Growth-Challenged Companies Invest in Consulting Projects
After several years of selling mostly cost-cutting work, many consulting firms refocused their market positioning around growth-related projects. Who are the best prospects? Conventional wisdom would say that companies experiencing high, double-digit, growth should be the ones most willing to invest in consulting projects, right?
Conventional wisdom would be wrong. Businesses with stagnant to declining top lines make for better prospecting, according to an APQC survey of more than 70 procurement and senior executives. The likelihood that a company will hire an external consultant to address any one of eight key business issues goes up the worse off the company is faring.
Why? The reason is likely a combination of the following.
- Executives within faster-growing companies are less likely to have significant problems – or at least, the current growth is masking those problems.
- Faster-growing companies are more likely to have invested in internal consulting staff and are therefore less dependent on external advice.
- Companies that still aren’t growing are more ready to acknowledge that they are in need of consultants’ services.
Just because struggling companies are more likely to buy consulting services doesn’t mean they will do so quickly. Our survey also found that the slower-growing the company, the slower its decision making for purchasing consulting. On average, the steps between identifying an internal need and receiving budget approval takes 22 weeks for a company whose top line is stagnating or declining. The decision making process shrinks to about 20 weeks for those companies for whom the top line is growing by single digits. And those companies growing by 10 percent or more tend to plow through those steps in just 16 weeks. Not surprisingly, the number of levels for project approval also increases sharply for growth-challenged businesses.
For more information, contact Cathy Hill (firstname.lastname@example.org).