Congratulations! Your firm just won the largest project in its history and it’s time to celebrate, or is it? Unfortunately, winning the big project doesn’t guarantee success and big profits. For project-based firms, project management is synonymous with profit management, but many projects start in the red making it nearly impossible to make a profit. Here’s a look at some common pitfalls project-based firms face before they ever start a project.

Accurate Job Costing

If you have been on a proposal team, you know the feeling of relief that overcomes you once you finally submit the proposal. Weeks of working long hours reading and writing exhilarating technical content and attending meeting after meeting. All this work and time exhausted by several people when in reality, your final price is the biggest factor in winning. But, can your firm deliver the project on the proposed budget?

Accurate job costing requires accurate information, and most firms believe they have the right systems for their business model. Excel sheets and the time clock work, but these systems don’t communicate very well. Even more, consider the unreported overhead time to reconcile these systems and the mistakes made during this process.

“If it works, don’t fix it” doesn’t always apply, and information in more than one system doesn’t work when trying to maximize profit. When it comes to job costing, you already have to worry about inaccurate estimates from suppliers. These are costs you can’t control, so be sure to take control of your internal cost monitoring to create profitable bids you can deliver.

Establishing Key Performance Indicators

Key Performance Indicators (KPIs) are various quantifiable measurements used for determining the success of the project. The KPIs establish a guide to the project and are used as the basis for critical decision-making. More importantly, not executing on a specific KPI can affect the project’s profitability for your firm and your client’s satisfaction.

Here’s where some project-based firms struggle. In many cases, several of the KPIs are destined for failure before the project starts. The problem is that defining KPIs is truly challenging and your clients usually lack experience with the process. All too often, this results in KPIs that are unrealistic and unmeasurable.

Establishing realistic KPIs is the first step to managing the profit of a project. As the project manager, it’s in your best interest to have a strong role in creating the KPIs. Good project KPIs have values that can be accurately measured and clearly reported on. Further, they need to be understood and agreed to by all parties. To learn more about project KPIs, click here.

Risk Management

Projects are full of unforeseen obstacles and predicting these is not always possible, but this doesn’t mean your firm can’t minimize the impacts. They just need to have a formal risk management strategy. Although this might be a time consuming process, it’s a necessary process required to protect your profit.    

A study by Info-Tech Research Group found that organizations with a formal risk management strategy are more than half as likely to have project management success than those with a reactive approach. To put it another way, having a risk management strategy before the project gets started is critical to the project’s success and profitability.

A risk management strategy starts with identifying common risks such as unrealistic schedules and requirements that fail to align with the strategy of the project. Once these risks are identified, evaluate the impact each risk will have on the project. From there, make a contingency plan that has a pre-planned response to the unexpected event.       

Become a Profit Manager

Don’t start your next project in the red. Project management starts with project planning, and not having the right systems and processes in place can hinder the success of the project. If your firm is falling into any of these pitfalls, consider the changes that you can make to become an effective profit manager.  

All too often, certain words and catchphrases are overused in business meetings to the point they have become trite and serve little to no real purpose. These words and phrases are used in business blogs, articles, websites, and day-to-day business emails. One such term, "client-focused", is thrown around as a marketing gimmick for professional services firms, but what does it really mean to be client-focused?

Before we get too far, here’s what you need to know:

1. There is a difference between saying you’re a client-focused firm and actually being client-focused.
2. Your firm’s culture dictates the level of service your clients receive. 
3. If your firm isn’t using technology to support your client relationships, you’re already behind.

The Firm-Focused vs. Client-Focused Professional Services Firm

Being truly client-focused depends on how your firm sees their clients. Sure, it is easy to talk the talk, but putting words into action is where things tend to get difficult.

When a firm places an enormous emphasis on the needs of their clients, they are firm-focused. A firm-focused business makes decisions based on the benefits to themselves and not with their client’s best interest in mind. 

On the contrary, truly "client-focused" firms make decisions that are determined by their client’s needs, as they are at the center of all such business decisions. They understand exactly what their clients need which helps to promote a symbiotic relationship between the firm and the clients.

Through the delivery of top-notch service aimed directly at the needs of their clients, a company will see a simultaneous rise in business performance. After all, the services provided were determined with the client and their needs in mind.  

Living the Firm’s Culture

Who are your clients? The answer might surprise you, but in the business world, there are two types: internal and external clients. 

Internal clients are members of your organization that rely on the help of other members to perform their job. These individuals can fall anywhere on the spectrum of your chain of command, from coworkers to upper management and executives. 

On the other hand, external clients are clients in the traditional sense of the term. They are the buyer of the services your firm provides. 

Do you feel you receive great service from the other internal customers within your firm? If you’re not receiving great service from within your own organization, imagine the service your external clients are receiving. Your firm’s culture is a reflected by the employees, and your clients can see if you live by the values you market.

