What Kind of a Consulting Practice Do You Have?
People establish consulting practices for a variety of reasons. Some choose to become a consultant to work part time from a home based office while raising school aged children or caring for an ailing parent. If you have been laid off from corporate positions, the title “consultant” feels better than saying that you are “unemployed” or “between jobs.” Some people enjoy doing essentially the same work that is done by employees within organizations but prefer to work off site and/or work with a number of companies instead of just one. Some folks offer consulting as an extra service to help their product-oriented business make more profit. You certainly are not alone if you established your consulting practice in response to working for an oppressive manager in a corporate position.
Then there are the people who view consulting as a profession with its own set of skills warranting specific education and training and business plans to guide the growth of the practice. A subset of these people got into consulting to address a need in the marketplace to solve a problem.
Growing Your Consulting Practice Starts with Being Honest With Yourself
The overwhelming majority of consultants really have what could be called “incorporated careers” instead of true businesses. If your primary purpose is to freelance, you might want to take some of the same steps taken by people who are looking for part-time jobs. They keep their resume current and respond to want ads. They stay in contact and do some networking with a group of people within key companies within their industry, and assignments come primarily through word-of-mouth referrals. You probably will be given the chance to do projects based on your references and sometimes on a corporation’s need to control the head count and the cost of benefits.
The growth of a consulting practice is limited if it is defined by the availability, abilities, and interests of a single person. How large can your practice really get if you won’t travel more than one hour from your home, refuse to do projects involving research, won’t learn new software applications, and/or prefer to take Fridays off? With time allotted for vacation, holidays, illness, marketing, sales, and administration, a solo practitioner may realistically only have about 1,250 hours available to do any work for clients full time. It should not be surprising then that the overwhelming majority of independent (solo) consultants bring in less than $125,000/year in gross revenue. The $125,000/year practice is essentially averaging $100/hour in fees.
Set Aside Time to be President of Your Firm
If you want to grow your consulting practice, it is helpful to begin by addressing “positioning” questions. Do you want to be viewed as a provider of a range of related services for companies within a specific industry, or do you want to be known for your unique approach or method and apply it across a range of industries? Will the reputation of your consultancy be defined by your style or personality? Will a geographic area define your practice? The best growth strategies for a consulting firm that wants to “own” an industry are very different from the strategies for a local consulting firm defined by style.
How would you go about answering these questions? If your formal education was not in business, you may not know. The temptation of most solo consultants is to just keep working on client projects and avoid this type of strategic question.
Instead of avoiding the questions, it is important to identify time on your schedule to address them. You may need to read some books about positioning. You may want to interview other business owners and professional colleagues about how they answered their positioning questions. In other words, set aside time for your work as a Business Owner/President, even if you will always be a solo consultant.
You will also want to reflect on your reasons for having a consulting practice. Is there an underlying philosophy involved? Is there a set of problems that you want to address? Are you trying to correct a wrong? Is your interest in advancing a technology?
You will want to review your past consulting assignments to learn which clients received the most value, wanted you to do more, were most satisfied, were the most profitable for you, referred you to others, etc. It is easier to grow a consulting firm when its true purpose is related to market needs and not just to help you avoid things like dealing with authority or having to learn.
Also, you will want to look at market trends. What is your competition doing? What problems will your customers be facing a few years from now that they will not be able to address on their own? What questions will warrant the objectivity of an outside consultant? What issues transcend an individual client? What skills should you be developing now to be more prepared to assist customers tomorrow?
Your role as the president/business owner of your consulting practice includes market research. If your past training and experience does not include market research, you will need to set aside time to read, learn when surveys are indicated, find out when a few phone calls will suffice, obtain resources for studies, and determine how much detail is necessary. This is especially important for those of you who are trying to broaden the identity of your firm away from “just another incorporated career.”
Marketing is like a Symphony with Background Music and Melody
Marketing background music elements include things that are expected in the marketplace. They may not directly attract a customer to you, but their absence could kill a deal for you. For example, it is expected that a consultant:
- Be listed in major directories
- Be a member of his/her industry association
- Have appropriate certifications and licenses
- Have professional looking letterhead, business cards, envelopes, etc
- Have a web site that at least conveys biographical information, a list of services, testimonials, case studies, etc.
These background music elements will not change very often.
The wording on your directory listings, association lists, printed materials, and your website should reinforce your desired positioning. If you want to be known as a safety expert for the pharmaceutical industry, you will want to provide references from within that industry and include a slogan or tagline that mentions the pharmaceutical industry.
