UK consultancies optimistic but talent, budgets challenge growth
1. MAGNIFEYEP A R T O F T H E A G E N C Y W O R K S T E A M
MAGNIFEYEP A R T O F T H E A G E N C Y W O R K S T E A M
ISSUE #1
BUSINESS
B A R O M E T E R
VISION
2. We are thrilled to be launching the Business Vision
Barometer, an on-the-ground viewpoint from consultancies
in the UK on what it’s like to be doing business, their
business, in 2015.
The team at Magnifeye has a firm grasp of the consultancy
sector having implemented project management systems
through Synergist for over 10 years. However, there is
no substitute in hearing from you on how you are finding
project-based working in the current climate, and how
you feel about the prospects for your company in the
future.
With this in mind we would like to thank the participants
of this first Business Vision Barometer which aims to
provide the starting points for open forum discussions
and learning between peers in this area, supporting
ambition, and highlighting the need for our support
where we can provide it.
The Business Vision Barometer will be issued as a
quarterly report for project-based firms in the UK so we
would encourage as many of you as possible to take
part, sharing your view and story of the challenges you
face and successes you enjoy.
The UK is currently enjoying economic growth, although
at a slower rate than initially anticipated at the beginning
of the year, and consultancies are a sizeable part of this
economic expansion. Not only as an important power
house of business themselves, but also in terms of
the valuable expertise provided to drive other
businesses forward.
To help maximise your profitability, we have created
a Fee Income Calculator to find out your annual fee
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No matter which industry sector your business operates
in, we hope you will find something of interest within
this report and please do email us if you’d like to take
part in the future or if you’re facing similar challenges as
highlighted in the report. We would relish the opportunity
to see how we can help create a system that works to
support your business.
The full set of questions we asked can be found at the
back of this document.
Thank you for reading.
Jay Neale, co-founder
Magnifeye
WELCOME TO THE BUSINESS VISION BAROMETER
BUSINESS
B A R O M E T E R
VISION
7. FOCUS ON: THE CURRENT TRADING LANDSCAPE FOR CONSULTANCIES
JAY SAYS:
“This first Business Vision Barometer
happily reports that consultancies are
feeling positive at this mid-way point in the
year, but as with any business there are
always hurdles to overcome, and ambitions
to be met. By putting project management
processes and profitability under the
microscope, consultancies will give
themselves a better chance of spotting
trends in their finances, areas of over
service perhaps and even where further
growth is possible. Coupled with the need
to recruit talent as highlighted in the
Barometer, this half way point in the year
is a natural time for many to review and
streamline processes, aiming for another
successful quarter and beyond.”
This first Business Vision Barometer sets the
scene for how consultancies are faring so far in
2015 as the economy shows signs of growth after
an uncertain few years for firms.
A healthy 88% of consultancies said the general
outlook of their business’ performance over the
next quarter is improving or slightly improving,
with none of the firms seeing it decrease or
dramatically decrease. The remaining 12% saw
their outlook remaining the same.
When considering the key challenges facing
their business at the moment, it is the issue of
finding the talent needed to meet the needs of
the business which plays on the minds of bosses
the most.
The top five challenges for consultancies at
present are:
1. Recruiting talent - 59%
2. Increasing new business leads - 47%
2. Growing existing clients - 47%
4. Decreasing client budgets - 35%
5. Increased competition - 29%
Perhaps reflecting the key business challenges
of finding new talent and increasing business
through the door, the financial challenges which
are predominantly facing consultancies are
focused on driving revenue.
The top five financial challenges faced by
consultancies:
1. Increasing profitability - 53%
2. Late payment - 41%
2. Accurate forecasting - 41%
4. Managing cashflow - 35%
5. Paying taxes/business rates - 18%
There is a clear need for consultancies to angle
the spotlight on driving growth in the current
climate to maximise on this period of positive
economic growth. With that in mind, concentrating
on recruiting the right talent and putting robust
systems in place to highlight revenue-driving
opportunities within the business, could be key
in the next quarter.
BUSINESS
B A R O M E T E R
VISION
8. FOCUS ON: WINNING AT WHAT PRICE?
The positive outlook displayed by consultancies
currently could be founded in their new business
successes. Over a third (35%) reported a 1 in 2
new business win rate in Q2 of 2015, 29% are
winning 1 in 3, and 12% are even winning at a
higher rate than 1 in 2. In terms of how this translates
to profitability, in the most part respondents said
they have not budged on reducing their rates
in the last quarter just to win new business with
over half, 53%, standing firm on cost to the
client. However, 47% of consultancies admitted
to dropping rates to win new business and of this
number, 29% are dropping rates by 10-20%.
Dropping rates to win business can be a slippery
slope for firms as it can give the client the
perception of a lower value service, and it becomes
difficult to bring the rate back up once the client
has received a discount. It also affects the
consultancy’s bottom line narrowing margins, and
not contributing enough to revenues to meet the
business’ targets.
There are of course business cases to be
made for dropping rates in instances where
agreements with clients are made for short term
rate reductions for longer term gain, or perhaps
on reviewing their finances a consultancy can be
sure that the business will stand up to it. But with
41% of respondents charging an average hourly
rate of £95-£105 per hour, could your business
afford to drop £10-£20 per hour?
