Determining the topics you consult upon, the types of clients you serve, and the way you deliver your consulting services has a large impact on the way you run the business. Those decisions also determine the financial performance of your business. Having clarity around the work you do, and how you do it will help you market, sell, and deliver your services more effectively.
- Determining the topics you'll consult on, the types of clients you'll serve, and the way you'll deliver your consulting services will have a large impact on the way you run your business. Those decisions will also determine the financial performance of your firm. Having clarity around the work you do and how you do it will help you market, sell, and deliver your services more effectively. To determine what you'll consult on, ask yourself, what areas of special expertise do you have? Do you have certain certifications or licenses? Is your expertise industry or functionally specific? Do you know a lot about financial services, or metals and mining? Or, is it functional like strategic planning, or personnel issues? Will you offer only advice, or are you going to do project implementation? Will you offer contract labor services? Think about the types of clients you'll serve.
Is there a specific client industry you're going to work in? Is there a certain size of client that you want to target? Whether it's small, medium, large, or even global. Are you going to work with for-profit firms or non-profit ones? Are you going to serve government organizations or higher education firms? Are you going to serve startups? Will you be working with individuals or companies only? Who within the client organization is your buyer? Are you selling to the C suite? To business unit heads? Functional heads? Certain departments? Specific locations? Your choice of client will expose you to all the dynamics they face.
If you're serving a client in a very cyclical industry, expect your business to be cyclical too. You'll also need to think through how you're going to deliver your consulting services. Will you deliver them onsite or remotely, or will it be a combination of the two? Are you going to take a team approach, or will you be an individual consultant? Will you be a general contractor consultant, serving multiple clients with multiple consulting partners where you're just coordinating those different firms? Will you conduct long engagements or short engagements? Are you going to serve as staff augmentation for your client? Each of these choices is going to impact the way you run the business.
These impacts are going to hit your financial performance as well. Longer consulting engagements can result in a boom, bust financial pattern. While you're serving clients life is good and money is coming in. But when the long engagement ends, you haven't been selling and there's a bust so you have to make up that time from a financial perspective. Shorter engagements will have less stability but more selling time, you're going to have to sell a lot more engagements to make the same amount of money, but since the engagements are shorter, you're able to sell a lot more of them.
Project-based engagements lend themselves to either fixed price or hourly types of selling. Again, it's a totally different business model. If you're going to do staff augmentation it's usually going to be hourly, but you won't get employee benefits. And if you're a general contractor, you're going to have to pay commissions to other consulting firms, as well as managing their rates and their economics. Your business model is a huge determinant of the ups and downs you'll experience. How easy or hard it will be to sell your services, and how your firm performs financially.
Make sure you think through all of these dynamics before you take your firm out there into the marketplace.
- 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.