If you’re not satisfied with your internal customer service, start communicating and living the values that define your firm. Your clients will notice the difference.

How Technology is Changing Playing Field  

Keep up with the Joneses - In order to be competitive and effective within an industry, your firm needs to ensure it is using innovative technology that helps promote success. Failing to innovate hinders a firms’ ability to adapt and grow while the "Joneses," aka your competitors, employ the use of industry leading technology enabling them to leave you in the dust. 

With a Client Relationship Management (CRM) software, you can take your company to the next level by keeping the functions of your company in a centralized system. This helps promote a conducive work environment in which the sales and marketing teams, and administration and finance teams can better work together to achieve client-focused results. To learn more about the basics to Deltek Vision CRM, click here.

An additional benefit of using innovative technology and software is that it enables you to access your work on-the-go. Today we have access to everything on our smartphone devices. From banking to entertainment, email to ordering pizza and everything in between, we can do incredible things with just one, single device. Having mobile access to your CRM allows you to -update client information on-the-go and enables other members of your organization access to the most up-to-date information about your clients. 

The Takeaway 

The importance of understanding what it means to be "client-focused" cannot be overstated. Your firm should define itself by its actions and not by catchphrases.

The goal of being client-focused is to nurture client relationships to retain clients and win more work. Remember, your existing clients are the lifeblood of your organization. According to Bain & Company, it cost 6 to 7 time more to acquire a new customer than retain an existing one. It seems smart to try to keep the clients you already have.

Ultimately, when push comes to shove, there are really only 3 ways to increase profits:  Sell more, improve margins or decrease overhead costs. While these principals may sound simple on paper they are often difficult to execute in the real world. But have you ever thought about the role client feedback plays in your firm profits? Perception is reality and understanding how your clients perceive you can uniquely position your firm to fuel the bottom line and increase profits.

The Breakdown: 3 Ways for Increase Profits

Sell More | Simply put, there are only two ways to sell more: Add new customers and increase sales to existing customers. In my experience, sales discussions tend to focus on adding new customers. But research has shown that it costs at least 8 times more to sell to a new customer versus an existing client. Ideally we want to ensure long term stability with existing relationship and leverage those relationships to win new work.

Tip for selling more:

• Avoid losing your least expensive prospects – existing customers. The best way to ensure long and meaningful relationships with clients is to (gasp!) create real relationships. Developing a client feedback process allows your firm to build trust between you and your clients, continuously strengthening your relationships and building client loyalty.

Improving Margins | The Pareto Principle states that, for many events, roughly 80% of the effects come from 20% of the causes. Consequently, many businesses have glaring opportunities for improvements to their bottom line by simply eliminating or refocusing areas of their business that do not fit company goals. Regardless of the area of business you target, strong client relationships are proven to make a positive impact to your bottom line.

Tip for improving margins:

• All opportunities are not created equal. It’s a dog eat dog world and as clients are receiving more proposals than ever, identifying strategies to increase your win rate becomes increasingly important. Successful professional services firms are implementing tools and processes to create an RFP feedback strategy.

Decrease Overhead Costs | While expense management is an important element to every successful business, it is imperative to understand where to cut costs in your business. Is re-work eating away at your profit margins? Are your project managers delivering more than the scope of work in the contract to try and ensure their clients are satisfied? By using client feedback to guide these decisions we are able to cut fat from our budget – without cutting bone!

Tip for decreasing overhead costs:

• Develop a corporate culture that embraces automation. Although automating processes and procedures sounds like something only for Fortune 500 companies, automation is actually perfectly suited for  small- to medium-sized businesses where the focus is on being lean and mean. Start decreasing your overhead costs by focusing automation on processes and tasks that are menial and time intensive. Doing so will free up your employees to focus on tasks and assignments better suited for humans such as responding, tweaking, evaluating and navigating complex social issues. 

So Where’s the Magic Template? 

Ultimately there is no golden brush for improving profits. Your firm needs to make decisions based on your own set of criteria. However, as you look to continue to set yourself apart and differentiate from your competition, consider the value of keeping your clients at the center of everything you do. Many firms claim to be client-centric, but do words often meet reality? The Client Feedback Tool can help you integrate a proven process into your project delivery system to keep your clients at the center of your business and give your firm the winning hand. 
 

Full Sail Partners, a Client Feedback Tool and Deltek Premier Partner, recently announced it has earned a spot on Accounting Today’s 2015 Top Value-Added Reseller (VAR) List. Accounting Today is a leading provider of online business news for the tax and accounting community, offering breaking news, in-depth features, insightful editorial analysis, and a host of web-related resources and services.

Each year a select group of 100 organizations are honored for their accomplishments as VARs. The top VARs are selected from organizations focused on sales and implementation of accounting and Enterprise Resource Planning (ERP) software. Criteria used to determine the winners include 2014 revenue, number of offices, and staff size.

