What’s in this edition:
- News/Publications to follow
- Financial considerations for your Marketing Consultants business plan
- Industry metrics for guidelines
Public Information to Follow
Financial Considerations for your Business Plan
Profit Drivers
Repeat Business: Business from existing clients is usually easier than finding new clients. You already know their business and their needs, so you can save time and money on sales and marketing. Plus, if you do a good job, they’re more likely to give you more work without having to go through a bidding process. This can lead to a more stable cash flow and help you schedule your staff more efficiently. If you can establish a monthly retainer relationship with your clients, you’ll have even more predictable income.
Improve Win Rate: Marketing consulting firms typically get new clients by responding to requests for proposals (RFPs). But responding to RFPs is a lot of work, and it doesn’t always pay off. If you don’t win the business, all that time and effort is wasted. A low win rate on RFPs can really hurt a firm’s bottom line. That’s why it’s so important to do everything you can to improve your chances of winning.
Effectively Manage Projects: Once you’ve won a project, it’s important to manage it effectively to meet the client’s satisfaction and profitability goals. This means accurately scoping the tasks and costs involved in the project from the start. It also means having strong project management skills to keep the project on time and within budget. “Scope creep” is a term used to describe when the scope of a project changes over time. This can happen for a number of reasons, such as the client changing their mind about what they want, or new requirements being added. Scope creep can reduce the profitability of a project, so it’s important to manage it carefully.
Cash Management Challenges
Variable Demand. Firms often have feast or famine cycles. When they’re busy working on client projects, they don’t have time to focus on business development. But when those projects end, they may not have a backlog of new work to keep them busy. This can lead to temporary cash shortfalls as they scramble to find new clients.
Delays in Collecting from Clients. Late payments are a pain in the neck for marketing consulting firms, especially small ones. Startup clients often have unpredictable cash flow, so they may not be able to pay on time or may even run out of money before the project is finished. This can be a real headache for the consulting firm, which has to spend time and energy chasing down payments.
Potential equipment purchases could include:
- Computers: $1,000+ per
- Marketing Content Software: $10+ per month Tools like Canva can be cheap for creating content.
- CRM Systems: $450+ per month
Recent Industry Metrics (Companies <$5M revenue)
Highlights from this vertical analysis and financial ratios:
- Majority of costs will be tied up in headcount and software.
- Cash heavy business and increased cash on the balance sheet post pandemic.
- Inventory will consist of company branded products.
If you liked this, subscribe to my newsletter below!
For more information on building financial models see here.
Please contact me here if you found this useful or want more information.