Growing Pains: #OpsTech to Unlock Growth for Boutique Consulting Firms
PRECURSIVE GUEST BLOG | HONEYCOMB PS
DERI HUGHES ON USING OPSTECH TO DRIVE GROWTH
Honeycomb PS works with small to medium professional services firms with operational support and provides access to specialist experts as and when needed for day-to-day running of businesses on a flexible and scalable basis. They help senior teams reclaim time back to spend on more important aspects that help grow their business such as their clients and people.
If you own a boutique consulting firm and are finding that your past success has made future growth harder to achieve, one thing is certain - you are not alone!
The UK consulting market is huge (>£10BN fee income according to the latest research from the Management Consultancies Association) and growing at 7% p.a. in an economy that is somewhat slower than that.
The sector employs approximately 60,000 people, across thousands of firms of different sizes, specialities and capabilities.
There is no great data on the number of “boutique” consulting firms or even an established definition of boutique, but the experts we’ve spoken to estimate between 3,000 and 5,000 owner-operated small consulting firms across the UK.
Typically, these firms are started on the brilliance of an individual who is able to sell and deliver great impact for clients, then starts generating significant demand and pulls in a team (employees, associates, or a hybrid model) to help them deliver.
Before long they are spending more time running the business than with clients, and struggle to break out of that cycle without time to address inefficient processes.
Through our experience working with firms of all different sizes and stages of development, we see a few common operational challenges that founders experience as they grow. These challenges are often frustrating, as the owners of boutique consulting firms can struggle to identify, implement, and optimise the right technology to unlock productivity and simplicity in their business operations.
We call this technology #OpsTech.
This article is our starting point for a series of guides on how to use #OpsTech to drive growth in your consulting business, at whatever stage of growth you’re at.
The right #OpsTech for your business depends on the needs of your business now and in the near future. It also depends on your appetite (and ability) to invest ahead of growth We identify three different stages, and one special situation, that should trigger you to consider making the time and cost investment in a new technology solution:
GROWTH STAGE 1: Early days
⬩ Typically your first 1-3 years of generating fee income, up to circa £1.5m revenue.
⬩ You’ve got some established clients, a small team (<10 people) in a serviced office, and have figured out how to explain what you offer when you meet new people.
⬩ New clients primarily come from referral, and you’re not too focused on what you’ll do for them - “we’re smart people who’ll solve your problems”.
⬩ You run your business on spreadsheets and are mostly focused on delivery, hiring the team to meet client demand, and on having enough cash in the bank so you can make payroll and take out what you need personally.
⬩ You’re not yet seriously thinking about external investment.
GROWTH STAGE 2: Established boutique
⬩ From 2 years in, to 10+ years - many boutiques sit happily here for a long time, generating £1 - 3m revenue p.a. (potentially with significant year to year volatility) with a team of up to 20 people.
⬩ You’ve probably got a roster of up to 10 bedrock clients, plus a longer tail of smaller or infrequent purchasers. You get a few new clients each year but as you’re still heavily involved in delivery it’s hard to find the time to build new client relationships or really hone your proposition enough to support cold marketing activity.
⬩ Your business processes are reasonably well established, but largely still manual. Unless you’re naturally inquisitive about new technology but you’re probably not spending the time to figure out how to automate them.
GROWTH STAGE 3: Beyond boutique
⬩ This stage is all about breaking through the £5m+ fee income barrier and establishing a mature firm of 50+ people; this requires dramatically different business processes.
⬩ Exactly when you invest in those processes and the technology to support them, will depend on your ambitions for growth rate and your confidence in achieving it.
SPECIAL SITUATION: Seeking external funding
⬩ If you’re looking for external funding (debt or equity) to help accelerate growth you will have different requirements for your business processes - particularly Finance - such that they can stand up to the external scrutiny of diligence.
⬩ This is likely to mean earlier investment in technology and expertise than would otherwise be justified.
In each of these stages, there are four potential benefits of implementing an #OpsTech solution to improve one of your internal processes:
Reduce risk to your business (e.g. avoid running out of cash).
Improve employee or client experience (e.g. better matching of people to projects).
Improve efficiency to free up time (e.g. automation of candidate communications when you’re recruiting).
Accelerate revenue and profit growth (e.g. automated proposal development, distribution and tracking).
How you prioritise the right area for the right benefits will depend on the detail of your specific situation, and your personal priorities for the business.
In the rest of this series we’ll be deep-diving on three specific areas that existing #OpsTech can be deployed to help address challenges at each stage of development