Category: Business, Organization, and Management

WHY DO PEOPLE WANT TO EXIT THE CONSULTING BUSINESS?

(OVERSING UPDATE)

Everyone who builds a consulting company always seems to want to exit. There are a lot of reasons for this. First, it is a low capital investment industry that is easy to get into and exit even if exit is at low multiples (1-2x). So it attracts people who work overly hard, and get tired of it. Second, it is an extremely volatile business full of constant risk, because there is no way to entrench yourself in a customer other than relationships and knowledge of their business. It is very hard to raise rates. Skills are rapidly perishable and subject to swings. Employees are not sticky. Receivables very high, and credit on receivables difficult and constraining to your growth. And it is the first business to feel recessionary pressures. It is a very mercenary business. And that is because it is largely impossible to collect rents. (which I find fascinating really. it is an example of how all of us seek rents, because the constant productivity of consulting is like the constant productivity of hourly labor, except you’re working in a higher paid white collar capacity. So by inversion that means most of us seek employment where we can seek rents.)

You start get enter the safety zone as you approach 500 people, and generally get somewhat safe after 1000, because even if you halve the business, you can halve the staff, and have the cash flow to rebuild.

SOLVING THE PROBLEM

The only way to solve the problems of the stressfulness of running a services business is BRAND, SCALE, PORTFOLIO, and PROCESS.

Build a reputation for excellence that feeds you leads.

Get large enough that you can tolerate volatility without causing doubt in the staff. (maintain your ‘other’ customer base of employees).

Look at portfiolios of either customers or offerings or both, and plan two years out at least, if not three.

Create a process of continuous training (education) for your employees.

WHY CAN SOME PEOPLE NOT DO THIS?

Because actively managing your business is pretty hard. And investing in your employees skills is not expensive, but it is a constant effort.

****So the best way to create process of continuous improvement is to treat the company as a university that does paying work for clients rather than unpaid homework for the professor.****

And instead of relying upon the professor’s or management’s opinion for your grades, you rely upon the reviews of your peers and your customers.

If you grasp this. That this is probably the business model for all businesses in the 21st century. That we have passed the era of lifetime careers. That we have passed the era of decade long careers. That instead we are in an era of continuous education of our staffs, and that we need processes to achieve that continuous training at lowest possible cost, then you will understand why we built oversing.

***BECAUSE ALL COMPANIES ARE TURNING INTO CONSULTING COMPANIES AND ALL LABOR INTO PROFESSIONAL WORK.***

Whether we have made oversing powerful enough yet to achieve this is certainly debatable. But that we have made it powerful enough to do much of it is not.

Oversing is a platform of the management of human capital in the 21st century.

It’s a Social ERP for The constant Improvement of human beings.

And the data we will give you about your organization after using Oversing will blow your mind.