Notes

Business Growth - AFAB Is a Four-Letter Word, So Say Focus Instead
AFAB (A-fab) noun:

1) a sale of "anything for a buck" as a way to generate revenue and keep billable employees busy

2) a business situation which can impede company growth, differentiation and/or profits

3) in older firms, an indicator of lack of concentrate on specific product or service offerings

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However you define it, AFAB (anything for a buck) is a condition, which typically impacts a small business at some time or points in its life cycle. It is essential to recognize whenever your firm is suffering from AFAB so as to take corrective actions. Failure to do so will impact your firm through lower gross margins, increased opportunity costs, and lack of brand and services differentiation. Even better, learn the warning signs (e.g., flat revenue growth or always needing different skills to staff projects) in order to avoid the condition whenever you can.

The remainder of this article addresses business growth and where AFAB may appear, AFAB's causes, symptoms and treatment, and the benefits from minimizing AFAB in your firm.

Business Growth and Maturity

The growth cycle of an IT professional services firm encompasses four phases. Many firms never experience the full cycle, which does not say they are not successful. It just means they probably did not reach their full potential. Also, it is possible a firm can jump in to the marketplace with a distinctive offering and rocket through the growth cycle. This example would clearly be an exception.

The four phases of growth generally occur in the following sequence:

1) Business Initiation

In this phase the business enterprise is just starting out either from scratch with some form of business plan or seeded by one or two initial accounts you have previously presold. Attention is directed at marketing and sales activities and quality of project delivery. Scope of services is based on what your team knows best, but to keep to drive revenue you sell what you rationalize it is possible to deliver, even when you have to use third party contractors.

This is the most typical scenario for AFAB. You can easily justify, and it can help you generate revenue to fund the business enterprise. On the upside, you might begin to develop some long-term client relationships. On the downside, you have trouble differentiating yourself, because it is hard to define what you do in terms apart from the breadth of technologies you use. To prospective clients, you appear to be everyone else. Furthermore, you typically undervalue your services based on the price you can command.

2) Practice Development

At this point you recognize that there are several patterns to your technology work. Additional info have specific concentrate on certain vendors and their products, so you decide to raise the firm's depth of experience in these few key technologies. Practice managers are assigned to lead the development of solutions, the management of people of their practices, development of partnerships (e.g., product vendors and training companies), and ultimately the profitability of the practices themselves.

It is during this phase that the firm starts to become known because of its technical expertise. Most, or even all, of the company's work is done in the local market. Your technical expertise begins to narrow down your competition some, but differentiating the firm continues to be quite difficult.

3) Business Expansion

This phase is characterized by growth into business solutions and/or geographic expansion. Just as you recognized technical specialization in the last phase, your firm now has a pattern of performance in industries (i.e., verticals) and business functions (e.g., sales, recruiting, etc.). The intersection of a technology and one or both these other areas enables you to focus in on specific business solutions. For each one you assign a practice manager as you did for the technology practices.

These business solutions begin to supply the firm real differentiation. You narrow the field of competition down significantly and will begin to command higher fees for the task you deliver. In addition, as you master these more unique offerings in the local market and so are recognized for your expertise, you are afforded the opportunity to take them to regional and national markets, especially those you view to be underserved.

4) Continuous Improvement

Your business is growing, profitable, differentiated and known available on the market. The competition is targeting you. You should constantly re-evaluate all aspects of your organization from service offerings to marketing and sales to delivery to operations. Typically, the two biggest areas requiring focus are adjusting your offerings to meet up market needs and improving efficiency in delivery and support services.

This is usually a time when you're able to more confidently introduce new ways to provide offerings to your existing and target clients such as for example managed services (e.g., application support or network infrastructure) and SaaS (i.e., software as something).

AFAB is prevalent in the initial phase, Business Initiation. It can also occur in the other phases co-existing with specific practices or business solutions. In some circumstances, AFAB can be justified on a temporary basis. For instance, if your firm is exclusively projects-based and you are experiencing the problem of the "roller-coaster" sales effect, you then might need to take action to boost utilization by accepting work outside of your normal scope. In this instance, keeping a constant eye on resource allocation is essential in order to minimize enough time AFAB is prevalent.

Causes of AFAB

There are several reasons AFAB can surface in your company.

