*Are You Starving Your Consulting Practice?
Source: Journal of Accountancy
As consulting services grow as a practice area for CPA firms, it's important for firms to understand the significant differences between these services and traditional compliance services. According to author Jennifer Wilson, firms that attempt to manage consulting services like compliance services risk “starving” the former. Differences between the two include:
- Unlike compliance services, which tend to recur, consulting services must be “regenerated” each year, making it difficult to predict revenue cycles or compare year-over-year revenue.
- Given the nonrecurring nature of consulting, and the peaks and valleys in utilization, traditional metrics may be less relevant.
- Consulting services tend to be more specialized, so they often require higher-level (and more highly paid) employees and are typically delivered with less leverage than compliance services.
- Consulting typically generates a lower percentage of recurring fees, requiring strong lead generation and closing skills among senior consulting leaders, as well as more sales and marketing administrative support.
Wilson recommends several strategies to fuel consulting growth, including hiring the right practice leaders; working with those leaders to develop an appropriate business model; identifying the right metrics and key performance indicators (which usually means avoiding traditional utilization statistics); identifying the characteristics of successful consultants and matching them with the right recruiting tools; employing a mix of CPA and non-CPA consultants; and dedicating appropriate resources for marketing, sales, and administrative support.
For the complete article, read “Consulting services can grow your firm—if managed properly.”
From Journal of Accountancy, March 7, 2016, www.journalofaccountancy.com/Issues/2016/mar.