Rule #2: Leveraging is key to profitability

2011-06-24T08:29:00.000-07:00

ok lets face it, beyond the goals for a better world and helping others, our bread and butter has to come from the work we do. To be a good boss and provide better life for the employees and partners in the company the business needs to be profitable, and in consulting business one of the key factor for profitability is 'Leveraging'.

So what is 'Leveraging', basically using junior and intermediate consultants with the senior in appropriate mix to ensure the skill and capability of the senior consultant is well utilized and billing is not limited to the senior and his limited time but spread across the mix. Two key benefit from this strategy, the obvious higher number of hours sold at average lower cost per hour leading to profitability and preparing the mid-level consultants to move up to take higher responsibility thus enabling growth of the firm.

Rule#1: You must produce more value to the client then your fees

2011-05-22T16:59:00.000-07:00

Alright, what you can charge as fees has to be substantially less in value (note value not cost) to your client over what he will gain from your work. Simple enough rule but hard to apply due to the shifting perception of value by geography and economy.

So when evaluating an opportunity, it's our job to evaluate how much value we can generate for the client and accept or decline the engagement on the basis of that. Tough choice when you are cash starved and need a gig asap, but if we break this rule we will have unhappy customer and bad referral, not to mention lack of satisfaction for your output too.

The Art of Consulting

Rule #2: Leveraging is key to profitability

Rule#1: You must produce more value to the client then your fees