Being in the Business Initiation phase of one's firm's life cycle (where AFAB is a normal occurrence)
Not defining your scope of services and just assuming that over time it will define itself
Lack of focus on business planning and analysis of results - you're busy working in the business and struggling to dedicate the time essential to work on the business
Unassigned billable consultants on the bench
Relatively lean sales pipeline
Having an excellent management team, but lacking someone with the knowledge to proactively manage your services portfolio
Symptoms

The warning signs of AFAB are numerous. The problem is having controls set up to recognize them as quickly as possible. On the list of symptoms are:

Revenues are flat or are growing at a decreasing rate as time passes
Each project you sell is really a one-off (i.e., unique where you haven't done the work before) or is another variation of prior work - there's little repeatability in delivery
You never appear to have the right staff to fill the available project roles
Gross margins are flat or decreasing due to increasing cost of delivery - you're using more third party consultants at an increased than budgeted cost
Sales cycles remain relatively long and key opportunities are bunched together under the same sales stage or two
Qualified lead generation is inconsistent (e.g., limited marketing activity) signaling another roller coaster wave in the sales cycle
Treatment

Eliminating AFAB and avoiding future business plateaus require diagnosis of the condition, treatment and precautionary measures designed along three concepts:

1. Focus

Review historical information on projects (i.e., numbers and revenue) to identify patterns of technologies used, industries served, and business functions and issues addressed
Review historical client information (i.e., numbers, revenue, industries, company size, buyers, issues, amount of time as a client, etc.) to identify an ideal target account profile
Factor in current sales pipeline activity and knowledge of other areas (e.g., pending changes in technology, potential marketplace changes, etc.)
Refine your services portfolio to include the offerings that best support the direction you set for the business
Identify and assign practice managers to lead each area in further development of solutions, management of their consulting teams, development of partnerships, sales support, service delivery, client relationship management, and producing favorable financial results
As elementary as it sounds, it is surprising how many IT services firms do not perform an analysis of these projects and clients to ascertain this important information.

2. Alignment

Assure that the business management team is in sync on the direction of the business enterprise and decisions made around your services portfolio
Provide clear definition of goals and objectives to the business enterprise areas which will support the practices, especially marketing and recruiting
Communicate the newly refined business strategy internally, then to the marketplace when ready
3. Metrics

Improve your monthly performance dashboard to include indicators of a potential AFAB situation (e.g., growing use of third party contractors)
Manage the sales pipeline to note the ebb and flow in new leads, delays to summarize opportunities, etc.
Develop performance reporting for each practice to improve the manager's capability to run his/her business
Each of these three areas (i.e., focus, alignment and metrics) requires ongoing attention within leadership's responsibility within the business.

Benefits of Minimizing AFAB

While AFAB has a place in the Business Initiation phase of a company's life cycle and can be justified at other times on a temporary basis, you need to develop the discipline to control AFAB to the very least, which means learning to say "no", a distressing thing to do. The potential great things about preventing or limiting AFAB by developing solutions addressing specific industries, business functions and technologies in your firm include:

Enhanced differentiation of one's service offerings
Greater opportunity to work with client executives when you sell business-oriented solutions
Increased repeatability of projects and work components
More efficient projects, thus lower costs of delivery
Reduced risk on projects
Better pricing opportunities predicated on differentiation
Increased revenues
Improved gross margins
Better on-boarding of new consultants
These benefits are real and don't require significant incremental investment in your business.

Do you suffer from AFAB?

Jay has over 30 years of management, business, & information technology consulting experience. He has enabled successful change in more than 140 clients taking advantage of growth opportunities in service offerings, sales & marketing, operations, and mergers & acquisitions. As a former partner at Accenture, Jay spent some time working in both large & small IT services environments. His experience crosses several industries with a particular concentrate on services companies & healthcare.

From a leadership and management perspective, Jay has:

* Built and led national, regional & local IT consulting practices of $5M-$95M in revenue.
* Led the stabilization & turn-around of two local IT consulting practices.
* Planned & built strategic vendor alliances & major account programs.
* Formulated & implemented growth approaches for over 20 companies.
* Served as interim CIO, interim CFO & interim CAO for three clients.

Currently, Jay is CEO and Consultant at Crescent Solutions LLC, a management consultancy concentrating on growth strategy initiatives. He computes of Houston, TX. [email protected]
Website: https://espaipriorat.org/ig-markets-review/