What a year! Congratulations to everyone in a professional services firm that just finished their best year ever. I count myself as blessed because so many of you, so many leaders of firms (whether accountants, or architects, or attorneys, or contractors, or engineers) shared feedback about your firm's successes and struggles and what you see trending in the industry. Thank you for that.
As I look back at the year, there were certainly a few common threads that wove through most of the stories I heard.
Obviously, one of the common threads was that most everyone is very busy. Another was that many are also struggling to attract and/or retain the talent they need to get the work done. In a way, those two sentences could summarize the state of professional services industries today.
There's another thread I've focused on quite a bit lately because it worries me... a lot.
Even though most of the firms I talked to are busy, maybe busier than they've ever been, there's an underlying current that, if they're willing to admit it, worries almost every one of them.
Here are a few notes I jotted down during conversations this year:
- We're busier than we've ever been, but we're less profitable than we've ever been.
- We've won more projects than ever before, but we submitted for a record number too. Our win percentage is actually down.
- We're so busy and we're hurting on the talent side so much that we've put a hold on developing new business. I'm afraid not being able to perform will hurt us more than passing on a few projects.
I don't want to dwell on the negative... it has been a great year, but these kinds of comments leave me wondering: How will you leverage this year's success for even more in the coming year? I hope this year wasn't the setup for a disaster to come.
Here are the two things I'd like you to weigh in on:
- If you were very busy, ever busier than ever this year, were you more profitable than you've ever been or have you been working harder for less margin?
- If you had more work than ever this year, were your win rates actually up?
My fear is that many professional services firms, while having a successful year, have simply been propped up on a very strong economy. I hope you'll prove me wrong, but if I'm right...
If professional services firms aren't getting better at winning, what will happen when the economy inevitably slows down and competition gets tighter?
We're already seeing signs that things are slowing down.
A couple more notes I jotted down:
- We just had a project post-mortem with a client we've worked with for 15 years. Everyone was thrilled. The next week we found out they were looking at different delivery methods and fee-shopping for their next project... The. Very. Next. Week!
- We're a $1.2 Billion company and 90 percent of our work comes from repeat clients and referrals. We have a team of 6 responsible for our business development, but they'll all be gone in the next 8 years.
If you're responsible for developing business in the professional services world, I'll guarantee you'll tell me it's a relationship-driven industry... and you'll be right.
Relationships are important. They need to be developed, maintained, and cherished. There's a good chance you wear "90% of our work comes from repeat clients and referrals" on your best blazer like a gold star. You'll insert your own number between 75 and 90, but everyone says it.
It's great when there's plenty of work going on and those relationships are paying off, but what happens when projects start to dry up? What happens when those relationships start to fee-shop or the people that maintain the relationships aren't in your firm anymore?
I know you're busy and I hope that continues for a long time. Congratulations on a successful year, but please, please make sure you work hard in the coming year to get better at winning more of the right work at the right fees. It's the only way to avoid disaster when the economy slows, commoditization is magnified and irrelevance is the lens your clients and prospects see your services through.