The number one challenge for HR consultants: How will you grow your business next year?

By David Leahy, Director, Great People Inside Australia

As this year quickly draws to a close, no doubt you’re reflecting on the year ahead. What are the opportunities? What are the challenges? What do you want to achieve?

In my recent conversations with HR consultants, one objective and challenge looms large for 2020 – how to scale their businesses. However, there are some unique challenges and barriers to growth for consultants which can stop growth in its tracks.

Consider this scenario. You’re an HR consultant working on your own. You’re able to earn decent money per hour and your costs remain relatively low. As you build up goodwill and a portfolio of work, word spreads and you gain a steady stream of referrals. Business is good. 

Eventually you can’t handle the workload on your own anymore. You hire a consultant to share the work. And then another. The three of you move into an office. On the surface things appear to be going well. There’s a steady flow of work. You’re all run off your feet. However, cash flow is tight. Making ends meet is becoming increasingly difficult, even though the business is bringing in more money than ever before. What’s going on?

When you examine your numbers more closely, you realise that the margins on the work your consultants are performing are very thin. Once you pay them, as well as pay the costs of office space and other resources, there isn’t much left over. As the business becomes more complex, you’re spending less time on billable work and more time on management and admin. By the end of that financial year your topline has grown significantly but your bottom line hasn’t budged. It’s been a whole lot of work for very little reward.

Sound familiar? Unfortunately this situation is extremely common for consultants. No wonder so many are burnt out and not seeing the financial return for their efforts. So how can you grow both your business’ top and bottom line sustainability in 2020?

Scrutinise your costs

Managing your costs effectively will help you claw back profitability. That may include negotiating a reduction in your rent, sourcing more competitive suppliers or outsourcing lower level work to a junior rather than a senior staff member.

Become more time efficient

For consultants, it is essential to understand how your time is spent and reduce that time when possible. If you or your team are spending too much time on a job it can make that job unprofitable. Consider ways to bring time down. Improving your systems, processes and technology are good places to start. Look at whether there are any tasks you can automate or outsource more cheaply.

Price strategically 

I’ve written before about how trading time for money is a trap. Consultants often find their earning potential is limited because they are paid for their time and there are only so many hours in a day.

The answer is to not price based on time but on value or outcome. Create service packages at a fixed cost which you know will be profitable. This also makes it easier to raise your prices. Don’t get stuck in a race to the bottom on price. By charging what you’re worth you can earn more while working less and attract a better client.

Target the right clients

Do you know which clients are your most profitable clients? By better understanding this you can focus your energy on those clients, upsell or cross sell to them and seek out other potential clients with a similar profile. Having less clients which are more profitable is worth more to your business then having more clients which are less profitable.

Diversify your offering

Diversifying what you offer is an excellent way to grow both your top and bottom line. Are there additional revenue streams which fit well with your existing offering? A great option is to offer a product in addition to your usual services such as an assessment, survey or report. These offerings require less of your time, can be sold at a higher volume and with a more reliable profit margin.  

The important thing to consider is which product is worth reflecting on before you jump in. There are lots of online tools out there, you may even have a product already in your portfolio, but is it differentiating you from your competitors? Is it the latest technology? How does it support you to earn revenue without constant active involvement by you?

Are you looking for ways to differentiate your business?

We recently launched Great People Inside in Australia and we’re in the process of growing and extending our channel and referral partner network.

The Cloud-based GR8PI People Intelligence Platform (GPI) is a next generation platform that provides you with the ability to provide key strategic HR insights and analytics to your clients. Its flexibility is unique as its the only fully-customisable, psychometric profiling and 360° feedback, platform in the world!  

For example: Want to help your clients analyse their people’s level of alignment to the organisations’ values? Want to help your clients analyse what precisely drives the performance of their top customer service or sales team members? Want to help your clients understand the impact of their top performers? Tick, Tick and Tick – The gr8piplatform can do this and more!

These days everyone wants choice and that is what we deliver with GPI. The unique ability to easily customise assessments means you are not restricted to offering tools that measure or analyse what the developer/manufacturer wants you to measure….you can help your clients measure precisely what’s important to THEM!

With GPI you’re not restricted by the status of the role either, our assessment dimension range is so vast and our unique pricing models mean you can develop client focused customised tools regardless of their role position or status in the business. We believe everyone in the organisation should be happy and have the same opportunities to ensure they “fit” and they love their work! In fact, our mission is “To develop and offer the future’s talent and assessment solution – the Cloud-based GR8PI People Intelligence Platform – to anyone working with people: Ready-to-use, customisable to meet every need, and affordable to everyone.”

About David Leahy

David Leahy is the Director of Great People Inside Australia (GPI). GPI Australia provides state-of-the-art and fully customisable assessment and development solutions to help select, match, onboard, manage, develop, engage and retain top talent. Recently launched in Australia, GPI is seeking a limited number of Australian Channel Partners, so this is your opportunity to get in on the ground floor. If you’re interested in being part of our mission, why not enquire and learn about our unique and exciting Channel & Referral Partner program. Contact David at [email protected].