By Monika Miles, Miles Consulting Group
Welcome to July – just past the midpoint of 2017! If you’re the kind of woman business owner who likes to pause and take stock of where your company is at a given time – this is a good time of the year to do it. Many of you know me as a state tax consultant. But I recently expanded my business to include training aimed at helping other professionals who sell their services to build their pipelines. In this “Rainmaking” side of the business, I talk to my participants frequently about accountability. If you don’t stop and periodically review key indicators in your firm like progress toward your sales goals for the year, the progress (and potential lagging points) of longer projects, your collection rate on receivables, and your rate per hour (or profitability of fixed fee projects, if applicable), then how will you know when it’s time adjust? This is particularly important for those in the businesses of selling services – like accountants, attorneys, and consultants. Our inventory is time. So the question is, are you on track with your inventory management?
Building a sales pipeline is one of the areas that truly requires regular review – much more frequently than just at the midpoint of the year. But, if you haven’t been regularly reviewing it or honestly engaging with it, this is a good time to get re-energized. “The year is half over?” OR “The second half of the year is just beginning!” So much of what we do when we lead service businesses is to find ways to motivate ourselves every day to keep up the good work. That includes combining a positive mind-set with accountability.
So, what are some of the things we might consider measuring at this critical, mid-year point? Hopefully you have created a strategic plan, on paper! For those of you who have created it in your minds, this may be a little harder. But don’t despair – you can do this too. And this will be a good opportunity to actually put it on paper, or into a spreadsheet.
3 things I recommend that service providers evaluate at this critical mid-year juncture:
- What is your sales goal for 2017? And where are you with respect to that number? The sales goal is projected revenue. It is the amount represented by signed contracts, or projects truly already in the revenue pipeline. Ideally, at the beginning of the year you would have projected by month or at least by quarter, how much revenue you’d earn throughout the year. Many businesses are cyclical, so this number may not be ratable. But take a moment to review your 6 month numbers. If your revenue does come in fairly evenly during the year, are you halfway there? If much of your revenue comes in during the first quarter, do your remaining anticipated client projects make up the difference? If not, regroup and re-evaluate what you’re doing (or not doing) to build your pipeline. Are you getting out there and meeting face-to-face with your network and people who refer work to you? If you are a thought leader, are you seeking out speaking engagements or writing articles that will allow you to touch many people? What about blogging, or guest blogging?
- How many new clients did you want to add this year? Are you halfway there? This benchmark is similar to revenue, and just may be a different way of looking at it. Many of us break down the revenue number into a formula. For example, if our stated revenue goal from new projects for the year is $100,000 and our typical project averages $5,000, we’d need to engage 20 new clients over the course of the year. If you haven’t landed 10 of those by June 30, evaluate why. Are you getting to the right people who can make the decision to hire you? Are you able to close the projects when you have an opportunity to get to the table? Or are you not even invited to propose? If the latter, a quick re-evaluation is necessary. Most people will not be able to close every proposed piece of business that comes their way. But, hopefully, you have a reasonably good closure rate when you do get to the table. It’s important to know your business and to know what a successful average closing rate might be for your industry. Be honest in your evaluation. If you sell higher end consulting, your closing ratio may be lower than someone who sells a cheaper product. Do some math, and during the mid-year evaluation, be honest with yourself about why your closure rate may not be as good as you hope. And if you needed 20 new customers to hit your revenue goal, make sure you are honest with yourself about what it will take to make up the difference in the next 6 months.
- Did you have plans this year to increase your rate per hour, or your profitability per hour (which might be even more important!) Hopefully one of your goals this year was to make money by working smarter, not necessarily by working harder. If so, it either means being more efficient with the time you spend on client projects or raising your rates. As consultants who are paid for our services (often by the hour), consider some different pricing options. Do you have varying rates per hour for different types of projects? Do you have a minimum revenue number per project before you’ll even take it on? People call me sometimes with “one off” questions. Back in the early days, I often gave away answers for free, thinking that I’d make the investment and then, someday, those companies would grow and become a big client. Well, guess what? Not everyone will grow, and not everyone will become a great client. So if, even at their early stage, I can provide a good service for an hour or two of my time, and get paid, why wouldn’t I? So, I have taken a different approach with potential clients who really just have a few questions. If I can truly provide a service that requires a little of my time, but delivers them incredible value, I will bill them. (We agree on this ahead of time, of course.) But I’m no longer shy about this being a two-way street. A client who receives good advice for a fair rate will at the very least appreciate you, and will also likely refer you. So, don’t give away too much of yourself, whether to a prospect or an existing client. Make a conscious evaluation of the time you spend with prospects who may never become clients. Consider your business model and whether an hourly billing model is serving you. Would a flat fee for specific projects be more beneficial for both you and your client? It’s a good time to re-evaluate and maybe try it out on your next engagement.
And as you do this mid-year evaluation, don’t forget to give yourself some kudos for your accomplishments so far! Congratulations on getting to the halfway mark. I’m excited to be here!