Where Do Professional Services Firms Like Yours Invest?

Successful professional services businesses must manage cash flow, acquire new clients and build the right team. How do your priorities stack up against your peers? Answer five simple questions to find out.

Question 1

  • Question – How long have you been in business?
  • Answers –
    • Under 3 years
    • 4 years to 9 years
    • 10 years or longer

Question 2

  • Question – How many employees does your company have?
  • Answers –
    • Just myself
    • Fewer than 5
    • 6 to 20
    • More than 20

Question 3

  • Question – Do you expect revenue next year to…?
  • Answers –
    • Decrease
    • Stay the same
    • Grow less than 10%
    • Grow more than 10%

Question 4

  • Question – How satisfied are you with your company’s progress?
  • Answers –
    • Very satisfied
    • Somewhat satisfied
    • Not satisfied

Question 5

  • Question – What’s your primary goal for next year?
  • Answers –
    • Grow and expand my business
    • Maintain the status quo
    • Reduce the scope to focus on our core strength

 

Professional services firms tend to see success early or not at all. New businesses face high upfront costs and slow payments, making cash flow a constant challenge. Small, young firms like yours with modest initial growth can try a line of credit to get through these lulls and to cover unexpected expenses. The good news: With time, most professional services firms get a handle on cash flow and shift their focus to marketing and acquiring new clients.

New professional services firms growing fast have cash flow top of mind as they juggle increased sales with the costs of hiring. Think about getting a line of credit to keep cash flowing as you wait for payments. The funds can also go to marketing and covering payroll. Our research shows almost a third of professional services firms think using smarter marketing to reach new clients is the best way to ensure their companies keep growing.

Professional services firms that aren’t profitable within the first year often struggle to grow. In hindsight, small business owners like you wish they’d invested more in equipment and building a team. Consider using a line of credit to cover your operating costs while waiting on payments. Small firms that aren’t growing fast also use lines of credit as a way to kick start growth by funding marketing and buying new equipment.

Professional services firms tend to see high growth in their first year or not at all. Still, some small, established businesses experiencing high growth aren’t preoccupied with cash flow and can afford to invest in talent and marketing.Consider tapping a line of credit to cover operating expenses when payments come in late, or use it to bring on new hires to boost marketing.

Large professional services companies face a daunting task from the beginning: If you can’t reach clients, expand and manage cash flow early, you struggle to grow long term. With modest growth, you get hit harder with late payments and overhead costs. Our research shows more than a third in the industry face their biggest cash flow problems in year one. Use a line of credit to cover operating costs and payroll when payments are late.

Professional services firms that grow quickly act differently than other businesses. Cash flow is still a top priority for you, especially early on. But your firm is more focused on the challenges brought about by growth. Try a line of credit to hire new employees and cover costs as you wait for payments. Looking back, many experienced business owners wish they’d spent more on top talent early on.

Large, established professional services firms have achieved a steady state. The cash flow concerns that characterized your early days are in the past, and your biggest expenses tends to be payroll and technology. Looking back, professional services firms say they wish they’d spent more on marketing so they could acquire more clients. Consider turning to a line of credit to invest in marketing and grow for the long term.

Looking back, many professional services businesses regret that they didn’t invest for growth early on. Large, established professional services firms like yours that are still growing at a fast clip are the exception. Consider a line of credit to fund equipment purchases and buy new offices or expand old ones. With these investments, you’re preparing to grow into the future.

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