The Consulting Growth Podcast
Joe O'Mahoney is Professor of Consulting at Cardiff University and a growth & exit advisor to boutique consultancies. Joe researches, teaches, publishes and consults about the consulting industry.
In the CONSULTING GROWTH PODCAST he interviews founders that have successfully grown or sold their firms, acquirers who have bought firms, and a host of growth experts to help you avoid the mistakes, and learn the insights of others who have been there and done that.
Find out more at www.joeomahoney.com
The Consulting Growth Podcast
From Spreadsheet Chaos to Streamlined Success | Episode 4 - Behram Khan & Prof. Joe O'Mahoney
Are your consultancy's processes holding back your growth potential? In this revealing episode of the Consulting Growth Podcast, we dive deep into how Professional Service Automation (PSA) software can transform small and medium-sized consultancies.
Guest Behram Khan, co-founder of Avaza PSA software, shares how the right systems can help consultancies escape the "spreadsheet trap" that drains productivity and profits. Born from his own frustrations as a project manager, Khan explains how fragmented processes using separate tools for tasks, communication, time tracking, and invoicing create costly inefficiencies that compound as businesses grow.
The benefits of implementing a PSA system are substantial and measurable. Most consultancies see a 5-10% improvement in billable resource utilization – equivalent to gaining an extra team member without additional salary costs. Status meetings become more focused, email threads more manageable, and project profitability more visible. Perhaps most critically for growing firms, PSA systems significantly improve cash flow through streamlined invoicing and payment processes.
Khan makes a compelling case for early PSA adoption: "Adopting a PSA tool should be part of the initial business setup." Starting with basic functionality and expanding as you grow establishes solid processes before bad habits form. The ideal solution balances ease of use with sufficient flexibility to adapt to your specific workflows.
Beyond technology, Khan offers valuable advice for consultancy growth: invest time researching how to reach prospective clients, maintain consistent marketing messaging with clear calls to action, keep existing customers happy through clear communication, and automate repetitive activities wherever possible. Most importantly, ensure your business can function smoothly even without you present – a key indicator of a truly valuable consultancy.
Ready to transform your consultancy operations? Listen now to discover how the right systems can unlock your firm's full potential and position you for sustainable, profitable growth.
Prof. Joe O'Mahoney helps boutique consultancies scale and exit. Joe's research, writing, speaking and insights can be found at www.joeomahoney.com
Welcome to the Consulting Growth Podcast. I'm Professor Gero O'Mahony, ceo of Equity Sherpa. We help owners of consultancies quadruple the equity value of their firms over a two to four year period. If you'd like to know how we do this, visit equitysherpacom. Okay, so we are here with Bheran Khan, who is one of the co-founders of Avasa, which is a professional service automation software that incorporates a whole load of things that we'll talk about in a bit more detail later. So, baram, thank you for joining me and giving us a bit of insight about PSAs and how they work and what Avasa does.
Speaker 2:So for people that are new to professional service automation can you give us a quick overview in terms of what it does, sure. So professional services automation, in short PSA, is a software that enables professionals such as consultants, lawyers, architects, engineers, accountants, et cetera, to perform core business activities such as project management, resource planning, communication and collaboration, time and expense tracking, sending quotes and invoices and then reporting on all of that business data to make better decisions. Each software vendor has their own approach and focus on how they incorporate these workflows, but in general, that is what a PSA software should address.
Speaker 1:Okay, thank you, and in terms of your own involvement, could you give us a bit of background about how you got to the space that you are and why you co-founded Avaza?
Speaker 2:Of course. So, as you've mentioned, my name is Baram Khan and I'm the co-founder at Avaza. My academic background is in finance, business administration and then computer science, so I spent a whole bunch of years in university, as you would be able to relate to. So, right from an early stage in my career, I enjoyed working on solving problems, in particular, process-related problems. I spent quite a few years leading teams of developers and implementing software solutions at large national and multinational organizations. Tim, the other co-founder, who comes from a software consultancy background, and I worked together on quite a few projects at Seven Media Group, the largest media organization in Australia. We often found ourselves spending a significant amount of time stitching together project management related processes that were totally disconnected and prone to errors. We were unable to find any product that would address our requirements. That was quite frustrating. So Avaso was born out of our own frustrations as project managers. We spent a fair bit of time in research, but in 2014, tim and I started working on Avasa full-time.
Speaker 1:Okay, and so that was 2014. So, just in terms of you know my own interest, what did you? Obviously you didn't build everything that's in it now. You didn't build in the first phase. So did you build a sort of what they would call, I guess, a minimum viable product and then keep adding things to it, or did you try and build?
Speaker 2:Absolutely. So, yeah, so with any startup these days. So, yeah, that MVP or the minimum viable product approach is the most sustainable approach that you can have. Obviously, you don't want to build something in a lab that no one is going to ever use, so you want to test the market, make sure that you understand the needs of the market, Like. We obviously knew our own needs, but we didn't know if those needs were in sync with what the market needed.
