The daily grind keeps business owners busy — especially in professional services firms. You’re always working on building your client pipeline, ensuring your team delivers outstanding service and making sure you’re bringing in enough revenue to make it all happen.

But to truly succeed, you’ll have to get more strategic about your financial operations. There are three areas professional services firms should pay close attention to so they can maximize opportunities for their businesses. 

Setting the right utilization rate

Utilization is a crucial metric for professional services firms. You might be tracking it already — but do you have the optimal target in mind? 

Your utilization rate is the percentage of time your team spends on billable, revenue-generating work versus the time they have available. It’s the lifeblood of your firm. Better understanding your utilization means you can:

• Ensure your billable time covers expenses and desired margins — and gives you the cash flow you need to operate
• Allocate enough non-billable time for training and internal meetings
• Build a healthy balance for your team to improve employee retention and satisfaction
• Grow revenue through employee incentive programs aligned to utilization percentage targets

You might be surprised how many firms aren’t incorporating or actively managing utilization — at least not with the rigor they should. In companies I’ve worked with in the past, we carefully tracked utilization and set the target rate at 77%. That kept teams engaged and productive, allowed time for continuing education and development, and ensured a healthy work-life balance to avoid burnout.

Your firm’s ideal utilization rate might — and probably will — differ based on your margin desires and needs. A Fractional CFO with experience in professional services can help you find the proper tools and methods to measure utilization and set a target rate that’s right for your business.

Pursuing a merger or acquisition

Whichever side of an M&A deal you’re on, it’s a good idea to understand the some of the strategies behind businesses’ desire to merge with or acquire others:  

• Supplementing existing business to add revenue
• Adding capabilities and talents they don’t have today
• Making the company “stickier” with a key client

If you want to be acquired, you have to make your company valuable and attractive in meeting one of these criteria. If you’re looking to acquire a company to add value like this to your business, you want to make sure you’re approaching it with both financial and operational strategies in mind.

But without a strong background in mergers and acquisitions, you might miss opportunities or take the wrong approach. A Fractional CFO has executive-level financial experience and has seen all this often. They’ll be able to help you before, during and after your transaction.

There are dozens of factors to consider, and a Fractional CFO can make sure you’re not just protected but flourishing in the process. 

Finding value-building partnerships

No matter what type of firm you own, finding the right clients (and enough of them) can be one of the biggest struggles. Establishing strategic partnerships can ease your stress and keep a steady stream of leads flowing your way. Depending on your industry, becoming partners with leaders like Microsoft or Salesforce can signal quality and trust to potential clients — and feed you leads that keep your revenue and visibility up.

As a business owner, you might have been approached by companies like these before and been hesitant to engage. The partnership agreements can be quite complex, and sometimes it’s hard to figure out if you’re really coming out ahead. An experienced financial leader like a Fractional CFO will be able to look at the big picture of your business and any potential partnerships to help you make the best choice for your business. 

Fractional CFOs deliver the financial guidance you need

Optimizing revenue, margins and strategic opportunities for your business isn’t your specialty — it’s a Fractional CFO’s. They have deep, varied experience across industries and business types, and they’ve likely seen — and helped conquer — challenges like yours in the past. You can rely on them for financial expertise, so you can stay focused on what you do best.

If you’re in Kansas City, Crown CFO can help. Contact Dayle Crane at dayle@crowncfo.com to bring a trusted, expert Fractional CFO to your business.