For smaller professional service firms, balancing the consulting you’re passionate about with the mandatory business management to run your practice can be difficult. While the client is always the priority, it’s like they say about oxygen masks before take-off, you must help yourself before assisting others.
To keep your practice afloat and running profitably, it’s important to keep a constant pulse on your Key Performance Indicators (KPIs) and make adjustments to optimize your work and plan for future projects. Often firms without a PSA (professional services automation) software struggle to see their metrics or spend hours compiling data from different places into one spreadsheet to get a general idea of their performance.
With PSA software, project, staff, and financial data live all in one place giving firms the power to access these KPIs in real-time. Stronger measurements lead to better management.
Below are the four KPIs every professional services firm should track that can be uncovered easily through automation software.
What projects are turning the highest profit? Review the revenue earned minus the labor costs associated with a project to find out how successful your revenue model is and which projects, in particular, are the strongest.
Tip for Improvement: The projects that turn a low profit, go a step further into the data to find the weak points that need to be tweaked. For example, fewer hours being budgeted than are actually required causing an increase in non-billable time.
How profitable is my current business structure? Similar to your project margin, the delivery margin includes the overhead cost in addition to labor cost. This will give you insight into operational and internal expenses that impact your bottom line.
Tip for Improvement: Take advantage of all the automation solutions available in the PSA software to cut down on time and money spent on internal workflows. Streamline project approvals, set up invoice templates and integrate into your accounting software to cut down on manual data entry.
Am I using my team and resources efficiently? Track how much time is billable versus bench time, and then adjust for a higher utilization rate. By look at a combination of historical and forecast data, this stat gives you the power to boost profit from efficiency.
Tip for Improvement: Use a staff allocation tool with your PSA software when planning projects to see which staff is available to take on more work and which staff members have too much on their plate and may affect the project's progress. This will ensure you’re making the best use of all team members' time and decrease the amount of time staff spend on the bench.
WIP (Work in Progress) Status
Are my engagements within budget? Instead of only measuring project performance in the end, project managers can play a role by staying on top of current projects with real-time analytics to make sure budgets are on track and deadlines are met.
Tip for Improvement: When a project starts to go off course and you’re able to alert your clients as it’s happening rather than a surprise on their invoice, there may be the opportunity to budget in more hours for the project or use the resource allocation tools again to get all staff hands on deck to make sure another deadline isn’t missed.
After you have your dashboards set up for tracking the KPIs that are valuable to you, reports can be pulled in minutes to share all four of these KPIs easily with your leadership team. You can also create custom user rights for staff to view analytics that is valuable to their success without sharing full business performance metrics.
To learn more about BigTime’s PSA solution and reporting capabilities and dashboards, request a free customized demo here.
About the AuthorMore Content by Trilby Lawless