Speaker 2:So we started with a small module which was to do with question and answers, so people could ask questions and then they could be responded to, so a bit like Stack Overflow and other Q&A products that you would see on the market.
Speaker 2:And from there we pivoted to make it a task management system, so it would have a list of tasks and you could manage those and prioritize and assign and do all of those things. And from there we said, oh well, you need to be able to collaborate on these tasks and there needs to be actionable items that come out of that collaboration. So that's how it started off. And then we started adding all the other professional service modules that you would generally see in a good PSA, and it took maybe three to four years to get the core right and get all those core modules in. And then you know, obviously icing on the cake is to try and polish it up, try and get a lot of feedback from the customers and make sure that's incorporated and you make further improvements. So yeah, it was a phased approach, starting with task management at first and then all the other modules were added later it's.
Speaker 1:It's nice that it got born out of frustration with your own project management experiences and and I get that you know there's nothing better than you know setting something up that way with your own frustrations, because you're knee deep in in the problems that that are there. Okay, and now there's obviously a few PSAs out there. Can you tell us a bit about how Avaza is different to?
Speaker 2:other PSAs out there, sure. So there's a few popular reasons that keep coming up in our discussions with customers. So, firstly, they love the look and feel of the product and how easy it is to get started. Now. That was really important to us. And then our early stages, those pain points that we had in our research. Many of the products that we ruled out were for that particular reason. So you would go and look at a PSA and it looked like that. It is extremely overwhelming. You would not understand where to start and you would have to go through professional services from that PSA to be able to get that PSA implemented. So the core thing for us was that anyone should be able to pick it up and get started with minimal need for any training. So that was the first reason that keeps coming up. Secondly, the features on offer are a good fit for most business requirements.
Speaker 2:Unlike many of our competitors, we are focused on offering an all-in-one solution, so businesses don't have to mix and match multiple products. We keep hearing how businesses move to Avaza because of our competitor products didn't offer time tracking or resource planning or invoicing and good reporting. So there was that gap in the market where many of the competitor products do something really well, but only that one piece and they wouldn't do any of those other pieces and many of the businesses would actually outgrow that product and then they would have to look for another product to actually try and integrate the two products. And then you get into those integration nightmares and you end up with three or four products, and the first problem, initially, that you're trying to solve was actually amplified by having all these other products. So that's one of the other points of difference.
Speaker 2:And, lastly, we are obsessed about customer support. We have invested in developing a team of highly trained individuals that are available 24-7 to our customers while live chat, audio and video calls. These close interactions give us the opportunity to better understand our customer needs and what, as a company, we need to do next. So you asked earlier as to how it evolved, and that is one of the core things that we did, that we stayed very close to our customers. By having that close interaction, we were able to see where the gaps were and what we should be working on next, rather than anything that we may have dreamt up ourselves. So I believe these are the core reasons why a lot of businesses choose Avaza over our competitors.
Speaker 1:Okay, so, so you? I spoke to a user of um, of Avasa, um Serena, at 1904 Labs and she confirmed all of that. So she um, I guess when I said why did you choose Avasa over the competition the first, the first thing she said was it's ease of use, and she said she spent a long time trialing dozens of PSAs and very often found feature overload that might have been suitable for a company like IBM, but for her it was the simplicity and the user interface and user experience that really sold it to her and, as you say, and the customer support as well, which she really praised, I guess related to another feature. Something that she mentioned, that you haven't mentioned, is that she said the price was very competitive compared to a lot of the competitors, which is great, but I guess it prompts the question how have you managed to offer this service for a very competitive price?
Speaker 2:That's a good question. That's a good question. Well, tim and I founded Avasa to address exactly that particular gap that you pointed out in the market. So for our own projects, we were unable to find an intuitive project management system that was flexible and affordable with great customer service. So basically, our ethos right from the start was to build a lean company that offers an easy-to-use software with great customer service. That discipline was instilled right from the start Not having any bloated processes, not having nice, big, flashy office buildings, buildings. And even though we have presence in 150 countries and we are able to support all of our customers 24-7, we're able to do so with all lean processes, trying to keep that cost base as low as possible. So most of the money that is available is spent on R&D and improving the product, rather than those things that don't actually contribute towards a better product. So I guess the good customer reviews and our competitive pricing validates that we are delivering on our promise.
Speaker 1:Yeah, yeah, yeah, I mean it's a good model. There's probably a book or some consultancy around developing good software projects on a budget as well. Later down the line, when you're less busy.
Speaker 2:Absolutely, and it does require discipline.
Speaker 2:None of it is rocket science, but you do find that many of the software businesses in the market, many of the startups in particular, they seem to be very much focused on raising the next round of funds.