According to Seth Fineberg, Technology Editor of Accounting Today, “The Accounting Today VAR 100 list is comprised of top accounting and ERP software resellers throughout the country, ranked by revenue. This select group represents those in the world of accounting software resellers that are truly ahead of the pack and we are pleased to honor them in this special report.”

Full Sail Partners provides on-premise and cloud-based solutions for architects and engineers, energy and environmental consultants, and professional service firms across the United States. Full Sail Partners' team, collectively, brings more than 200 years of experience with Deltek solutions. The firm represents unique technology solutions that integrate with Deltek Vision including Deltek’s Kona social collaboration platform, the Client Feedback Tool, and Vision Unleashed.

"Last year Full Sail Partners was listed as one of the VARs to watch and we are extremely honored to make our return to the Value-Added Reseller Top 100 List," said Sarah Gonnella, Vice President of Marketing and Sales of Full Sail Partners. "Our firm continues to deepen our bench strength with Deltek Vision experts, allowing us to be the go-to firm for consulting, customization and integration. Jumping to number 85 in Accounting Today’s Top 100 Value Added Reseller list is a great accomplishment and demonstrates our ability to engage our existing client base, as well as, target new project-based firms beyond the AEC industry.”
 

The other day I was having a discussion with a client about the challenges of owning a consulting firm. It’s funny how these types of conversations force you to reflect on your own experiences. I quickly realized I made some mistakes along the way as all business owners do when they first start out. I’ve also been witness to mistakes by other consulting firms that have reached out to us for help. From these past experiences, I have identified 9 deadly sins owners of consulting firms should avoid.

1. Not Staying True to the Purpose – When you started the firm you had a purpose, your mission, vision and principles. Don’t lose sight of how you became a successful consulting firm, even through the tough times. It’s important to diversify and be innovative, but it must always fit what you stand for. When you leave your core business, you also lose your core loyal clients.
2. Failing to Innovate – When firms fail to see the changing tealeaves and adapt to their client demands and the competitive landscape, the business can become stagnant and may even die out. Innovation opens your firm up to the next big success. Ideas may fail, but continually innovating and adapting will keep a consulting firm growing.
3. Not Planning for Growth – Alan Lakein said, “Failing to plan is planning to fail.” This couldn’t be more true when it comes to thinking about how you will grow your firm. The demise of any consulting firm is hoping to stay where it is and not planning for future growth. Change is constant and you can rest assure that your competitors are looking at ways to grow their staff, revenue and client base.
4. Misunderstanding Profitability – You would think this would be a no brainer for consulting firms, but you would be surprised at the excuses made by Project Managers and Owners about why the profit number is declining. Most consulting firms watch profitability for the company, but are you watching the profit on each project? Even worse is when you make the same mistake with the next project. It’s important to take those lessons learned and circle them back to the proposal process.
5. Not Tracking Cash Flow – Firms that do understand profit often forget that it is only half the problem. Clients that do not pay can derail the best profit and growth program and impact cash flow. Having a consistent feedback program with clients can decrease payment issues. By constantly collecting client perceptions about the service delivery, firms can quickly resolve issues and reduce the firm’s payment issues.
6. Misguided or Lacking Process Improvement – Processes deteriorate over time for all kinds of reasons, including addition of new technology, employee turnover, and cutting expenses or resources. Periodically reviewing your processes - whether technological or how staff approach clients or issues - keep staff trained and technology up-to-date. Technology that allows for automatic workflows is an easy way to improve efficiency, decrease redundancy and create consistency. Keep in mind that pursuing too many process improvements at one-time can also be detrimental to the goal. Process improvement must be clearly defined, have an internal champion and sometimes done in stages.
7. Treating BD as a Part-Time Lover – For smaller firms especially, business development can be a challenge to juggle getting the business and doing the work. However, if your firm isn’t constantly selling to existing and new clients, your sales pipeline will eventually run dry. Setting goals and monitoring those goals through a CRM system, for example, can provide visibility to ensure business development is consistent.
8. Ineffective Risk Assessment – The moment we start a business we run into unpredictability and risks every day. Sometimes leaders don’t even know there is a risk issue. Understanding the risks facing your company – from professional liability issues to growing into a new market – allows you to minimize the risk while still being able to “take a chance”.
9. Improper Planning of Disasters - Failure Happens! However, many firms don’t realize until it’s too late that they don’t have an effective backup and recovery solution for their database, email, and network. Even if your firm has a back-up method in place, many times it can’t be deployed quickly. The scary stat is that 60% of all firms that lose their data will close in 6 months. Instituting a Disaster Recovery System that allows for redundant offsite storage and system restoration within a 36-hour period can greatly reduce the chances of complete loss.

Ask yourself, if your consulting firm is committing any of these deadly sins? If so, what can you do about it? Albert Einstein is quoted as saying, “Insanity: doing the same thing over and over again and expecting different results.”  It would be insane to keep repeating any of these deadly sins.