5 challenges facing professional services companies-and how to overcome them
- 1 5 challenges facing professional services companies-and how to overcome them
5 challenges facing professional services companies-and how to overcome them
Every business faces challenges, but many B2B companies face similar problems due to the nature of their work.Professional service companies in particular often encounter Cash flow restriction, Recruitment difficulties and schedule frustration. Many of the obstacles these companies are now facing have become more serious due to the lag in business caused by COVID-19. Fortunately, there are some useful solutions.
If you run a professional services company, here are the five most common challenges you may face and what steps you can take to overcome them.
1. Maximize billable time
In a professional service company, maximizing the billable hours per employee is important for Maintain cash flow And increase profits. “Time is the inventory of service-oriented companies. It is a perishable resource that deteriorates in a second,” said CEO Nick Bideshi. Blue dollar, A digital marketing agency.
“Because we have a fast-paced work environment, our biggest challenge is missing billable time,” said CEO Michael Hamelberg. Bottom line group, A company that helps business owners reduce business expenses.
He said: “The time spent on phone calls and online information with customers after work, or time spent on business travel consultations is just part of the time that consultants forget to record them and are ignored.”
Neglecting to record billable time may cost your company thousands of dollars in revenue, but this is only part of the problem. The bigger problem is to ensure that employees have enough billable work each week.
Maximizing employee billable time comes down to better organization and project management. First check your record keeping method. “We have a dedicated team to manage a software tool that obtains billable time according to our billing guidelines,” Hammelburger said. “We have improved compliance and accuracy by 90% and avoided writing off billable time in order to quickly track customer payments.”
Next, consider your Project management technology. How do you usually allocate items? Are some employees overworked while others are idle? You may need to change your team or distribution method to ensure that everyone has enough billable work in a week.
2. Recruitment and training
Recruitment It can become catch-22 in a professional service company. You may need to hire to help offset your project burden, but hiring will also create more work for you and your team in the short term.
“We must constantly balance hiring employees and onboarding customers,” Bideshi said. Not only do you need to find, review, and interview candidates, you also have to train them, which requires a lot of non-billable time and resources. In addition, depending on the experience level of the new employee, it may take weeks or months for the person to start billing and start generating revenue for the company.
In order to prevent the loss of income and job opportunities, it may be helpful to try to shorten the company’s recruitment and training time frame while increasing the checks and balances in the process. Consider clarifying the scope of work in your job description, spreading a wider network for candidates, or conducting a more thorough interview. These steps can help you find more experienced candidates.
Speaking of training, right tool Can help speed up the process. Bideshi said: “We have automated 90% of the on-the-job training of non-management employees by using software solutions to hold courses for internal purposes.”
3. Acquire new customers
Maintaining existing customers while finding new customers is an eternal challenge. Sarah M. Williams, founder and director of the company, said that even if you have an ongoing customer relationship, it is still important to attract new customers to stay up-to-date, increase revenue, and keep your team agile. 816 New York, A brand strategy and communication agency.
“In addition, you don’t want to rely too much-especially now during COVID-19-only on a few relationships, because things are always changing.”
However, acquiring new customers requires not only time and patience, but also resources.You may need a budget New marketing initiatives, Spend money on advertising campaigns, and free up time for consultation and advice.
Work hard to improve your marketing plan. “We have carried out content marketing activities on our website, aimed at gaining potential customers, especially those who have a communication strategy need,” Williams said.Content marketing efforts, as well as online advertising and Email nurturing activities Can help you bring you more potential customers.
It is also a good idea to advertise any free services you provide. “We conducted a 30-minute free consultation,” Williams said. “If the lead seems strong enough, this usually becomes a proposal process.”
You may also want to find potential customers from your network. Check out virtual meetings or discussion groups, or consider implementing a referral program to inspire past and current customers to spread your name.
4. Plan for ongoing needs
Running a professional services company means balancing your time between current project work and future work plans.
“The client’s budget may end, increase, or start suddenly for various reasons,” Bideshi said. “In the post-COVID-19 world, these ups and downs seem to be more violent than before.”
If you don’t plan Downtime Or demand increases, and certain areas of your business may be affected. For example, in a marketing agency, “the demand for the design team may exceed its capabilities, while the strategy or writing team does not have enough work,” Bideshi said. This may affect your project schedule and billable time, both of which will ultimately affect your profits.
“The demand problem is due to Sales funnel,” said Bidders. “This may be due to the type of company that the company cooperates with is too specialized, or the business development process is improper. ”
Bideshi says that one of the best ways to attract consistent potential customers and generate stable demand is to improve your sales channels. “A key factor to consider is the monthly or annual churn rate based on revenue rather than the number of accounts.”
From there, try to use the data to determine the strongest and weakest points in your sales funnel.For example, if you know that most customers have left your website after visiting your website login page, Is committed to brainstorming to increase participation in this stage. This may involve adding a video to the page, tightening the copy, or directing potential customers to free consultation or a discount on the first service.
5. Waiting for customer payment
“As a self-employed SEO and website designer, the biggest challenge I have always faced is the time it takes for some companies to pay for the services they request,” said founder and CEO Jase Rodley. Dial lab, A website design and search engine optimization agency.
Many professional services companies eventually have to wait 30, 60, or 90 days to receive payments from customers. The coronavirus pandemic will only exacerbate this problem. According to a recent report, Late payments affected 43% of the total value of B2B invoices Released in North America this year. More importantly, the total amount of payments overdue for more than 90 days doubled to 13%.
As you wait for accounts receivable, cash flow will quickly decrease, which makes it tricky to pay operating expenses, let alone budget for growth plans such as hiring or investing in new technologies.
You can use some strategies to keep cash flow stable. Rodley says one option is to charge a non-refundable deposit for your services. “it Give your bills some leeway without having to pay in full. ”
Another option is to set up a payment plan. “We automatically bill our existing customers and put our project work in an installment plan that is also automatically billed, so we can always get paid,” Williams said.
Hammelburger suggests that you can also negotiate with your supplier or supplier to extend the due date for accounts payable. Just make sure you maintain a good relationship with these suppliers; otherwise, you may risk burning the bridge.
If you are having trouble trying to speed up your accounts receivable or delay your accounts payable, please consider seeking help from an online lender.At Fundbox, we provide Commercial Credit Line.
Overcoming the challenges of your company boils down to implementing a more efficient system-everything from sales to recruitment.If you are struggling in a certain business area, please take some steps to regroup and Develop a strategy for your success. If you need help with cash flow, please consider applying Commercial Credit Line.
Disclaimer: Fundbox does not provide financial, legal or accounting advice. This content is for reference only and is not intended to provide and should not be used as a basis for financial, legal or accounting advice. You should consult your financial, legal or accounting advisers before making any transactions.