Speaker 2:So those fundraising events is where the main thrust of the business is, and so that requires obviously artificial growth of some degree Well, as in growth on steroids, where it is not sustainable through natural organic processes and so much of the funds go into that space, rather than the core research that needs to be done and staying close to the existing customers. Focus is very much on new customers and what that funnel looks like, and I think that's one of the points of difference that we feel like that everything should organically grow, grow and we should be listening to our customers and their needs rather than what a VC fund may be saying or what may be the software trends within the startup community. And so we have kept ourselves isolated from much of the noise that comes from those sectors of the market and very much stayed close to our customers and making sure that we're delivering on their needs.
Speaker 1:Okay, that's really interesting Because I mean, as you know, I'm looking at small consultancies that are growing at the moment and you get a similar thing there and you've got sort of small consultancies that have accepted large amounts of venture capital or private equity money or even have been bought quite early by another consultancy, and those that want to grow fast have been forced almost to buy other consultancies or really expand at too fast a rate, and what happens very often is that they end up falling back in on themselves because they haven't got the infrastructure or they end up with a broken culture because they've got too many different competing needs and obviously private equity want their money within a certain horizon, whereas those that are privately owned can be a little more strategic, take a longer-term view and the growth might be slower, but it tends to be more sustainable, absolutely spot on okay, um so okay.
Speaker 1:So, talking, talking about your, your client, so I'm I'm especially interested in sort of small consultancies that are growing. It would, would that, would that group, be the majority of your clients, or do you have? What do your clients look like in terms of the demographics?
Speaker 2:Sure, yeah, I would say majority of our clients would be small to medium businesses and Avaza, in terms of the sweet spot for our customers, would be that same demographic, so small to medium businesses, helping those small businesses get to that medium-sized fast and get the medium-sized businesses to have sustainable, scalable, robust processes.
Speaker 2:So that's the value add from a VASA point of view.
Speaker 2:Larger organizations and when I talk larger organization we are talking about hundreds of thousands of employees spread across different geographies they tend to start getting into those particular specific custom features where a way specific to the industry, and so they seem to be a misfit for a PSA solution out of the box.
Speaker 2:Yeah, whereas the small to medium organizations have mostly same kind of processes that they want to map across to a software and they want to get those benefits, they want to get that automation in and they're smaller teams so they want to work in a lean environment rather than having those bloated red tape processes that you would see generally in larger organizations. So, yeah, I would say probably 45 to 50 percent would be smaller businesses and then the same number and I'm talking in terms of volume of people rather than the value of revenue would be in the medium-sized businesses and very you know, one of larger organizations would be using us because you know their IT departments aren't cooperating or they couldn't roll out a large ERP system and there are impediments there and they start looking for a PSA solution and they find a buzzer and they roll it out to one or two business units.
Speaker 1:Okay, so you've touched on something there that is very interesting to me, which is this balance between a sort of off-the-shelf standardized you know this is how we do it rather than sort of trying to get the customers' processes and trying to map them themselves. Now, when I spoke to Serena in 1904 Labs, she said that you were actually really helpful in terms of you know they had ideas that helped you develop, develop your, your, your offerings and, you know, in some cases even tailored the offerings to their needs. But when you are faced with, say, a medium, you know small consultancy, it's hit the 30 employees mark. They they can't run out of you know six spreadsheets anymore. Is it ever advisable for those consultancies to say hold on, we've done it this way for the last five years. Is this something that you experienced? Actually, you know we've done it this way for the last five years. We want your systems to map what we've done rather than us to follow. You know your processes. So how does that conversation, how does that conversation go, sure it?
Speaker 2:happens quite a bit, and so medium-sized businesses like 1904 labs and and others where they would have, you know medium-sized, you know teams where there's a lot of collaboration and they've been running for a fair bit. They've got well-entrenched processes in place. You know many of these processes, as you alluded. Like you know, I call it the spreadsheet trap. Yeah, so you know you want to start a process. What do you do is start a new spreadsheet. Well, you want to discuss that process. You start a new email thread and you want to send a document out. You start a new Google Doc or a Word Doc, and so many businesses fall into those traps. And so when they start and that is around the time when they start actually looking, because they fall into this trap and they can see that there's a lot of time spent in these disjointed processes and they're prone to errors and the admin team is getting larger and larger in size because so much of it has to be now done they start looking out for a PSA system. So generally, that is a good thing. So that part of the journey is quite compatible with the offering. However, as they start rolling out the PSA, they do have that baggage that comes along where they're saying, oh, but, by the way, when I was using that particular spreadsheet I was able to report these particular metrics in this particular way, and that's what our customers are used to. And so we have a bunch of those conversations. But many times and because they're professional services organizations, they know what process reengineering is. They do know that some alignment, realignment may be required to actually try and get better throughput. So when you're looking for those standardizations, there would be some tweaks that need to be made. So even in 1904 case, they had many processes that were way custom and they had teams of business intelligence analysts and data scientists looking through data and they wanted to manipulate in particular ways. And those discussions mostly times we were able to come to a consensus on what the standard should be that would be acceptable and of benefit to the larger professional services industry rather than just to the particular case. And so most of those battles are one, not all, but many, many times we do come to a consensus around what that process should look like. In addition to that where we do come to those consensus, the PSA and much of that development that I was talking to you about in terms of how we are fine.
