7 critical lessons to help you grow your professional services business (wisdom from Marcus Lemonis)

We don’t often watch tv, but when we do we watch shows like The Profit.

In case you’ve been living under a rock, let me tell you the story of the NBC hit show called The Profit.

It’s a business-based reality show featuring Marcus Lemonis. He’s a forty-something-year-old business guy who’s helped grow (and save) dozens of companies who desperately need a lifeline.

In each episode Marcus ends up saving the day by helping a struggling company avoid having to close their doors by investing in them with cash. He drives a hard bargain every time and ends up owning a percentage of the business for the cash he offers.

Once he’s in, Marcus is in charge and he’ll do whatever is needed to save the business and make a profit.

As we watch Marcus surgically repair these companies, we find a commonality as we see the same mistakes with professional services firms.

There’s a common theme we’ve noticed with the businesses that Marcus helps and the ones we help are typically trying to help: they’re attempting to recover from poor performance or want to take their business to the next level.

That said, we’re going to share seven secrets with that will help you overcome similar struggles with your business and save you the embarrassment of having to be on the tv show The Profit.

1) Focus on what you’re good at. Your core competency should be your focus. Many of the companies that Marcus helps have strayed off course from the original products and services that got them to where they are. They’ve lost their focus, spent too much time, money and resources on less profitable lines of business. This has left them weakened and confused. So instead of chasing the shiny object, stay true to your core values and main revenue generating products and services.

2) Profit, profit, profit. Many of the companies we talk with are so focused on revenue they completely ignore the main reason for the existence of a business: profit. They’ve lost their perspective and lost their way. Many businesses with respectable revenue are losing money hand over fist and don’t have a plan for healthy profitability. Businesses can’t spend revenue and this should never be the expectation. Ideally, you need to have a plan for profitability through a well laid out growth initiative.

3) Know your numbers. According to Marcus, there are three numbers that every business owner should know. You need to know your annual sales revenue based on a trailing 12 months, not the calendar. You need to know your gross profit margins and you need to know your expenses as a percentage of your gross profit, not a percentage of your sales because you pay your bills with gross profit, not with revenue. We’re flabbergasted to learn how professional service owners don’t know the basic metrics of their business, such as sales per employee, the cost of goods, the cost of acquiring new customers, margins on service lines, products, etc. So get to know them because knowing this will help you grow and better manager your company.

4) Cash flow. This is so critical. It also ties into the above point related to knowing your numbers. Many companies are stretched to the limit with available cash to run their businesses and are often over leveraged. A business cannot sustain itself without having healthy cash flow, which is then reported by knowing your three numbers.

5) Check your ego. So many entrepreneurs have poured their heart and soul into their business making it hard not to see through the trees in the forest. It’s easy for you to become blinded to ideas that could help your business become healthier but at some point you’re going to have to give up some of the control to the people you’ve entrusted to help you run the business. It’s hard, we know, but letting go of your ego is one of the critical aspects of setting the stage for growth and profitability.

6) Right seats on the bus. To quote the great Jim Collins, you need to have the right team members in the right seats on your bus. We’ve seen many situations where the companies we’ve worked with had excellent employees. These employees were doing great things but they were doing the wrong things. They were given responsibilities far beyond their skillsets and abilities and often hired because they were friends or family members. As a business owner, you need to be objective and tough when it comes to determining whether or not you have the right team members in the right positions. While business is always personal, the paychecks of all your employees are relying on you to make good decisions like getting everyone in the right positions on your bus.

7) Sales and Marketing. Entrepreneurs often have a build-it-and-they-will-come-attitude. They have this innate quality of believing that their better mousetrap will drive the world to their door. What they fail to factor is how difficult it is to generate and acquire new customers and how much time and money this will take. Just because you know your product or service and are passionate about it doesn’t mean your prospects will have the same convictions to buy what you’re selling.

Let’s talk and let us be your guide.

These seven nuggets of wisdom are things we help professional service firms overcome each and every day.

But it’s not only about the nuggets of wisdom for us. It’s about your success through an M&A and growth strategy initiative that’s designed with you in mind.

To talk with us about how we can help you IT services business navigate the tricky waters of M&A and growth, email here us to schedule some time to talk.