magnifeye - business vision barometer

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

BUSINESSB A R O M E T E RVISION

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 income target. Simply fill in a few details here we'll work out the rest

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


ANNUAL TURNOVER

£250k-£749k 6%

£2m-£4m 29%

£4m-£5m 12%

£5m+ 35%

£750k-£1m 0%

£1m-£2m 18%

0-15 15-30 30-50 50-100 100+

MARKET RESEARCHERS

6%

MANUFACTURING CONSULTANTS

6%

OTHER

35%

BUILDING CONSULTANTS AND ADVISORS

6%

MANAGEMENT AND BUSINESS CONSULTANTS

17%

IT CONSULTANTS

18%

ENGINEERS

12%

RES

PON

SE R

ATE

5%10

%15

%20

%

EMPLOYEESEXPERTISE

WE SPOKE TO


IMPROVING SLIGHTLY IMPROVING

REMAINING THE SAME

DECREASING DRAMATICALLY DECREASING

RES

PON

SE

10%

20%

30%

40%

WHAT IS THE GENERAL OUTLOOK OF YOUR BUSINESS’ PERFORMANCE OVER THE NEXT QUARTER?


RETAINING TALENT

24%

OTHER 12%

INCREASED COMPETITION

29%DECREASING

CLIENT BUDGETS

35%

RETAINING EXISTING CLIENTS

24%

RECRUITING TALENT

59%

INCREASING NEW BUSINESS LEADS

47%GROWING

EXISTING CLIENTS

47%

USE QUESTION 6WHICH OF THESE IS A KEY CHALLENGE FOR YOUR BUSINESS AT PRESENT?


LATE PAYMENT

ACCURATE FORECASTING

OVER- SERVICING

MANAGING CASHFLOW

INCREASING PROFITABILITY

PAYING TAXES/ BUSINESS RATES

RES

PON

SE

10%

20%

30%

40%

60%

50%

WHAT ARE THE BIGGEST FINANCIAL CHALLENGES YOU FACE IN RUNNING YOUR BUSINESS?


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.


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.”


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 andbudgeting 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%


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?


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.



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To discover how a project management system can benefit your business...

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