Speaker 2:Tuning our own product is to have the flexibility within the product that many of these custom flows can be embraced within the product so they can be configured. So, whether it's your custom statuses or you have multiple assignments, you need to have external customers, not see some particular data. You need to have external customers, not see some particular data. All of these kinds of things can be introduced with minor customizations, without.
Speaker 2:And the struggle, the battle between these custom-specific workflows and a standard PSA is that if you start introducing everything that someone needs, it would eventually become a dog's breakfast, yeah, and it would be that same thing, that it would be intimidating and would be hard to use. So we're very careful that when we do introduce a particular feature that we do feel like would be of broader benefit, that we offer it in a way that it doesn't clutter the UI, it doesn't make the usability compromises. And so looking out for PSAs that do that, where they're simple to use but they have the flexibility of the configuration, where many of your workflows would be taken on and would work seamlessly, is the sweet spot that the businesses need to look out for.
Speaker 1:Okay, thank you. And so, in terms of when a business should start to think about PSAs, you know, in terms of my own interviews, I've had people who, literally from the founders they started to use the because they started up a couple of companies in the past or they'd been, you know, know, very professional firm. They started to use PSAs very early on, whereas others have left it until you know quite, quite late, when, when the inadequacies of their own different apps and systems forced them to do it, as they said, as you say, they were paying a fortune for admin to clear up the mistakes. So when would you recommend that a growing, you know, an ambitious firm that was set on growth started looking at PSAs? Would it be earlier on or later on?
Speaker 2:Right. So in my opinion, adopting a PSA tool should be part of the initial business setup. Okay, they may not need all the bells and whistles initially, but many of the features are useful to be incorporated right from the start. So founders find themselves juggling their time between important business activities during the business incorporation stage, and it is essential to have a task management system where all these activities are documented and prioritized so important activities don't get completed on time and don't go missing. As the business starts interacting with customers, the same task management system that they had introduced for themselves, they can add on collaboration on top and roll it out to their customers so they can collaborate on those tasks that are now client facing.
Speaker 2:This demonstrates a professional outlook and keeps everything in order For time and material engagements, which many of the professional services companies would have. It is important that software is in place to ensure all billable time and expenditure is properly recorded and easily invoiced. Healthy cash flow is so essential in the early stage of the business, so offering easy online payment options is going to help with businesses getting those invoices paid. Just imagine sending invoices by Google Docs or spreadsheets and then sending manual reminders for those and then not knowing which ones are paid and which ones are, and so you can see how you fall into that bad practice trap if it's not instilled early on. Onboarding new team members and customers is going to be much easier with well-established processes slash software, freeing up time to work on growing the business rather than peddling around trying to work on these processes that are highly inefficient. So basically, the earlier the PSA is implemented, the better it is Okay.
Speaker 1:Well, that I think. So that's useful to know. But it's also useful for me to know, because, as you were describing that, I was thinking about my own consultancy, which actually is starting to suffer from this. There's only three of us in it, but, and what's interesting is that, by the time you add up the monthly cost of your task manager, your project manager, your to-do list, your invoicing, if you add those individual subscriptions up, you're actually talking a fair whack of money, um, and of course, in theory, they they talk to each other. So you know, we started using Trello and the guy, one of the partners, said no, it's fine, because you can use a zap or a zapier tool to connect it to something else. And you know, we've never done it because it's too complicated.
Speaker 2:So I might, I might actually be your next customer, yeah small incremental improvements go a long way, and having a PSA and, as I said, you don't have to roll out everything and that's why you need to have a choice it should be simple and easy to use, like Trello is, but Trello does as many businesses, they actually grow out of that and when they grow out, then they're having these discussions, exactly as you said. Well, let's have Zapier and then we would have a Zap that would create this Google calendar invite.
Speaker 2:Or it would go out and create this Google sheet or whatever. And so you end up in this trap that, rather than a PSA helping you, you just had a task management system and you did not think of the other processes that you may need down the track. And then obviously you're in love with the product that you've already adopted and you don't want to really change that. And then band-aid solutions come on top, so that early research, spending a little bit of time knowing where you want to take your consultancy, what would be your workflow touch points, even though they may not be there yet but they may be introduced later Then having that product that is economical, easy to use Obviously you don't want to. You know you don't want to pay an arm and a leg for something that you're not going to use for five years, so you want to make sure it's economical.
Speaker 2:So that price sensitivity for smaller businesses is completely legitimate concern. You don't want to go in and pay hundreds and hundreds of dollars a month where you can't yet see the value on understanding really what the savings are than this broad brush kind of a thing. Oh, maybe it helps with me something, but you can't really quantify it. So those kinds of discussions early on with yourself and your PSA vendor is really important. And you know when I was talking about those close interactions with our customers and leads, those are exactly the kind of conversations we're having where they're saying why should we take on a VASA and why should we pay X amount of money when we're doing perfectly fine with this and maybe we can add this thing on? And so those conversations end up in everyone understanding what the problem statement is and, once it's solved, what the benefit is going to be and and if that is worth it, sure you take on a PSA, and if it's not yet worth it, then you could delay that decision a bit.
