Consulting Firms – Emerging Trends

The next few years are bound to be filled with speed bumps and sharp turns for consulting firm owners and operators. Economic uncertainty alone creates question marks around demand for goods and services, supply chain dependencies, financing options, currency fluctuations, and hiring. Add to that global political unrest, labour shortages, ongoing cybersecurity threats, changing government regulations, and environmental sustainability concerns and it's no wonder that consulting firm owners are feeling tentative about the future. This blog post talks about the trends that most firms will face, along with suggestions on how firms can operate more efficiently to weather whatever storms may be coming.

How Consulting Firms are Adapting and Evolving

To stay competitive today and into the future, consulting firms need to shift their thinking. The “old-school” mindset and way of operating a consulting firm is quickly becoming passé, and in some cases, bordering on offensive to the younger generation of buyers. While some trends come as no surprise, others are new for firm owners.

1. Embracing technology: The same was said 30+ years ago, but still holds true today; consulting firms need to invest in technology to stay competitive. From implementing automation tools (Customer Relationship Management solutions, Marketing Automation tools, Accounting software, and Communication platforms) to artificial intelligence, and machine learning - the goal is to streamline processes and increase efficiencies in the firm. The name of the game is automate, simplify, and adjust (when the data supports it).
2. Focusing on client experience: With increasing competition, consulting firms need to differentiate themselves by providing exceptional client experience - particularly when up against large, established firms that have optimized client engagement channels. This can include everything from offering personalized service and responding quickly to client inquiries, to using data to better understand client needs and preferences. In a world where reviews are king, client experience can be the difference between strong and mediocre sales.
3. Adopting sustainable practices: As consumers become more environmentally conscious, consulting firms need to adopt sustainable practices to stay relevant. This can include reducing waste, using eco-friendly products and packaging, and implementing sustainable supply chain practices. The upside is a more favourable reputation in the marketplace, cost savings from reducing waste, and regulatory compliance as more and more laws are introduced around environmental and social issues.
4. Attracting and retaining talent: With a tight labor market, consulting firms need to focus on attracting and retaining top talent. Employees are shifting their professional values and firms need to adjust accordingly. Whether that means offering remote work options, more competitive compensation, or better work-life balance alternatives - what used to appeal to potential employees has and will continue to shift. And don’t forget about culture! Now more than ever, people want to have a “connection” with their employers and teammates.
5. Diversifying revenue streams: Consulting firms may need to diversify their revenue streams to reduce their reliance on a single source of revenue. This can include expanding into new markets, developing products that complement your service, or venturing into new service lines altogether.  

Overall, consulting firms will have to stay agile and adaptable to weather the uncertainties ahead. They’ll need to keep up with changing client expectations, embrace new technologies, and focus on sustainability and talent management.

Future-Proofing Your  Consulting Firm

How do you future proof when you don’t know what the future holds? There are a number of ways that consulting firms can operate more efficiently to not only navigate whatever curve balls are coming, but to rise above the noise and position for growth. Here are some key areas that consulting firms should be thinking about today:

1. Streamlining processes: Consulting firms can streamline their operations by identifying and eliminating inefficiencies in their processes. This can include everything from automating routine tasks and simplifying workflows, to reducing bureaucracy and using data to make decisions. Not only can you free up employees to perform higher value work, but you’ll improve quality and reduce errors associated with human intervention. 
2. Adopting technology: By adopting technology like cloud-based solutions, automation tools, and digital communication platforms, consulting firms can increase efficiency, productivity, and collaboration. For example, they can implement accounting software to track finances and cashflow, use project management software to track progress, automate client service with chatbots, and use analytics tools to optimize their operations.
3. Outsourcing functional expertise: Consulting firms should focus on their core competencies and outsource non-core functions, like accounting, IT support, and HR administration. Specialized expertise can be very expensive - especially when you don’t need it on a full-time basis which is common for consulting firms. Not only can you get the expertise you need by outsourcing, but you can reduce overhead costs and free up core resources and personnel to focus on growing the firm.
4. Improving forecasting activities: With good bookkeeping, accounting and reporting practices, firms can more easily plan for future events and understand how current performance may help to predict future results.
5. Emphasizing employee engagement: Whether it's a carryover from the pandemic, or just changing demographics, today’s workforce is changing. Baby boomers are retiring and are being replaced with a labor force that values very different things. Top trends include a focus on well-being, remote work options, diversity and inclusion, and a stronger employee voice in large-scale decision making. By fostering a positive, more relevant work environment, firms will increase employee engagement and productivity. Always communicate clearly, provide timely performance feedback, and implement meaningful recognition programs.

Today’s consulting firms are grappling with a plethora of moving parts. So much has, and is still changing with the way we do business, connect with clients, and keep employees engaged that operators everywhere are scratching their heads. Add to that a shifting and uncertain economy, and many firm owners are experiencing more and more sleepless nights. With a focus on process improvement, technology adoption, non-core function outsourcing, and employee engagement - all is not stormy.