Improve your profit margins

Improving profit margins should be a goal that is shared and understood across the whole business.

Your business management systems — from finance to project management to marketing — need to enable and support every function within your professional services business to work together rather than sit in their own functional silos. An interconnected approach is a prerequisite to making sure that projects are successful, while reducing costs and improving profit margins.

By working together with the support of a sophisticated project-based Business Management System your practice can gain a clear picture of how your projects and resources are operating and their impact on either a project’s performance and the business as a whole. With this greater visibility, you’ll be able to make strategic choices and increase your profit margins as a result.

Access and interrogate your business information

• When you capture the value of your Business Management System you are able to access one version of the truth for each aspect of your projects. This will enable you to put together an actionable plan to improve profit margins. There’s nothing worse than ‘digging’ around to access this information.

• When you have a clear picture of your resource allocation it becomes possible to move resources to other projects and to ensure all your people are effectively resourced. Are your people fully utilised and do they have a schedule of completion for the week? Your resources need to work efficiently to increase your profit margins.

• How many projects have been completed? When you have a clear picture of when projects are being completed it becomes easier to plan your resource requirements moving forward; ensuring minimal ‘downtime’.

• How many projects are late, running up additional expenses that weren’t forecast and that are likely to reduce a project’s profit margins. Your system needs give you better foresight so that you can identify potential issues with scope and delivery in order to keep a project on track, rather than having to act reactively once a project has become delayed.

• Submissions and feasibilities that have been completed or are unsuccessful. By understanding the number of submissions that have been completed or did not go ahead — and how much it’s costing — it becomes possible to adopt more efficient and effective processes, offer additional training or more appropriately allocate resources to increase the potential success of your submission.

• “We need more resources to complete our project”. We’ve all heard this! “I don’t have the people or the appropriate resources to complete the project”. You need access to accurate and timely information. And this should be at your fingertips.

• Effective reporting systems (e.g. project dashboards) can be created and used to simplify an ever growing amount of information. This allows your project leaders and studio managers and finance to generate and share insightful reports to enable discussions about their performance and resources. You can play a role in ensuring that change sits at the heart of your organisation, whenever the reports reveal that it is necessary. You should only adopt changes when the case for it is established.

Take Small Steps

One of the best business practices is to keep your focus on your key objectives and to take incremental steps towards them. The best results are achieved by taking small steps — by concentrating on one task at a time. A failure to allocate resources or to expect too much, too soon from your teams can de-motivate them and reduce their willingness or ability to efficiently work together.

Integrated Business Management Systems can, for example, provide you with the financial and resource availability information to enable you to avoid these situations. This can be used to benefit your employees as you begin to focus on projects and tasks that are likely to make a difference to your company’s revenue and profit margins. Your teams will also know more about how they can work successfully together in order to achieve your business’ project-related and financial goals and objectives.

Leadership is required

Capturing your financial, project, employee and marketing information in the one place will provide you with a broader picture of how the business is performing. Subsequently, you as a leader can play a greater role by sharing this kind of information to inform your people what needs to change in order to make ongoing improvements to the business.

Principals and Directors need to lead change by facilitating and provoking these discussions and organising regular meetings with your people to discuss the firm’s performance — you need to lead and can’t delegate this to the “Studio Manager”.

Explaining where projects or the business as a whole, needs to adapt in order to control operating costs will lead to your business increasing profit margins.

Take Action

In summary there are six ways implementing a sophisticated project-based Business Management System can improve your business. Used effectively it will:

1. Boost revenue and cash flow

2. Generate higher profits

3. Gain visibility and control

4. Eliminate non-value adding activity

5. Provide access to information in real-time/anywhere

6. Increase resource utilisation and productivity