Running a consulting firm is fraught with pitfalls. Being overly reliant on a small number of clients, focusing too much on delivering services and not enough on selling, not managing your people well, and making administrative mistakes on contracts, accounting, or personnel issues, can cause major headaches. Know the common pitfalls and plan to avoid them or recover quickly if they happen.
- When you run a consulting firm,…you're going to face a lot of potential pitfalls.…Beyond the big mistake of not doing great work,…here are the top pitfalls I've seen people face…as they build their firms.…First is being overly reliant on a small number of clients.…Having a few big clients can be awesome.…They're predictable and easy to work with.…That is, at least, until there's major upheaval…and they stop being a client.…To avoid this, diversify your client base…as quickly as you can.…
Monitor client concentration at least once a year.…At thoughtLEADERS, every December I pull up…all our client revenue for the year,…and I make that pie chart to see…where the revenue's coming from.…In the early years of the firm,…I noticed one year that we had two clients…that were 65% of our revenue.…That was pretty scary.…If one of them stopped being a client,…I had a big hole to fill.…The following year, I invested a lot of time and effort…into diversifying that client base…to reduce that customer concentration risk.…
Next, focusing too much on delivering services…
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- Identify types of consulting business models.
- Describe revenue models.
- Explain how to estimate and manage costs.
- Price services using pricing strategies.
- Explain how to negotiate deals with clients.
- List effects of responding to RFPs.
- Identify the phases of constructing a consulting engagement.
- Present findings and implement recommendations.
- Describe different ways to manage legal issues.
Skill Level Beginner
1. Define Your Consulting Business
2. Marketing and Selling
3. Contract and Protect Yourself
4. Run the Consulting Engagement
5. Handle Administration
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