that can go wrong. The bigger the project, the bigger the consequences of a failure. According to the 2008 U.S. Census, the typical professional-services business spent two-thirds of its revenue on payroll. So if a project representing 20 percent of the quarterly revenue goes bad, it could have a serious impact on the business.
The solution is to improve the quality of the project-management oversight with the size of the project. You need to invest the time up front to create a solid plan and be prepared to adjust for the inevitable changes that occur when working for clients. You’ll also get the best results if you can make project management part of your team’s day-to-day activities. This way, your project team can handle problems as they arise rather than attempting to put together the pieces after it’s too late.
Related: How to Survive the Peaks and Valleys of a Seasonal Business
2. Bench time can be a detriment. Variable workloads are a fact of life in professional-services organizations. While some team members might be going insane with work this month, their workload could become unusually light in the next.This creates a scenario whereby the most expensive resources are severely underutilized. Given the weight of payroll in a services company, someone having a single light week can wipe out any profit from that resource.
A steady flow of work isn’t a realistic goal for many professional-services firms. It's important, however, to get a handle on how the staff is being utilized so you can reallocate personnel to other projects during slack periods. In terms of technology, look for solutions offering a granular and global view of current projects and enabling you to accurately forecast staff requirements for new and recurring work.