Speaker 1:but, as I said, in my opinion, the earlier that discipline is put in place, the better it is yeah, I mean it's interesting for me because I've been teaching, you know, I've been a management consultant for 25 years. I've been teaching consultancy for 15 years, um, but it's only really in the last 18 months that I've become aware of psas and I think I mean that's partly my own ignorance, but I think there's, you know, in in some cases there may be, you know, a market of people out there who don't realize that this is affordable for smaller businesses, that they think you know they're used to these big ERP systems. You know, especially if they come, you know you might get someone at Deloitte who gets to middle manager and leaves and starts up by themselves, and they might, you know they're used to a large ERP system and they don't realize that you know smaller solutions exist. That's me excusing my ignorance.
Speaker 2:It's true, and many of these are popping up in in recent times that you can see, avvasa itself is a young company. You know, seven, eight years isn't that long a time and when we started many of these businesses that are big household names were still in their infancy stage. So they're still making inroads into these small to medium organizations. And this whole concept of usability and easy product that you can just kind of sign up for, similar to how you sign up for an email and you can just get on with it and start using it, is relatively new. And so the awareness as part of PSA software vendor industry. It is our job to actually create that awareness and make sure.
Speaker 2:And so many of these events and now in the midst of COVID and all that things have slowed down, but a lot of investment was going in through the software vendors trying to create this awareness in the professional services industry in particular and making sure that they understand that this isn't one of those ERP decisions but this isn't one of those Deloitte's big, heavy-handed with large IT teams rolling out software kind of decision. This is something that you can just sit on your computer, sign up with your email and get started straight away and in a few hours later down the track, you would actually have two or three projects up and running and your team onboarded and with support 24-7. So that is now where the industry is at, and so, yeah, I completely understand how a lot of people aren't aware of it and and but I think the next three to four years I think it would become a household thing for in the professional service industry for everyone to take on a psa and start working with it yeah, yeah, okay, thank you.
Speaker 1:Um, so I've seen, I've seen terms of stats in terms of the impact of PSAs on things like profitability, growth and profit margins Sorry, project margins specifically seen, what are the major sort of business benefits that a typical owner or founder would see after six months to a year of using a PSA.
Speaker 2:Sure, that answer differs from the size of the company to size of the company. So if you're a sole proprietor business, the benefits are going to be quite different to if you have a team of even three or four people. So let's just take the example of someone with two, three, four people, small consultancy, and many of the benefits would be similar for a sole proprietor as well. But you know what I mean. You know what I mean. So the first major return on investment that we see by rolling out a PSA is how you can better manage your resources. So you have three or four people and you need to plan those resources and make sure that you can maximize their billable revenue. So an improvement of 5% to 10% is something we commonly see. So someone who was getting billed at 70% would go up to 80%. Someone at 80% may go to 85%, 86%, depending on the needs of the market and depending on what the skills are of that particular individual. Now that benefit, that 5% to 10% benefit, can translate into a cost saving of one staff member or someone additional that you can hire, maybe a junior, but you can actually start growing your business because you're optimizing the resources that you have on hand. So resource planning is a must. Making sure that you're working on the most profitable business engagements first, and that's your priority is something that a resource planning tool would give you. That's what we have and PSAs should have.
Speaker 2:Our customers have cut down significant amount of time in status meeting. You know those good old status meetings. Every day you get together either on a conference call or Zoom call or whatever it may be, and oh, what did you do yesterday and what are you planning to do today? And even in the agile software development world they call them the standouts. They're quite popular where we work together, and back in the days we used to do them quite a bit and we thought, oh well, that's the state of the art way of running projects. Now those status meetings can completely be cut out, and I'm not discounting human interaction. You can increase human interaction with DSA, but you don't have to have unproductive human interaction. There's seven people sitting in the team and six people are completely sitting and listening to one guy Mostly something that may not be relevant to them at all, as to how someone fixed the front door. They're not relevant to someone who needs to go out and build more revenue. The other thing that we have seen is reduction in long email threads, so where a lot of projects start with action items in an email and then there's three or four people in the loop even a customer and there's a lot of projects start with action items in an email and then there's three or four people in the loop even a customer and there's a lot of back and forth going on with all different fonts and colors, everyone replying to those threads, and every time that thread comes in you have to go in and catch up on what had happened in the past. People don't realize how much time they spend in emails and they feel like that that's the necessary evil. They don't have to. If you had actionable tasks with collaboration on those tasks, where all the commenting by your customers, by your team members, was done on that action item, there's nothing more beautiful than collaboration around context. Collaboration that is broad brush and everything mixed and matched is a recipe for disaster and a lot of confusion is created and bad quality projects are delivered through that. So that's another significant benefit for having an online system with good collaboration around those tasks.
