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| [image credit: kolyaeg on pixabay.com] |
In the world of Professional Services
Consulting, I learned some interesting heuristics, several decades ago,
that have stood the test of time.
(these are based on long-term sustainable planning models...)
If you build the financial model for your practice around an assumption of a utilization rate of:
60%: Your firm has a good chance to survive & thrive - even in the lean times. You
won't make as much money - and you won't be able to pay your personnel
top rates. But you will have the advantage of long-term continuity -
while others disappear.
70%: Your firm will experience wider
swings in unplanned reductions-in-force. This will impact morale,
training costs, client satisfaction, and retention.
80%+:
You'll be able to pay your personnel higher rates, and provide a lot of
nice benefits - but your firm will experience increased levels of staff
turn-over, and burn-out. Decreased retention will affect morale.
Increased client account churn will damage the bottom line. In the lean
times, your company will be decimated by reductions-in-force.
95%+: You are on the highway to hell. You are in the "sweatshop" business (or, indentured servitude). 🤣
110%+: Your business model is fundamentally based on abuse of your personnel.
