Firms looks to keep up the momentum while the going—and growing—is good!
The results of our annual executive outlook are in—and the numbers are promising, to say the least. Onward and upward would seem to be the mantra this year as both the results of this year’s Executive Outlook survey and exclusive interviews with firm leaders would indicate. Continued positive economic momentum combined with the election of what most expect will be a very pro-business administration leads to a rosy forecast among consulting executives. Sprinkle in enough upheaval to key industries such as healthcare and financial services, along with what appears to be bipartisan support for increased infrastructure spending, and the result is a real “Pedal to the Metal” mentality.
Of course, the devil is always in the details and whether or not the economy hums along the way most anticipate will be determined by what happens in Washington. And, as we’ve seen plenty of times before, what we think will happen probably will not. Global unrest, international threats, domestic dissatisfaction and looming inflation could throw a wrench—or stall completely—what figures to be an economic super highway in 2017.
Based on our interviews, consulting firm leaders appear more confident than they did last year—when they felt pretty darn confident. There’s simply no denying they’re very satisfied with their firm’s overall financial performance in 2016, and are especially giddy about the forecasts for the year ahead.
Most say they’re coming off an outstanding year and words like “optimistic,” “momentum,” “extraordinary” and “exceptional growth” were commonplace in our interviews. Some firm leaders are even reporting growth above 20 percent in 2016. Not too shabby.
The going—and growing—is good, but economists point out that we’re most likely still in slow-growth mode and the global economy will continue to have to settle for growth below 3 percent. But consulting firm leaders are seeing no signs of a slowdown as they continue to report pipelines remain strong. If any sort of economic correction is coming, consulting firms would be among the first to see it. So far, that’s not the case. The leaders we spoke to say all indicators continue to point in the right direction.
And that’s confirmed by our market research. Based on the results of our Executive Outlook survey, which measures what firm leaders are forecasting for 2017, the consulting profession remains optimistic about where it is and where it’s heading. Consulting asked firm leaders about their business over the last 12 months, as well as what they’re expecting in 2017. The research was conducted in November and December with more than 100 Managing Directors, Partners and Vice Presidents weighing in.
Comparing last year’s projections with this year’s reality is a good place to start. For the year that just ended, a staggering 94 percent of executives said they experienced real revenue growth, even higher than the 91 percent that predicted it in last year’s survey. And 65 percent said that the growth was higher than 10 percent, two percentage points higher than the 63 percent who had forecast double-digit growth for 2015. So, in reality, things were even better than what firm leaders had forecast for 2016 at the end of 2015.
As for forecasting 2017, those numbers are also looking up. Case in point: a whopping 98 percent of executives are forecasting growth and 91 percent are saying that growth will exceed 6 percent. Both of those numbers are up over last year. The forecasts and projections of top-line growth is significant, but what about the bottom line? There’s good news there, too.
Some 80 percent of firm leaders reported improvements to their net profits in 2016. In 2017, a staggering 96 percent of firm leaders anticipate net profits will improve, while only 1 percent say they’ll be down this year. The other 3 percent say they anticipate no change in net profits. And 57 percent, up from 55 percent last year, say net profits will be up more than 10 percent in 2017.
As part of the survey, we asked participants to rate how concerned they are about certain internal and external issues. There, the survey showed even more positive signs as new client business development and client retention continue to top the list. In previous years, pricing pressures and sales cycles were top of mind. Meanwhile, internally, the biggest concerns in 2017 are setting new strategic goals/direction, resetting compensation expectation and voluntary retention.