Think 4 x Bigger and Grow your Consultancy Business
Do you feel that your consultancy is doing something that works really well? If so, keep doing it and when you stumble onto problems, challenge yourselves to think four times bigger.
In 2011, Andreas Granstedt, Matthias Hjalmarsson and I founded PE Accounting. Since then, together with our growing team, we have gone from 0 to almost 100 employees.
Over the course of these eight years, I have helped many of our approximately 600 corporate customers – the majority of whom are consultancies – to adapt their processes to facilitate growth.
During our journey, one important success factor that I have identified in both ourselves and our customers is having the courage to sit and mull over how we can resolve problems from a more long-term perspective.
4 x is a key metric
An excellent key metric that I have used both for our own company and many of our customers is that, when management sits down to consider significant growth over time, then four times the current size is the way to go. If, like us, you maintain a 50% growth rate, you will be there in three years. This is of course a very steep rate of growth; however, even if your actual expansion proves to be less dramatic, this approach will challenge you in exactly the same way as a good corporate vision and help you to restructure to reach your goal.
The consultancy sector is all about attracting the right expertise to enable growth or streamline operations to increase profitability. Even here, it is enormously helpful to plan from a broader perspective. You may already have mastered agile processes and continuously appraise exactly what works for you at any given time. If you can combine this with long-term thinking and established structures for growth, you will have something very powerful.
How to think 4 x bigger
4 x bigger – Organisation: Even when growth is a given, it is a good to have a clear idea of what the organisation might look like as step-by-step you increase recruitment. If it is already hard to pull everything together, the strain on the organisation will increase considerably in parallel with your expansion. Instead, you should have a clear picture of how you will need to restructure as the number of colleagues, assignments and hours quadruples.
Our own approach was to draw up an organisational chart for a company with 80 employees while there were still only 20 of us, with a name for each position even if many of these appeared several times. Then, we simply needed to fill in the organisational chart as and when the company grew. This creates a level of discussion that creates the preconditions for growth with the minimum of growing pains.
For example, what happens if you create a recruitment function while you have only 20 employees and measure this as if it were sales or marketing. This is what we did and it proved to be a crucial advantage when the time came to grow.
4 x bigger – Culture: When a consultancy grows, it may find that new demands are placed on its corporate culture. A deeply rooted corporate culture affects how effectively new colleagues take responsibility; they know what is expected of them and are able to contribute in the desired manner and it affects everything from stress levels and creativity to efficiency.
It also helps to define how attractive you are as an employer – something that in the consultancy sector is completely crucial to whether growth is even an option. A strong corporate culture gives you a strong competitive edge.
4 x bigger – Leadership: Even in terms of leadership, it is possible to think in terms of four times bigger than you are today. That your current leaders have their own ideas about leadership is great, but how is this transmitted to everyone else? Leadership affects many people in a growing business, even in flat organisations in which everyone is required to lead. Greater demands are continuously placed on onboarding, monitoring and development. Timely investment in leadership has positive short and long-term consequences.
4 x bigger – Capacity: Early in your company’s journey it may work perfectly well to keep track of your capacity with simple means; however, how do you administer a structure designed to cope with multiple consultants working on both long and short-term assignments? This demands entirely different processes if it is to be managed effectively. It also has an enormous impact on your bottom line.
In a consultancy sector where a lack of assignments is often not the problem, it is even more important to have structures in place in good time that can streamline administration, cut unnecessary overheads and increase margins.
4 x bigger – Monitoring: In a company with only a few employees, everyone is aware of most ongoing projects and which may be more or less profitable. When the size of the business grows and data is less readily available, it becomes considerably more difficult to know exactly how things are going.
Structured monitoring helps you to see both how it is going for the company and why. This is a prerequisite both for becoming 4 x bigger and for mapping out your journey there.
4 x bigger – Commission: Consultancies in general have more or less complicated commission models and are often under the impression that the particular model they have chosen is standard, but with a twist. In the long term, such models can greatly increase administration costs and hinder automation. Here, it is better to keep it simple by implementing simple, transparent models. If you start out needing manual administration to calculate commission, you can count on this becoming increasingly difficult over time.
In principle, you can apply the 4 x perspective to anything. Take whatever problems you are wrestling with right now and place them in a 4 x perspective. See what happens.
Automate to avoid your problems growing exponentially
Now that we live in a world with quality digital services that to a greater or lesser extent automate various processes, it is important that you keep abreast of technical developments – even in those fields that may seem boring, such as bookkeeping and auditing.
I often highlight a diagram that shows the difference in time and money spent on auditing as a consultancy grows in size. Of course, this exponential growth does not apply to all types of problem that may arise during your expansion; however, it does provide an indication of how quickly small problems can escalate unless you think 4 x bigger in terms of time.
Webinar 26:th april – How to scale your consulting business!
Regardless of whether you want to expand your consulting firm from 25 to 100 or 1000 to 1500 employees, great demands are placed on the right preparation.
Johan Haeger interviews Olle Rydqvist, co-founder and CEO of PE Accounting, who since 2011 has had an annual growth of 50 percent.
Olle has helped many companies in the consulting industry to change processes to be able to grow quickly.
Anders Hagberg, CEO of Cinode and former Business Accelerator at several companies, will also participate.
Don’t miss this opportunity on Friday April 26th at 12-12:30 CET (13-13:30 Finnish time) if you want to know how to scale up your consulting business with good profitability!
Target audience: Leaders in consulting companies. This webinar will be held in English.