Sooner or later, most professional services SMEs arrive at the growth crossroads where tough business decisions face them. Growing is a fine balancing act as flying too close to the sun too soon, can cause you to crash and burn. Here’s how to grow cautiously.
You have successfully negotiated the first few years of running your own professional services firm. Now – are you ready to up the ante?
In many instances, spreading your wings means setting your sights on a different client base. According to Rob Smorfit, chairman of South African Chamber of Business’s (SACOB’s) Small Business Committee, the size of your business relates directly to the size of your clients. “Big corporates perceive it to be very risky to do business with very small companies as they don’t have confidence in their ability to deliver, absorb risk and, sadly, manage their cash flows.”
Furthermore, as a one-person band it is practically impossible to meet the needs of a large multinational corporate on your own. The exception is professionals who provide a very specialised, limited service, such as consulting to the legal department on a specific aspect of corporate governance.
Therefore, it is quite likely that your business would start out servicing a limited number of smaller clients. But as you grow and gain experience, appoint more employees and build a strong network of associates, the possibility of netting a few blue-chip clients could very well be within your grasp.
The advantages of having a large company on your client list are numerous: a high-value, long-term contract provides income assurance and job security, and you are bound to gain valuable experience. Additionally, a big corporate under your belt is almost guaranteed to impress prospective clients and make them see you with new eyes.
Be warned, however, that servicing a large client has its pitfalls and you need to sign the contract with your eyes wide open:
Don’t sneeze at small
A lot of professional services providers spend precious time chasing after the big corporates. But have you ever stopped to think about the advantages of smaller clients?
Getting rid of customers who are bad for business
When you start out on your own, there is always anxiety about where the money to pay the bills will come from. As a result, SME professional services firms often take on any and every client that comes their way and stick with them no matter what.
Believe it or not, this might not be the best way for you to do business. Some clients are simply not good for your business and you have to learn to identify them and deal with them.
The 80/20 rule
The Pareto Principle derives its name from a nineteenth-century Italian economist and is a performance rule which states that 80% of your results (or revenue) are achieved from 20% of your activities (or client base).
Put Pareto to work by:
A penny for your thoughts?
As a professional, you sell your ideas, approaches and methodologies for addressing clients’ business issues. It is therefore very important to protect your intellectual property.
For example, Baird’s Renaissance, a medium sized public relations agency, has developed a process with which to assess an organisation’s reputational risk and the steps to follow to devise a strategy to address it. They have also developed a crisis communication methodology. Both these processes have been copyrighted to Baird’s and only employees are allowed to use them – as is stipulated in their employment conditions.
Copyright is the material expression of an idea. The law of copyright protects literary, musical, artistic and creative works, computer programmes, broadcasts, sound recordings and cinematograph films. Copyright in these works cannot be registered because the right is established automatically once the work is created. Only copyright on films can be registered. For your process or methodology to be copyrighted, it has to be written down.
As a rule of thumb, copyright infringement occurs when your copyrighted material is used for financial gain as opposed to private or personal use.
You can “register” you copyright electronically on the Copyright Protect website. When you submit a file for registration, their secure, independently audited servers will time stamp your file utilising highly sophisticated technology, providing you with irrefutable proof of the time and date that you submitted a file. This could be very helpful should your copyright ever be disputed as you can prove without a shadow of a doubt that the file existed on a specific date. See www.copyrightprotect.co.za
Also remember that your intellectual property can be an additional source of income through licensing. By licensing your methodology to another person or company, you give them the right to use it in exchange for a fee payable to you. There are risks involved in this process, for instance if the third party misuses your concept and blames the less-than-perfect results on you, or does not adhere to the terms of the agreement. It is, therefore, essential to consult attorneys who specialise in intellectual property to ensure that your rights are properly protected.
For more information, contact the Companies and Intellectual Property Registration Office (CIPRO) on tel: 0861 843 384; email: info@cipro.gov.za or visit www.cipro.co.za.
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