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Professional Services: Driving and Defending Revenue. Part One


Professional Service (PS) firms face a wealth of change and challenge over the short and medium term. While some practice areas will maintain, or even grow, fee levels, the defensive posture of many ultimate clients will drive a need to revisit strategy for many.

If you are looking to refine your goals and focus, I have aimed to demonstrate how you might practically apply high-level theory around business planning and address some of the important steps necessary in order to defend and grow revenue. The challenges to growth fall into key three areas:

  • Strategy: Is the direction clear? What are your goals, how are you planning to reach them and what changes are likely to impact direction and timelines?

  • Business Development: What effort is necessary, where is the greatest return and how best to encourage execution of your strategy?

  • Resourcing: You are clear on direction and the level of effort necessary but have you got the team and adequate resourcing in place to deliver?

Let’s take a look at each in more detail. As you’ll see, the lines between the three blur – whilst the areas are distinct, all three need consideration to maximise the chances of success. We discuss strategy below and link to BD and Resourcing and the end of the article.

 

Strategy

At PLy we split strategy into development and execution as they are distinct areas and getting both right is essential.


Development Analysing the market and building a response: the pandemic has caused numerous shifts in direction; be it managing a general slowdown in activity, a shift in the service mix, an opportunity to enter a market or grow through acquisition. Desk research and conversations with other stakeholders, for instance journalists, clients and alumni, should reveal key trends that your strategy needs to address or ignore. For example, your research might establish the following in the current environment:

  • The usual counter-cyclical narrative appears to be playing out – disputes, investigations and insolvencies are stable or increasing.

  • Transactions are more subtly impacted this time compared to 2008 and there are also significant pockets of transactional activity. For example, tech IPOs, SPACs, NPLs, distressed M&A and investor activism all provide fee opportunities beneath the higher level M&A slowdown.

  • Some areas will see substantial investment. Compliance and regulation, supply chain and information security appear buoyant.

  • Some sectors will blossom while others will see years of uncertainty; and other areas will unfortunately face fundamental changes to business models.

  • Brexit looms and the trade/no trade deal options will likely require scenario planning. We'll explore this in a future blog.

The intelligence gathering around sectors, trends, activity etc (plus competitors) helps to inform your strategy, which may indeed be to carry on as is, but is more likely to see a change in focus. Questions you would typically answer during your planning efforts include:

  • Where best to focus to maintain growth or minimise a shortfall?

  • Where should you increase, change and reduce efforts?

  • Where are the opportunities for M&A, new services or market entry?

  • Where are the competition focusing or winning?

If we applied the research to a fictionalised PS firm, it might adjust its strategy as follows:

  • Ensure all existing clients and contacts are aware of their services in support of litigation, investigations, fraud, restructuring, capital markets and compliance.

  • Identify corporate clients and targets with the balance sheets strong enough to support M&A.

  • Develop relationships with active investors. Which do you know already and which do you need to meet?

  • Consider acquiring or hiring expertise in cyber and supply chain management to plug skills gaps.

  • Switch focus/resources from the areas facing reductions in activity.

Execution – Delivering on what was agreed: So, further to the development process, you’re now clear on short and long term goals. The next key stage is execution – a continued challenge to professional services firms for at least three reasons:

  1. The overall plan is not as clear as it might be. I find it helpful to apply two tests to planning and execution. The first is the 5Ws: Who, where, what, when and why – apply each to the elements of your plan as a sense check. Then add the critical question “How?” – it is frustratingly common to see a sound plan fail through poor execution.

  2. The day job gets in the way. A perennial challenge for PS firms - you only find time to undertake BD when you are between projects and then it’s often too late.

  3. It’s not clear who is responsible for what in terms of measurement and accountability. Again, this is a common challenge. You may have been in numerous meetings where it is agreed to target numerous sectors and verticals but ask your teams some key questions:

    • Why is this attractive to us now?

    • Who’s doing the legwork – turning an idea into a campaign?

    • What does ‘good’ look like in activity or revenue terms?

There are a variety of goal setting and tracking frameworks (and acronyms) available – KPIs, OKR, BSC, EFQM and others. All improve execution and I have had some excellent results with 4DX from Covey and McChesney where we: focus on 1-2 goals; act on lead, not lag, measures; keep score and drive accountability. You might find a framework works well with your team, but if that level of formality does not suit (we tweaked 4DX a little) then the bare minimum to undertake is to ensure the following are clear and measured: overall goals, agreed activity, expected efforts and ownership.


Click here to access part two: BD activity and if you have any queries, please contact me at: paul@plyconsult.co.uk, I would be pleased to hear from you.




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