As the digital age advances, the list of things that are expected from consultants has increased. Today, a consultant is expected to have authored some articles for trade publications, websites, association newsletters, etc. Providing timely information on your website used to be viewed as unique but has quickly become “expected.”
Project Your Competitive Advantage
The melody of your marketing symphony will convey your competitive advantage. If you are a safety expert within the pharmaceutical industry, your melody elements will convey why someone should select you over other safety experts in the industry.
The melody elements come in the form of more direct communication from the consultant to the marketplace. For example, the speeches you provide at conferences are part of the melody. Direct mail pieces that go beyond form letters sent to thousands of people would be part of your melody. Sometimes the gifts you give customers become part of the melody. The elements of your website that go beyond “brochure-ware” are part of the melody. Display advertisements in trade journals, your approach to entertaining, and media appearances are all part of melody.
The melody elements of your marketing often require more thought and preparation than the background music. Most consultants will not have enough money and time to do twenty different melody elements. Plus, it really is not necessary to do that. It is often best to select three or four key things to do in a way that is unique to you. You want a memorable melody that you can keep doing so your marketing melody is consistent, persistent, and insistent.
My company’s marketing program has included carefully selected birthday gifts for our clients. This wouldn’t be a good marketing approach for every consultant, but in our case we wanted to convey that our clients are our “customers for life.” Unlike accountants, we do not provide services for our clients on a constant basis. We try to stay in touch with our clients so they will think of us and invite us to help them when they are considering their next major move.
Ask yourself if the melody elements of your marketing program should come in the form of special events? Becoming media personalities? Conducting research? Leading philanthropic efforts? Publishing a magazine? Sponsoring a major award? Whatever you choose to do, it is important to sustain the effort. By the time you have become bored with the masthead of your newsletter or your association projects, most people will not have even noticed them.
Remember that people are preoccupied. The first time a prospective buyer receives a piece of direct mail from you, he/she is too busy to even see it. Then maybe they actually notice the announcement of a speech you are giving. Then a reprint of an article written by you doesn’t get read but is set aside. Then they pass up an invitation to participate some research you are conducting, but they did notice who was doing the research. Then they hear you on a talk radio program and decide to enter your name in their data base. However, still no call to you. You get the idea. Most marketing experts will tell you that it takes six or seven marketing impressions before a prospective buyer even considers responding.
If you think that your competitive advantage is that your consulting firm is “fast,” you will want speed to be projected in your company’s name, the titles of your speeches, the themes of your advertising, the writing style used in your direct mail, the pace of your website, etc.
Protect Your Competitive Advantage
Business opportunities are lost every day by consultants who convey a promise of a competitive advantage in their marketing messages and then fail to back up that promise with consistent management practices. For example, a firm sends conflicting messages when it promises that they are “fast” and then has a slow voicemail system or doesn’t return phone calls within a very short period of time.
If your competitive advantage is that you are similar to your prospective customers, your marketing would play up your background. It would include photos of you with people your prospects would know. Your gifts would be a bit more personal or fun. Your messages would convey a sense of familiarity.
Another consulting firm with a competitive advantage of “thoroughness” might have marketing messages that emphasize credentials, awards, licenses, certifications, etc.
In addition to being a skilled consultant, are you fun to work with? An advertising agency client of mine had the competitive advantage of being “fun.” Their brochures and advertisements were as good as or better than their competitors’, but their true edge came from their humor, ease of being with people, love of their work, etc.
If your marketing promises that you use cutting edge technology and are a leader in your industry, are you investing in continuing education? Do you hire only well educated people who enjoy continuous learning? Does your compensation program reward the development of new techniques?
Measure the Return on Your Investment in Marketing
Too many business people, including many experienced solo consultants, view marketing just as an expense. In actuality, marketing is an investment with measurable results. If you want to grow your consulting firm, it pays to learn how to measure return on investment in things like marketing and protect some time to actually do it.
How many consulting assignments do you want? What is the dollar value of an average consulting assignment for your firm? How many proposals must you present to prospective clients to get one consulting assignment? How many leads does your marketing need to attract to bring one prospect to you?
Dollar volume desired $ 200,000
Budget available for marketing $ 20,000
Number of consulting assignments desired 20
Value to a typical consulting assignment $ 10,000
Number of prospects needed to get one assignment 5
Dollar value of a prospect $ 2,000
Number of leads needed to attract one prospect 10
Dollar value of a lead attracted by marketing $ 200
Number of leads needed (20 X 5 X 10) = 1,000
It helps to keep track of where your leads come from. Where did someone who calls you first learn about you? Who is making referrals to you? If your marketing did not attract 250 leads/inquiries last quarter, it could be that you have gotten lost in marketing activities that aren’t really generating leads.