Speaker 2:Okay, project reporting is another big one. So you see many project managers around at the end of the week where they either need to invoice all the uninvoiced time or they need to work out what are my profit margins. Is this project on budget? Is this project on time? And so if you have Trello, for example and you know, trello is a fantastic task management system and system and I've used it myself in the past However, if you had something like a Trello, it isn't going to tell you how much time and material you've spent on that project.
Speaker 2:All it's going to tell you are the tasks that are on hand. It's not going to tell you what your project budget is and how much actual cost has been spent. It's not going to tell you how much you have built and how much actual cost has been spent. It's not going to tell you how much you have built and how much is left to be built. Now, many of these processes are then done on spreadsheets and Word documents and whatnot. So the project finance department whoever is doing it, even if it's a one-person team would be spending time on project finances, understanding profitability, understanding all the admin pieces and what needs to go out to the customer and many a times, even missing on billable revenue because they didn't track that call that they had with the customer, or they didn't track that meeting that they had. And if they had a PSA on hand, it was on their mobile just one press of a button and they could have easily tracked that against that project. So that's another big benefit. So cost savings is a big part of it. So having your billable revenue go up, your costs go down.
Speaker 2:Improved team and customer collaboration also delivers high quality product. So we all know that pyramid of projects with quality, time and budget. But if you do want to have higher quality projects, you need to make sure that you set the right expectations for your customer. And if your customer had visibility on the work that you're doing, and this visibility can be managed. So something like an Avasa would allow you to share particular tasks only with the customer and the rest of the project would be hidden from the customer because their internal back-end work. So having that level of transparency with the customer and having that close collaboration not only improves the quality of the deliverable, but it sets the right expectation. The customer is in the loop all the time. It's not like at the end of the week or at the end of the month. That status update goes and it's shock and awe. And they just didn't know that it's not going to happen for another week or two weeks or whatever it might be.
Speaker 2:Integrated invoicing and online payments really help with cash flow. Now many businesses discount that. They feel cash flow isn't that important early on. But come those bills whether it be utility bills, whether it's your software subscriptions, you know whatever else that you have to pay for your staff, your payroll, and if that money hasn't come in the door, that cash flow is not being managed properly and there is no excuse. Many times what happens is you send an invoice out and the invoice doesn't have the right level of detail. The customer comes back and says by the way, I don't understand this invoice. Yeah, I wanted to see each line item of deliverable that you guys have done Now. Knowing what your client expected on an invoice, making sure it can be done with the minimal amount of effort, and then having opportunity for a client to pay that invoice with a couple of clicks is going to improve your cash flow.
Speaker 2:Trust me, I have had many a time this discussion with professional services businesses where they say, oh, we are happy with sending it on our spreadsheet and we have got this custom template and we do this funky thing with it and those conversations end up them realizing that, look, if you don't do that, how are you going to get your consolidated reporting? If I want to know what your age receivables are for your entire business, how much of revenue is outstanding yet to be paid by your customer? You can't get that out of a spreadsheet. All these invoices are in separate sheets. How are you going to consolidate them all and how are you going to get to those numbers? And every time something gets paid you have to go in and update it all. So the list is long and on our website there's lots of this documented in terms of benefits.
Speaker 2:But I would say that it's a no-brainer in terms of small to medium businesses taking on a PSA. Choose only the bits and pieces that they need. So, for instance, if they're just doing research and development work and they only do one invoice a year sure invoicing isn't your problem then you only have a very low volume invoice, so don't use the invoicing side of things. But you certainly have a list of tasks and deliverables and things that you want to work on every day. If you don't have time in material engagements, but you still want to track your own cost.
Speaker 2:Where do I spend the time? You want to estimate your task and make sure you track your actuals against those so you know whether you're true to your estimates. I call my developer and, by the way, everyone is so optimistic about estimates. You ask them how long is it going to take to do something? And they'll say, oh yeah, it would take maybe six hours. And when those actuals come in and the reality sets in because there's rigor, there's a process and you can see look, it actually took 12 hours, you were wrong by 100%. And that's when the reality and those kind of meetings are really good and productive, where you go in and say, look, be more realistic with your estimates, understand where you're spending your time.
Speaker 2:And that's what I really mean. Like if you don't want to spend, if you don't have material costs, if you don't have expenses, if you don't charge your customers for all your materials or transport costs or whatever it might be, then sure, you don't have to use expenses. But if you do and you have a team of people who are actually spending money and that money has to be on bill to your customers, then having an expense module integrated with your project management, so you know the cost of those expenses is built into your project budget and you can track the profitability based on that. Cost is really useful. Now if you were to go in and get a standalone expense management system, it isn't going to speak to your project management system and you wouldn't know what your profitability is. So shooting in the dark is where they find themselves many a times, and there are many solutions out there. Finding the right solution for your needs is priority number one, in my opinion, right at the get-go when you're setting up your business.
