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Posts Tagged ‘Economy’

Managing in a Downturn – The Intro

December 8, 2008 2 comments

This year, we’ve had 9 straight months of increasing unemployment claims topping out in November at 6.7%; a major crisis in the credit markets; the failure of a significant number of supposedly untouchable financial and quasi-governmental institutions; a significant challenge to the financial health of our northern European banking brethren; a looming crisis in our primary, remaining manufacturing sector (the auto industry);  and the typical politically charged rhetoric from Washington.  Fear, uncertainty and doubt are being sown in the market place and even ebullient (although I’d describe him as manic) personalities like Jim Cramer are making incredibly negative comments about the domestic and worldwide economic forecast.  In short, everyone says things are going to suck.

In our space, I think its fair to say that new client acquisition is going to slow and, therefore, become more expensive on a per-capita basis.  I’ve talked with friends in each of the regional sales teams for MS and all confirmed that deal flow is slowing, becoming harder to manage, and, in many cases, the customers are just not making a decision to buy.   Therefore, the consultancy business models that depend on high margin MS software (think Dynamics) are, possibly, going to feel the biggest immediate impact as new, large deals become more scarce. 

As consulting managers, what can we do?  Consulting is a very, very simple business model.  Revenue comes from a narrow array of sources and our only real expense (assuming we manage opex competently) is salaries.   So, we either have to cut salaries to align expenses to revenue, increase revenue or do both.  In this next series of three posts, I want to take a closer look at:

  1. Increasing revenue through better attachment to existing clients
  2. Cutting expenses through effective staff turnover
  3. Finding new sources of revenue from our existing clients
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