JAY SAYS:
“Alongside growing or adding to projects with existing clients, the new business stream
is hugely important to consultancies and undoubtedly has a knock-on effect on recruiting
talent and growth targets.
Compromising on rates, which will have been carefully worked out to ensure profitability
on projects and that value is delivered for the work required, could be perceived as under
estimating the worth of the consultancy provided, and can also create problems further
down the line in trying to bring that rate back to what it should be.
As part of the Business Vision Barometer, we asked consultancies why it is they think they
lose out on new business and 65% said they thought it was due to budget constraints.
So we see why the temptation is there to drop rates just to win the business with one eye
on a longer term relationship.
And yes in some cases it can work to discount rates on an agreed short term basis, but
devaluing your work is not an ideal starting point with a client. Know your worth,
understand what a piece of business needs to bring to your books in terms of revenue
and be resolute in the value of your consultancy.”
BUSINESS
B A R O M E T E R
VISION
9. FOCUS ON: NEW BUSINESS: INVESTMENT OR PLANNED FOR?
The new business process can be pressured
especially if you are a small consultancy and
there’s no one with a designated new business
role to handle much of the workload. Invariably
a team will have to cope with client work as well
as new business pitches or tenders.
The Business Vision Barometer revealed that
when it comes to new business, consultancies
face a multitude of challenges:
Having a new business resource would alleviate
the pressure of some of these challenges but
if this is a business cost you can’t afford, then
what other options are open to help ease the
process? Clearly there are some elements of the
pitching process that are out of a consultancy’s
control - budget disclosure or project scope from
the client being some of those - but in terms of
resource, taking the view that new business is
a revenue stream to be planned for rather than
an investment could be a mind set change worth
exploring.
You may be one of the 30% of consultancies that
already allocate a budget to winning new
business. But 35% are only sometimes, and
not that accurately, allocating a budget with an
additional 35% stating that they never allocate a
budget, according to the results of the Barometer.
Putting a resource and costs budget in place for
new business, beginning with an audit of time
reports and outgoings spent on the first half of
this year, can really help consultancies to
understand the cost of new business, and then
go on to create time and space for teams to
dedicate to maintaining that healthy win rate.
Almost half, 47%, of respondents in the Barometer
said they are already monitoring internal and
external costs spent on winning new business.
By planning new business resource and
budgeting for this spend, what has been
previously perceived as investment, could be
turned into a valuable revenue stream.
1. Working to short notice deadlines - 29%
2. Not knowing what the budget is making it hard to cost accurately - 24%
2. Having the right people available to work on it - 24%
4. Project scope is not clear from the potential clients - 18%
BUSINESS
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10. WHAT WE ASKED
HOW MANY EMPLOYEES
WORK AT YOUR COMPANY?
WHAT IS THE GENERAL OUTLOOK
OF YOUR BUSINESS’ PERFORMANCE
OVER THE NEXT QUARTER?
(compared to last quarter)
WHAT IS YOUR AVERAGE
NEW BUSINESS WIN RATE
AT THE MOMENT?
IN WHICH REGION OF THE UK
IS YOUR COMPANY BASED?
WHICH OF THESE IS A KEY
CHALLENGE FOR YOUR BUSINESS
AT PRESENT?
WHAT IS YOUR AVERAGE HOURLY
CHARGE RATE?
WHAT IS YOUR BUSINESS’
FIELD OF EXPERTISE?
WHAT ARE THE BIGGEST
FINANCIAL CHALLENGES
YOU FACE IN RUNNING
YOUR BUSINESS?
DO YOU ALLOCATE A BUDGET
TO WIN NEW BUSINESS?
WHO IS RESPONSIBLE FOR
NEW BUSINESS WITHIN YOUR
ORGANISATION?
WHEN YOU DO LOSE OUT ON NEW
BUSINESS, WHAT DO YOU THINK
ARE THE MAIN REASONS?
ARE YOU MONITORING HOW MUCH
YOU SPEND (INTERNAL & EXTERNAL
COSTS E.G. RESOURCE, EXPENSES)
ON WINNING NEW BUSINESS?
WHAT IS YOUR BUSINESS’
ANNUAL TURNOVER?
DURING THE LAST QUARTER,
HOW MUCH HAVE YOU REDUCED
YOUR RATES BY TO WIN A NEW
BUSINESS CONTRACT?
WHAT IS YOUR BIGGEST
CHALLENGE IN NEW BUSINESS?
BUSINESS
B A R O M E T E R
VISION
11. Magnifeye is part of The Agency Works Team,
the UK implementation partner of Synergist.
With a wealth of knowledge in accounting and
project management systems, we work with you
at every stage of the process taking a closer look
to understand your business’ needs, right through
to the installation and training of new users.
We have a dedicated Client Services team
who will ensure that your management system
continues to run smoothly for your business after
it has been implemented.
MAGNIFEYEP A R T O F T H E A G E N C Y W O R K S T E A M
MAGNIFEYEP A R T O F T H E A G E N C Y W O R K S T E A M
ABOUT MAGNIFEYE CONTACT DETAILS / LINKS
To discover how a project management system
can benefit your business...
call 01455 553 246
or email hello@magnifeye.co.uk
www.magnifeye.co.uk
Twitter @Magnifeye_UK
Follow us on LinkedIn
And join the LinkedIn Business Vision Group
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