Many of you reading this may aspire to obtain an MBA from a recognised business school such as Melbourne. Should you do that, your investment might be as high as $90,000. What I'm going to try and do here, is to condense the learning from one of those courses for you, into a two or three minute read.
What I want to convey to you is a financial model for a professional services practice and what you will learn on an MBA course is that essentially, the finances of any business are only really dependent on two things, those things being the operational competence of a business multiplied by marketing. In layman's terms, that's how good you are at what you do, multiplied by how good you are at telling people about how good you are at what you do. And most professional services firms are not particularly strong at this second discipline.
Often, I ask people to score themselves around a board room table, where they think they are currently out of ten and most people will tell me that in terms of finance, which covers things like profit per partner, cash at bank, work in progress, debtor days etc they're at about 6 or 7 versus the potential. Most people sit on the fence, don't really go particularly strong, don't go particularly weak.
When I ask them how good they are at what they do, people come out like silver gorillas banging their chest and proceed to tell me how great they are at delivering legal, engineering, accounting or a financial service and most of them score themselves 8, 9 or even 10 out of 10. If the financial model works, that suggests that the marketing score or the business development score, how good they are at telling people about how good they are at what they do, is actually only at 3 or 4. This is a huge opportunity, often ignored.
Should you invest all your hours getting better at delivering the service, whilst that is important, I really advise you to spend extra time on how you can make yourselves better at telling the story about how good you are at what you do, because that's where you'll get the biggest return on your investment!
If you're the best at what you do, how come you don't win more of the available work that's out there? It's a question that many people struggle with. What I can tell you in these difficult times, is that being technically gifted at what you do is no longer a guarantee of financial reward. The world is no longer fair.
How do I know this? Because having done this exercise in more than 100 professional firms, I have met some very capable practitioners who frankly struggle to make ends meet. On the other hand, I have met some pretty ordinary professionals who drive Ferraris. There's something else at play here rather than just being good at what you do. Think, what you do in your billable hours this year will affect the profits that you take home this year. What you do in your non billable time builds your future and makes you sustainable.
So, sit down with all the key stakeholders in your business and think about how you are going to get better, at telling people about how good you are at what you do. You might just be able to change your car. If you need help be sure to get in touch.
