Vacancy Rates in the US Office Market

Vacancy Rates in the US Office Market

Vacancy Rates in the US Office Market

Remote work vs in office vs hybrid work continues to be a debate in the professional services industry.

It appears service firms are voting with their wallets as vacancy rates are trending up. And as long term leases start to expire, expect this trend to continue.

Is the rent bill still worth it?

Share it on social :

SUBSCRIBE TO COLLECTIVE 54 INSIGHTS

Sales Cycle Length in 2023

Sales Cycle Length in 2023

Sales cycles are getting longer in boutique professional services, as 2023 unfolds.

When faced with an uncertain future, i.e., recession or not etc., prospects take longer to decide on projects.

The good news is prospects are still saying yes, and projects are getting approved. However, it is just taking longer than normal.

To counterbalance this, boutique pro serv firms need to reduce uncertainty by being easy to do business with.

Make it simple to say yes.

Share it on social :

SUBSCRIBE TO COLLECTIVE 54 INSIGHTS

Boutique Management Meetings

Boutique Management Meetings

Working on the business vs in the business requires management meetings.

Ever wonder when your peers have the management meetings?

It looks like Mondays and Fridays are most common.

How about the over achievers who do what the legendary Sam Walton did when building Walmart- management meetings on the weekends!!

Keep in mind that too many meetings are a sign of poor leadership.

A team can meet or work. If they need to meet it is because they don’t know what they should be working on.

Keep ’em short and sweet.

Share it on social :

SUBSCRIBE TO COLLECTIVE 54 INSIGHTS

Revenue: New Clients vs. Existing Clients

Revenue: New Clients vs. Existing Clients

Generating expansion revenue from existing clients is the most reliable growth strategy for boutique professional service firms. You have access to the client, you have done good work for them, and you are behind the walls hearing about their needs. 

Here is the split between existing client and new client revenue in boutique pro serv firms.

Share it on social :

SUBSCRIBE TO COLLECTIVE 54 INSIGHTS

Average Contract Value in Professional Services

Average Contract Value in Professional Services

Scaling a boutique pro serv firm requires an increase in contract value overt time.

Why?

An example:

5 business development reps each doing one deal per month at $100k per contract = $6 million/yr.

5 business development reps each doing one deal per month at $200k per contract = $12 million/yr.

The firm doubled the revenue without adding any business development headcount or expense. Thus, they scaled, i.e., more revenue same headcount.

Are your contracts big enough?

Here are the average contract values for small, medium, and large firms.

How do you compare?

Share it on social :

SUBSCRIBE TO COLLECTIVE 54 INSIGHTS

Sales Pipeline Visibility

Sales Pipeline Visibility

Sales Pipeline Visibility.

Boutique pro serv firms can be lumpy businesses. Matching revenue and expenses with limited forward visibility can be very hard.

Firms should be able to forecast out one year, at a minimum.

Unfortunately, small firms can see out ~4 months, and medium firms can see out only ~7 months. Only large boutiques (100+ employees) can see out 1 year.

Boutique pro serv firms have lots to improve on when it comes to sales forecasting.

Share it on social :

SUBSCRIBE TO COLLECTIVE 54 INSIGHTS

2022 Employee Turnover in Professional Services

2022 Employee Turnover in Professional Services

Despite the great resignation, and recession fears, employee turnover in professional services remained low in 2022. By historical comparison, employee turnover in 2022 was not a problem for most firms.

Boutique firms (10-250 billable employees), in particular, added headcount and increased wages in 2022. Many report they have too much work and are having trouble finding enough talented workers.

One segment, marketing and advertising agencies, continue to run approximately 2x higher than the other segments in pro serv.

Share it on social :

SUBSCRIBE TO COLLECTIVE 54 INSIGHTS

Revenue per Employee

Revenue Per Employee Trends by Firm Size.

1. Very little change for small firms. Reason: small firms have yet to figure out how to grow revenue while keeping headcount flat.

2. Excellent trend upward for large firms. Reason: large firms can grow revenues without growing headcount.

3. Big drop for medium firms at the end of 2022. Reason: revenue dropped more than expected and they did not reduce headcount.

Key lesson: boutique professional services firms must learn how to grow revenues without adding headcount.

Share it on social :

SUBSCRIBE TO COLLECTIVE 54 INSIGHTS

Entry Level Annual Compensation

Entry Level Annual Compensation

Entry level wages in professional services firms in small, medium, and large firms.

Trending down. Most likely due to the trends in the general job market.

What to do with this? Founders of boutiques should see this as an opportunity. Lots of great talent available at better prices.

Share it on social :

SUBSCRIBE TO COLLECTIVE 54 INSIGHTS

Full Time vs Contract Labor

Full Time vs Contract Labor

Full time employees vs part time contractors as a % of a firm’s workforce.

As a small firm scales to a large firm, contractors get replaced by employees. And the Founder earns more as employees are less expensive than contractors.

How do your numbers compare to ours?

Share it on social :

SUBSCRIBE TO COLLECTIVE 54 INSIGHTS

Full Time vs Contract Labor