Speaker 1:I didn't realize this interview was going to be so useful to me personally, because I have my to-do list in front of me and in red writing I've got I don't know if you can see it in red writing I've got chase invoices written here. I've got chase invoices. Uh, I've got five invoices I need to chase um. But also, you know, I'm teaching a course at the moment, uh, to independent consultants and um, and one of the things we're advising is to track your time and all of them have been doing this for two weeks and they come back and go wow, I didn't realize that. You know I've been billing the client for this, but actually I've been doing this. Now their question is well, how do we get visibility of this to the client? But obviously, you know, if you've got those types of systems built in, then the client can have visibility to it, Absolutely.
Speaker 2:Like with Avaza, we even allow timesheet approvals to be done by customers. Okay, so many workflows require and so this happens more where your consultants are on site quite a bit, where they're doing on-site work and they're working under the supervision of a customer and they have billable work, so much of that time is tracked right on site and then the approvals are sent to the customer contact and once they approve it, billing becomes so much easier because it's all approved. The customer has already seen it and they know exactly what the billable rates are. The rate cards are predetermined and they can see that on the invoice that, oh yeah, I had approved it all. That's all there and all they have to do is send it to the finance department. If it's a large client or if it's a smaller business, they can pay it themselves through their credit card. And so yeah, injecting these workflows, whether they're internal backend or whether they're client facing workflows, all of those can be configured within a PSA like VASM.
Speaker 2:Yes, and so yeah, giving thought to those processes and saying and see, well, this is one of those things you need to work out whether it's hurting you like not having that visibility for a customer to see where you're spending time. Does it hurt you? And if the answer to that is yes, then you say, okay, well, how am I going to address that? You know how am I going to improve that visibility? And so what level of detail do I need to track my timesheets on right so the client may say oh yeah, I can see that you worked on that task, but what did you particularly do on that particular task? So if you need that, then document that in notes. You would know exactly what the client requires and you will fine-tune that, configure your psa process accordingly, and it would just be a well-oiled machine and your client would be happy.
Speaker 1:You would know exactly what you're doing and you it would translate into a much healthier bottom line it's interesting because when so I coach and act as an advisor to a few small consultancies and one of the things they say when I'm talking about billing is that they you know, they purposefully work beyond what they say. They're going to work so that they can be competitive, so they can offer the client competitive. And I always say well, first of all, you need to know how much you're discounting. So if for every hour you're billing a client, you're actually doing two hours. You need to know that. But number two, you need to present the full bill and then discount it so the client can see what discount they're getting. It's not something you want to do in secret, in the background, because the only people that suffer there are the employees. If you can present the bill and then negotiate a discount, then the client knows what value they're getting. Otherwise it's hidden.
Speaker 2:Absolutely, and the PSA should allow you to do that.
Speaker 1:Yeah, okay, all right. One final question is I guess you will have seen a lot of small consultancies grow and this isn't your core area of expertise. In fact, you've grown your own software company. Is there any advice that you would give other than getting a PSA, which I think would be your number one? But what would your number two, number three bits of advice be to consultancies that wanted to grow?
Speaker 2:Sure, you rightly said we have learned a thing or two running Avasa and interacting with thousands of professional service businesses over the last few years. I would say the number one thing is to invest time in researching how to get your offering in front of prospective clients. You need to be where your customers are, for example, industry listings, marketplaces, social media groups, magazines and newspapers and the list goes on. You've got to be where your customers are, and newspapers, and the list goes on. You've got to be where your customers are. Number two make sure the messaging around your marketing is consistent and actionable. A well-designed website with clear call to action goes a long way. So when someone is going through your website, they need to know exactly, after consuming a good message, what action you want them to take. So that is really, really important. Enable your leads whoever your leads are, whether they're getting to you via your website or whatever that they should be able to engage with you on multiple communication channels. So introducing live chat, having them access your emails, whether it's inbound calls there are numerous different ways whether it's the social media messaging that they can inbox you. All these different channels should be obvious and visible to your prospective leads. Demonstrate a professional outlook with robust processes and clear engagement model. Make sure you're able to communicate the return on investment effectively in your proposals. Now, this is something that we come across quite a bit as well, where many a time we have this ROI discussion with our prospective leads. Be able to communicate that effectively. What that would be why should they choose you as opposed to someone else needs to be well articulated in your own head and in the culture of the organization. So when you reach out to these prospective clients, that is adequately, abundantly clear. Keep your existing customers happy. That's you know. Needless to say, you've got to keep your base happy. Maintaining a clear communication channel with your customers would keep them happy. Set realistic expectations with regular updates would keep them happy and deliver projects on time and budget. It's all quite obvious.
