Today, the US Bureau of Labor Statistics announced that 142,000 jobs were created in August; bringing the total number of jobs created to over 1.6M so far this year.
Now what if I told you that the Professional and Business Services category is responsible for almost half a million of these jobs? Amazing right?! In August alone, the Professional Service sector created over one in three new jobs!
And given that this category makes up only 12 percent of all jobs in the US economy, the extent to which this expansion is being led by professional service businesses is astounding; they've been responsible for almost 30 percent of all new jobs this year.
While professional service businesses continue to lead the charge in the economy's recovery, their breakneck growth presents a number of operational and financial risks for them. If not carefully managed, these risks could imperil the continued recovery from the Great Recession for all of us.
As a professional services business, here are a couple of the risks you should strive to avoid:
Yeah, it feels great to be busy, particularly after the lean years of the Great Recession. But being busy doesn't get you paid, and hiring more employees to respond to "demand" can sink your business fast if you're not converting "busy" into "bucks".
The key with this transition from "desperate" to "flat out" is to resist the temptation to say "yes" to every opportunity. Now is the time to start being discerning again, and you should be reviewing every project to decide whether similar clients, projects or budgets are really profitable for your business or whether you're working hard but going backwards. That way, in the future, you can start to say "no" to those clients or projects that don't help your business succeed.
Many entrepreneurs in the professional services sector don't realize that their inventory is the most perishable in the world: their people's time.
Unfortunately, this time costs them money everyday people come into the office, and work on a project (and its payments) drags on longer than expected. With over 70 percent of expenses in a professional services business being payroll-related (and thus fairly "fixed"), having a project go late could cost you not just your profit on the deal, but the survival of your business.
When things were quiet, or the business was still small, you could probably manage these risks in your head, on a whiteboard, or by keeping an eye on your bank balance. Unfortunately, as you grow, the size (and impact) of these risks grows even faster. Once you get to 4 or 5 people you'll be spending $10K a week in salaries alone, so even taking your eye off the ball for a week or two can really hurt if you're investing all of your retained earnings into more growth (leaving little leftover).
We built Accelo specifically to help growing professional service businesses succeed. If you're running a growing professional business and you'd like to know more about how to handle your growth, visit our website.
The Operational and Financial Risks associated with growth are particularly dangerous to the professional service sector and strike most often when professional firms are growing. If not properly managed, these risks are disastrous for the individual business, and collectively, the overall growth and prosperity of the economy.
Want to see Accelo in action? Sign up for a free 7-day trial of Accelo now and see how our modern cloud-based client work management platform helps you manage and grow your professional services business automatically.
