While some firms may make growth look easy, most of the time it’s hard. It takes strategic, long-term thinking combined with an unwavering commitment to execution and accountability.
Off the top of your head, name as many fast-growing companies as you can. Now, think of some more that are growing uncommonly fast. You know, like Tesla, fast. Okay, take 30 seconds…seriously, do it…I have all day…
Okay, now how many of those companies were professional services firms? Two? One? None?
Most of the time, growing a professional services firm is incredibly difficult. New clients don’t come easy. Especially big ones. Every time you start to get momentum, something pulls you back. A key partner leaves. An important client retires or turns to another source of trusted advice. As the old song goes, “You take two steps forward and then take two steps back.”
At the end of the day, I think there are 5 obstacles that block firms from growing as much as they’d like:
- Business Model
Let’s look at each of these individually.
#1 – Business Model
The first, and most obvious, growth inhibitor is the nature of the business itself. When Netflix or Salesforce acquires a new customer, they’ve just generated a recurring revenue stream. An annuity, if you will. Customer retention, at companies like these, is in the 95-98% range. And, more importantly, those customers continue to pay for services every month or every year for a long time into the foreseeable future.
By contrast, most professional services firms have a leaky bucket problem. They may have client satisfaction rates in the 90%+ range. But that doesn’t mean those same clients are going to part with their money in the next 12 months to work with them. Frequently, your expertise doesn’t represent an ongoing need. Clients hire you once. And then hire you again out of nowhere 5 years later. As a result, most firms start the year with only 30-50% of their revenue identified. I offer some suggestions on how to fix that later…
#2 – Positioning
In the last 10 years, I’ve written about positioning on this blog more times than I can count. Ultimately, positioning is about choosing where your firm will compete. What types of clients does your firm serve best? What problems are those clients struggling with right now that you know how to solve? What issues are they not seeing that they will they be struggling with in the next few years?
Ultimately, you can position around a market (CPG), a buyer (CMO), a technology (CRM), a business function (customer support), a specific business process (customer acquisition), a concept (customer experience), or even a mindset (customer delight). Ultimately, the best firms position themselves narrowly enough to bring deep expertise to bear on a client’s specific situation. Yet, broadly enough to ensure there’s enough runway to create sustainable growth. A major reason many firms miss their growth potential is they simply miss the mark on positioning. They go too narrow. They go too broad. They tie things together that don’t belong together. Or they simply have none.
#3 – Point-of-View
It’s one thing to declare a positioning. It’s another thing altogether to have something compelling and valuable to say to clients in your narrow field of vision. Ultimately, a firm’s point-of-view is what separates it from a client’s other options. It’s the belief system governing how your firm thinks about the work it does. It’s the “special sauce” for how clients can solve the problem in a different or better way than they’ve been able to in the past on their own or through hiring your peers. And it’s frequently the polarizing lens that attracts clients to you and catalyzes growth.
At the end of the day, clients may have a clear understanding of your firm and its expertise, but simply do not find anything compellingly different, unique, or better in the way you approach the issues you solve such that they hire you.
#4 – Culture
As my Rattle & Pedal podcast co-host, Jeff McKay likes to say, “In professional services culture drives everything.” Sure, the partners in your firm may have committed to some growth targets, but are they willing to do what it takes to achieve them?
Early in my professional services journey, I worked with an engineering firm that had built a deep body of experience in silo inspection. The practice leader had literally written the industry code on how to complete a proper diagnostic for a grain or materials silo. The CEO and I were convinced that there was untapped opportunity to market the firm’s expertise in this area and grow the practice 3-5x where it was at the time. But, at the end of the day, the practice leader simply wasn’t willing to develop the methodologies, oversee the content development, or train the additional staff necessary to attract, win, and deliver the work. Yes, the practice was profitable. But it simply wasn’t going to grow. And, short of ousting a partner, or resetting cultural expectations there wasn’t a whole lot we could do about it.
#5 – Delivery
Most firms provide customized solutions to customized problems. Sure, there may be a thread of intellectual property underlying those solutions, but ultimately every engagement is unique and is delivered by a senior consultant through a custom consulting engagement. For the client, it’s like dining at a 5-star restaurant where all their needs are fully anticipated, attended to, and accounted for. But, just like you, sometimes clients want a different kind of experience. They want to dine fast casual, on the go, at their desk, or even cook a meal themselves. But firms rarely offer them many, if any, options.
As it turns out, there are a wide range of ways a firm can deliver its intellectual property. These alternative delivery models can open growth opportunities previously ignored. IP can be used to spawn coaching services, open and closed training programs, productized services, SaaS products, books, events, you name it. Ultimately, the delivery models are practically endless. Yet, firms routinely close off growth opportunities by offering clients only one.
Where to Start?
The first, and most important, place to start is to simply recommit the firm to growth. Establish clear and specific growth targets. Not just how much you hope to grow, but where that growth will come from and how. Then, agree on what needs to happen for that growth to occur. Finally, commit to holding everyone mutually accountable to doing the hard work necessary for growth to take flight.