Improving profitability is all about working better and smarter. It’s about increasing productivity and output through services that have a clear value proposition and through improved service delivery practices. The improvement in how your organization works and delivers its services results in profitability improvement.
Professional services businesses face significant pressure on their profitability. Salaries continue to rise while fee rate pressures are a given in today’s market. The profit drivers in a services business are unique and complex. Most of these are known to experienced executives and certain key drivers, such as utilisation, are generally monitored and managed. Very few organisations however actively use the profit drivers to explicitly identify and address performance improvement initiatives.
The value proposition of service offerings, service delivery practices, organisation and leverage structure, practice management and performance management all impact on the performance and profitability. Systematically reviewing and addressing each of the profit driver elements makes it possible to improve how you work and increase profit.
We help professional services firms identify and address the parts of the business and work practices that have the greatest profit improvement opportunity. The opportunity for working better and smarter and therefore improving profitability exists in all professional services firms. We use a focused approach to profitability improvement, starting with a detailed analysis of your business across all of the professional services profit drivers.
We identify the problem areas and quantify the profit improvement potential. We then help you address and fix the problems by diagnosing the underlying root causes and developing, in collaboration with your people, the required strategies that address these causes.
This approach leads to improved work practices and productivity improvement which ultimately will produce the increased profitability.
Our approach is to analyse your business’s profitability, with a focus on gross margin, and identify what parts of your business is performing well and what parts can be improved. We identify where the profit improvement opportunity is with respect to each of the underlying profit drivers. After diagnosing the underlying causes, strategies that address the issues are developed and implemented.
New Light Strategies’ approach to profit improvement in professional services is set out in the following document:Download PDF