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As part of our Year of Sales theme, we also focus on how strategy/business consultants within audit firms should effectively compete against more focused strategy firms. We refer to them as Audit-Based Consultants (ABCs) even though they reside within an audit firm’s consulting division. Given the nature of their firms, many audit-based consultants have asked for dedicated and specific help. This program continues this effort within Insider, Legacy, and SCRA for ABCs.
ABCs can deliver strikingly superior results and value for their clients by leveraging the unique skills and assets of audit firms.
Please assume there are no errors, mistakes, miscalculations, or overly optimistic assumptions that would make the business cases in the following example misleading. We will show you that a critical final step is missing even though everything else was done correctly in a business case. It is a step that only audit firms can perform.
Most business cases/benefits cases in any consulting engagement forecast the increased earnings from undertaking the recommendations, after deducting the cost of implementation. These earnings are discounted back to adjust for inflation. While variations exist, this is the standard approach. The increased earnings are then incorporated into the cash flows and presented as numbers at the end of the study. This number is almost always incorrect.
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Hard Lessons For A Client
We once advised a multi-billion dollar market cap client that wanted to enter a new sector. Their goal was to both find new sources of earnings and share price growth, and diversify their revenue streams. We developed an effective business case for them. Everything was correct, from the assumptions to the calculations. It should be noted that many of our assumptions included a range, as precise forecasting is impossible.
We will discuss this case study in greater detail in the upcoming Insider/Legacy program. Yet, here is the gist:
The client had a new CEO who was unfamiliar with the sector. He assumed that as long as he could raise capital, gain board approval and secure regulatory permission, he could deliver the business case. We advised him carefully that one critical step remained, which only he could lead. If not managed well, projected earnings could fall by 20-40%. We recommended he hire PwC to do the final step calculations. He declined to do so.
Confident in his abilities, he rushed ahead. The new division turned into a quagmire. It sucked up capital while delivering lower earnings than the company’s traditional cash cows. The share price slumped; years later, the company offloaded the division.
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For those wondering what went wrong, this is not about the cost of capital, inflation, or execution. You can have the lowest cost of capital, with the lowest inflation, and run your operations perfectly, and have the best markets, and this final step, if not completed, will haunt you.
The error was not in the implementation. The strategy was sound. The financing was optimal. The operations were near best-in-class. Yet, one crucial piece was overlooked.
Are these companies performing the same?
US Company:
Delivered earnings of $1Bn.
Revenue of $10Bn.
Dutch Company:
Delivered earnings of $1Bn.
Revenue of $10Bn.
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Want to become a bestselling author with a smaller chapter in our other co-authored project (The Published Author Program, Lite) instead? Secure your spot in our next Lite co-authored book for an affordable $997 or 4 payments of $275.
For both co-authored projects, all you need to do is write your chapter and we’ll handle the rest. We’ll produce a beautifully designed book and work to get it to #1 on Amazon in at least one category, earning you the “bestselling author” title for life. You’ll also receive a professionally designed PDF of your chapter to share, plus bonus training on how to leverage the book to build your brand. And if you need help in packaging your ideas and thoughts into a chapter, we have an optional wordsmithing add-on. Learn more and secure your chapter spot here.
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Simple & Powerful
This is not going to be a long and complicated program on business cases. It builds on what we have already extensively taught and brought together in The Strategy Journal and Succeeding as a Management Consultant as well as other books available within Strategy Control Room Advanced/SCRA (more details on this membership can be found in featured box above).
At a senior level, where you are in a position to make these changes across a practice or large team, we focus on the critical moves you can make to deliver outsize value sustainably.
That said, strategic thinking is based on many small, sequential and logical steps that we teach across all our programs on StrategyTraining.com (within Insider / Legacy) and in our books within SCRA. Mastering them will help you drive greater value for your clients.
The team is loading this program and it will be released soon. If you are a consultant within an audit firm, structuring your entire business case and recommendations around this approach can set your firm apart. It allows you to demonstrate unique value in a way rival firms almost certainly could not replicate.
We also welcome your feedback (email us at [email protected]). Your experiences and feedback may shape future programs and follow up training episodes and resources.
(Enroll in Insider or Legacy member at StrategyTraining.com (link below.)
