The true cost of advisory: Can it actually damage your revenue, cashflow, and valuation?

Advisory is sometimes seen as the holy grail: the big-ticket item, a golden revenue key. Consulting projects, as a subset of advisory, are interesting too: seemingly lucrative and almost certainly a new challenge for the team, with the potential to differentiate your firm.

But should you be careful what you wish for when landing consulting work?

The time value of money (or, in technical terms, discounted cashflows) means that the revenue you’re making today is worth more than potential earnings later on. That’s a big tick in the ‘pro’ column for consulting. And still, what a consulting project actually requires from the firm and its leaders carries more commercial risk than you’d think. 

Between the time, effort, and new skills required to deliver great consultancy, the opportunity cost can erode something more reliable for growth: sustainable, recurring revenue.

I’m not saying it’s a case of one versus the other: consulting versus subscription. But be mindful of the mix of work you do. 

Consulting projects can lead to ongoing advisory work - or, in other words, one invoice becomes many. Make that shift, and you can be confident that these one-off consulting projects will pay off into the future.