If you love data and can gaze lovingly for hours at a well-crafted spreadsheet, then you may hanker for a vast array of meters to judge the progress of your consulting firm; something like an airplane cockpit.
Conversely, if numbers aren’t really your bag then you might prefer the dashboard from the 1962 Morris Minor I drove around England last century: one, lonely meter. (Plus, the speedometer was usually wrong and the car didn’t go fast enough to matter.)
Either way, your best bet is to cast your watchful eye on three sets of data: your consulting firm’s vital signs.
Consulting Firm Vital Signs
The data that you want within easy reach—right next to your phone, pens and stash of Milano cookies, are these three morsels:
You always want to have a handle on your consulting firm’s cash position, since that determines your ability to pay your staff and yourself, to cover expenses, and to invest in growth.
How to: Consistently track your consulting firm’s year-to-date revenue, year-to-date expenses and projected expenses. (Projected revenue is also helpful.)
Your prospects for future work are the most direct indicator of the health of your consulting firm. No clients = no firm. You can, if necessary, buy capacity on the open market; however, you can’t buy clients and projects.
How to: Set up your CRM correctly and keep it up to date. That will allow you to quickly ascertain the status of your Pipeline in all six stages, from Dormant Contacts to Proposals Submitted.
Your current and projected capacity determines your ability to live up to your consulting firm’s promises to current and prospective clients. If your pipeline is the heart of your consulting firm, then capacity is the lungs. As your consulting firm grows, capacity management becomes crucial.
How to: Every week, estimate your projected utilization for each member of your team for the next 8-12 weeks. (Note that historical, actual utilization is not a vital sign!)
The overall how to: Set up a dashboard that enables you to instantly access your three vital signs, and establish systems to populate your dashboard. Then, assign responsibility for updating the dashboard to an administrator on your team.
Your duty is to check your consulting firm’s vital signs weekly.
Monitor New Stuff, Too
The other data you should monitor frequently, though temporarily, is anything new at your consulting firm. For instance, new staff, new offerings, new systems.
Set in place clear metrics for success and a predetermined timeline for evaluating anything new at your firm. Make sure to establish an end date for tracking and evaluating.
Ironically most consulting firm data outside the vital signs are either collected and analyzed too frequently, leading to low-value, administrative overhead, or too infrequently (i.e. never).
Construct a schedule to periodically review other data. For instance, quarterly, semi-annually or annually, you could assess:
- Time requirements by project, service line or client
- Profitability by project, service line or client
- Administrative overhead
- Revenue sold by each team member
- Client satisfaction
- Marketing plan completion
- Size and health of your Network Core
- Partnership effectiveness
- Strength of key relationships
- Joy and personal satisfaction (among your team and you)
The list above is by no means definitive. Please add your thoughts: what other data is useful to review?
Text and images are © 2024 David A. Fields, all rights reserved.