Speaker 2:Using technology to automate repetitive activities is really good. So think of things like recurring tasks, recurring meetings, recurring expenses or invoices. They can all be automated. Use a tool to automate those things Reminders for outstanding tasks and timesheets or invoices, tasks and timesheets or invoices. Make sure that those reminders are set and the technology is helping you get those out on time without a human getting involved. Online timesheets and expense approvals, as I discussed earlier. Make sure that your approval workflows are well tuned in to the expectation of your customer and the internal policies that you have put in place, so your employees know what they can spend their money on, where they can spend their time on, and they know that that approval is around the corner and many of these things are going to get rejected if things aren't done properly.
Speaker 2:Look for opportunities to reduce cost where possible. Now we were discussing this earlier that our ethos has been very much running a lean organization, so making sure that you promote remote work culture to avoid time wasted in commute and paying hefty rents. Now in COVID, everyone is forced to do this, and so it's like. You know, many people have leapfrogged this and they've been forced to do it and now they've found oh well, that's actually quite good. You know, sky hasn't come falling down. Things still work and we're still able to deliver projects, you know.
Speaker 2:Spend less time in meetings and emails and replace them with robust project management processes, as we have discussed earlier. Replace time-consuming manual workflows, like using disconnected spreadsheets, consolidating data from different sources and spending all that time in reporting, and use a dedicated software that replaces all these inefficiencies. Increase your team's billable revenue. I would say that all these things that you have to do and I've been going in sequence of funnel you've got to get your leads happy, then you've got to get your customers happy, but by end of the day, you need to make sure that you're maximizing your billable revenue. That is what makes or breaks a consultancy. That is what makes or breaks a consultancy. So ensuring that you are maximizing your team's utilization rate or your own utilization rate is really, really important.
Speaker 2:And, in summary, I would say marketing having effective marketing, good sales operations, like the example you gave. If you're going to do sales with heavy discounts, make sure that process is in place and that discount is visible to your customer. You don't want to dilute the value of your offering. You want to show them how you appreciate your business and the favor that you're doing to them in this particular engagement, rather than setting an expectation that that is what the value of the service is. So having that robust sales process is really important. And effective business operations that takes care of all the back-end collaboration and setups and tracking, time and expenses and all of those. So if you have your funnel sorted out, you have great sales and you have great business operations. I think that would set you to be a success and be a more profitable business and be more attractive for prospective buyers.
Speaker 2:I would say that, well, we even though we're not out in the market to sell, but many times we speak to venture capitalist companies and one of the things that we repeatedly see in those meetings is they're looking for a robust business with repetitive processes that scale. So if the CEO, if the founder, was to disappear, does the business collapse or does the business still run? So just imagine putting yourself in that place and say, okay, well, if I was to go on a one-month holiday to the Swiss Alps, is the business still going to continue to operate as it does with me there? And if the answer is no, there are things that you need to work on and those processes have to be put in place that everything works as a well-oiled machine without that person present. So that's the advice I would give for smaller businesses to get started.
Speaker 1:Thank you, thank you. I wasn't expecting so much value there. I thought you might have a one liner, but all of that is fantastic and some of that is new to me as well. Um, I would say I I had a conversation um with, with, um, my, the cohort that I'm teaching at the moment, who are all independent consultants, and you know, we, we talked about marketing and sales and maximizing your utilization and billable rates, but when I talked about reducing costs, quite a few eyebrows went up and many of them haven't really thought about. You know that you, you increase your margins, yes, by increasing your revenue, but also by minimizing your costs. And you know really, really simple lifestyle things. You know not not buying that, not buying that coffee every day and, as you say, not having you know those long commutes. You know, really, it does add up over time. Yeah, yeah, absolutely Okay. So, in fact, I said that was the last question. There was one more, which is is there anything I should have asked you that I've missed?
Speaker 2:I think we have covered it well why BSH can be part of the core business strategy for growth. The only thing I would say to consultancy business owners is to find their point of difference from other businesses offering the same services, whatever it may be like experience in particular field, presence in certain geographies, pricing you know you were talking about discounts whatever that point of difference is, they should know that and use that to their advantage. Make sure every system and process that is implemented boosts that advantage so they can find and stay ahead of the pack. If they're able to do that consistently and it is validated by satisfied customers, then I'm confident that it would translate into successful and sustainable business.
Speaker 1:Yeah, that's a really good point. And you know, it surprises me how often, you know, some very experienced consultants think about strategy simply as oh, that's where I want to be, how do I get there? Instead of seeing it as sort of these self-improvement systems. You know, connected systems which boost your unique value proposition, or whatever you want to call it. And, as you say, if you have that differentiator, you know if everything you do is focused on boosting that differentiator, then you know if everything you do is focused on boosting that differentiator, then you know that where you're competing, you're going to be winning. You know you might not want to, you might not be selling to the other 90% of the market, but you're not going to win that 90% of the market because you can't win everyone. But you want to know that where you are competing, you're winning. That's really good advice. Thank you, okay. So, berram, that's really good advice. Thank you, okay. So, berram, that's really kind of you. Thank you so much for your time. Um and um, we will speak soon.
