How To Grow Your Consulting Business Using Organizational Flexibility?

There are a lot of different ways to grow your consulting business. But one of the most overlooked ways is through organizational flexibility. Your capacity to adapt to changes in the market can greatly help you to stay ahead of the competition and help grow your consulting business.

Therefore, in this article, we will talk about how organizational flexibility can be used to your advantage and help grow your consulting business in order to reach your desired goals.

How to Use Organizational Flexibility to Grow Your Consulting Business?

To grow your consulting business, you need to be flexible in your approach. That means being open to new ideas, new clients, and new opportunities. It also means being willing to change the way you do things if it will help you better serve your clients or grow your consulting business.

Being flexible doesn’t mean that you have to be a pushover; it just means that you’re willing to adjust your plans to meet the needs of your business. When you’re flexible, you’re able to adapt and grow, which is essential for any successful business. So, with that thought in mind, let’s take a look at how organizational flexibility can be used to help grow your consulting business.

Having a Staffing Strategy to Deal with Fluctuations in Projects

A consulting firm is a dynamic organization that is vulnerable to the fluctuations of the business cycle. New projects come and go, and the people who staff your firm tend to change over time. While you may not have current problems with recruitment, finding the appropriate level of staffing is tricky.

A major economic event could shift the entire market, meaning that your company might quickly lose or gain projects that affect your staffing scheme. Whether you have too many staff on hand or not enough, firms rarely end up in the middle with the perfect number of consultants.

Due to unpredictable economic changes, it’s important to have a flexible staffing plan that accounts for factors affecting your firm’s optimal size, considering the structure of the business and the market demand.

The appropriate level of staffing is not an issue that will go away. With too many consultants, you could lose profitability in the case of headwinds. Without enough consultants, your firm could miss important opportunities to grow and profit.

In addition, having excess staff could mean that your firm accepts projects for which it isn’t qualified, which creates the risk of damaging your credibility. In a consulting firm, delivering great value and return on investment for your clients is a must have, but the key to profitability is finding the size and cost structure that works for you.

Optimizing the Risk Rewards Equation

The driver for profitability, in all asset-intensive businesses, is optimizing the utilization of the assets. Consulting, despite being asset-light from a tangible standpoint, carries the bulk of its costs through salaries.

This means that you need to find the right trade off to get the maximum economic performance resulting from the utilization of each employee, without overextending your human capital budget.

Besides sizing, finding the right equilibrium between base salary and bonus is very often an underestimated lever. Many consultancies consider the total compensation as a fixed cost and link the bonuses to the quality of delivery without taking advantage of the flexibility it could provide.

Speaking of salaries, if you want to know all about the salaries in management consulting, you can read our article on management consultants’ salary.

Tying part of the bonus calculation to the economic profitability of the firm can not only mitigate partially the risk of the downturn but also drive the right behaviors from your consulting staff.

Another lever can be, to change the ratio between base salary and bonus to lower the guaranteed amount but grant higher rewards if the firm is doing well. This is a deal that many young consultants are more than willing to take as it mimics the classical partner structure they aspire to.

Sizing for the Unexpected

Just like staffing for any business, maintaining the right number of employees directly affects your profitability. Keep in mind that, once you have people on the payroll, you measure profitability by what remains after their checks clear your company bank account.

Your firm makes a financial obligation to employees, at least in the short term, by offering ongoing employment and perhaps benefits and perks. When you extend your budget for a certain number of staff, financial issues and downsizing might threaten your ability to keep them on the payroll.

Or worse, the pressure to keep up with your payroll needs could lead you to unscrupulous or deviant behaviors to capture new business. You cannot always predict an economic downturn. Because of this, your firm should add new employees in stages, so as not to overextend the payroll budget.

It’s always easier to hire new consultants than it is to fire them, so be prudent. If you do have to begin downsizing, you run the risk of blemishing your firm’s reputation and damaging relationships with your consultants.

Investing in Non-Production Activities

When reviewing your sizing assumptions, it is important to anticipate that not all days will be productive. First by design as assignments usually don’t align themselves to optimize your own schedule.

Second as you need to dedicate some time to other activities that are key for the sustainability of your company. Those activities will range from commercial and networking to more knowledge related tasks on research, capitalization, thought leadership and knowledge sharing.

This layer in your resource planning is crucial as it will condition your ability to bring something fresh to your clients and your flexibility to move from one contract to another.

Preparing for Good News

Once you have defined the minimum size and added some resources to handle other activities, choosing the right size for a consulting firm is still not an exact science. As it turns out, with a sizing like this you might be unable to take on additional projects and therefore grow your consulting business.

The secret formula lies somewhere in the ideal balance between internal and external resources. This means that you have enough full-time consultants on staff to provide stability and to inspire client confidence.

While at the same time, you have successful partnerships with external organizations and individuals to meet the requirements of special projects on schedule.

You want the size of the staff to meet the level of projected demand. You also want your company to build a network of valued partners and qualified subcontractors. This enables your firm to augment consulting staff when the demand for all projects exceeds your internal capacity.

When you accept new projects, you can temporarily take on extra consultants. Later, you can scale down to the usual team size, especially after those extra projects are completed. Unless in the frame of a deliberate strategic move, none of your projects should extend your firm too far beyond its core competencies.

Partnering with Other Firms for Qualified Staff

While you may rely on external consultants, you must also ensure that each of these resources possesses the right skillset for the job. Not every consultant will have the appropriate qualifications for each new project. You may need a diverse recruitment strategy to attract subcontractors who can augment your operations.

Beyond the optimization of your cost base and the proper management of your company’s risk profile, working with external partners creates new business opportunities.

When you expand your professional network, you can pitch new business. Your additional partners can bring capabilities that are complimentary to your core business. At first, this may seem like conflicting advice, but your firm should begin by adding partners with capabilities that closely relate to your core competencies.

While you could augment your staff through relationships with other firms around the world, it’s important to choose those located in countries or regions that offer your company the biggest competitive advantage. The intent is to win new business. This occurs, in part, by attracting the interest of the companies that are familiar with your new business partners.

Be Flexible and Prepare for the Future

Your firm will eventually adjust the number of staff, hopefully, to include more consultants. This will mean that the pessimistic scenario is improving and that you are growing your activities in a sustainable way.

Even though financial challenges may arise, you will agree that the best time to add more human assets is when things are going well. When your company is successfully completing its current projects, and attracting new ones and your worst-case scenario in terms of planning can cover your internal staff, it may be time to consider adding at least a few consultants to your team.

In essence, you are scaling up to prepare for future growth while managing risks. Looking at your teams and discussing the capabilities needed for new opportunities, as well as factoring in the use of qualified partners and subcontractors, will help you to optimize your consulting set-up.

Balancing your current resources, while leveraging partnerships, doesn’t mean you need to fundamentally change your recruitment plan but those adjustments can make all the difference on your balance sheet, reduce risk, provide higher rewards to your employees and open new opportunities to fuel your growth.

Closing Thoughts

At the end of the day, if you want to grow your consulting business, organizational flexibility is the key. You need to be able to pivot quickly and adapt to the needs of your clients. Also, if you want to know more about consulting, you can hop over to our podcasts and listen to some episodes and learn more. Click here.

Use the tips mentioned above to help you become more agile and responsive so that you can continue meeting and exceeding the expectations of your clients. What strategies do you use for staying organized and flexible? Let us know!