The first place to look is your association-related networking. We all know consultants who go to association meetings, attend conferences, and participate on committees and do not end up with any consulting leads. If this is happening to you, it could pay for you to obtain some coaching about how to turn association networking into real business.
If you are not generating the number of leads you need, you might want to review your list of associations. It is wonderful to network with your consulting buddies in professional associations, but marketing-wise it is even more important for a consultant to be visible at events that serve the consultant’s customers. If you are a safety expert in the pharmaceutical industry, you will want to attend and speak at conferences for pharmaceutical executives and have articles published in journals read by pharmaceutical executives.
If your marketing is not attracting the needed number of leads, you might also want to review how you are communicating with your past customers. Are you keeping inactive clients informed about your new services? Do you have a schedule to follow up with them to learn how they are doing and what new needs they have? Are you asking for referrals?
Also, if your marketing is not attracting enough inquiries, review what people receive from your business. How do you maintain communication with people who have attended one of your speeches? Who receives reprints of articles you have written? Are there names in your database who have heard from you one time and never again? How does your business interact with members of associations between conferences? Who is notified when you are scheduled to give a speech at a conference? Who do you invite to attend an event with you? Who do you nominate for awards? Who do you invite to serve as a panelist with you?
Get Help If Marketing Is Not “Your Thing”
We all know consultants who would rather just focus their time on serving customers. Maybe you are one of those people. However, being a good consultant is usually not enough to drive the growth of a consulting practice. Fortunately, there are marketing consultants available who specialize in the needs of other consultants.
Learn Strategies That Complement Your Desired Positioning
Nowadays it seems more popular for consultants to do whatever they can to avoid having employees. I have seen consultants tolerate poor quality service from subcontractors just so they did not have to face the responsibility of being an employer. In some ways, I am convinced that the trend toward “virtual” everything has gone a bit too far when it comes to consulting practices. I have found that it pays to employ people who do the core elements of your consulting practice and save subcontractors for the type of work that your clients occasionally need.
If you decide to grow your consulting practice by hiring other consultants, associates, assistants, etc., it pays to learn about things like “billing multipliers,” the difference between a senior consultant and a junior associate, when to use performance bonuses and commissions, etc. Although a consulting company grows primarily through capable people providing quality service and solid marketing, it pays for consultants to learn how to execute growth strategies like acquisitions, joint ventures, roll ups, geographic expansion, channel control, equity deals, initial public offering, licensing, franchising, etc.
Enjoy the “Game” of Growing Your Business
It is important for consultants to learn how to grow their practices, but it is also essential to enjoy the process. Clients and employees want to work with people who enjoy what they are doing and care about things beyond themselves.
Growing a consulting practice involves
- articulating your purpose
- selecting your desired position
- executing the background music and melody of your marketing program
- hiring key players and establishing strategic alliances
- tracking and measuring return on investment
- balancing your time between consulting and running your business
- investing in your continuous learning about how to be an Owner/President of a growing consulting firm
Far too many consultants work long hard hours taking care of their customers and do not take care of themselves. The overwhelming majority of consultants pay themselves less than they would have received if they had remained in their former corporate positions. Most have no health, disability, life, or long term care insurance and have no pensions.
There are no guarantees. Your marketing puts out some bait for the type of “fish” you want to catch. You can try another pond. You can change the bait. You can even consider going after another kind of fish. When you get the “fish” to bite, you have an opportunity to work with interesting people, solve important problems, create future opportunities, and deepen your skills.
Known as The Growth Strategist®, Aldonna R. Ambler, CMC, CSP helps professional service firms, technology/telecommunication companies, and construction-related/distribution companies reach their goal of Achieving Accelerated Growth With Sustained Profitability® through a combination of speaking, consulting, executive coaching, authorship, and growth financing. Her clients seek a minimum of 50% growth/year, with the majority achieving between 100-200%. She has executed an ESOP, grown multiple international businesses, won just about every major award an entrepreneur can win, provided expert testimony on economic growth at over 30 legislative hearings, conferred with four different Presidents in the Oval Office, and published two books and over 100 articles. Aldonna Ambler can be reached at 1-888-ALDONNA (253-6662) or at www.ambler.com.