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Common Practices to Grow a Consulting Business

Image of Tiffany Joy Greene, M.B.A (aka Manic Maple)
Tiffany Joy Greene, M.B.A (aka Manic Maple)

Consulting businesses are in the business of solving problems for their clients.  According to HubSpot, "A consulting firm is a business comprised of industry-specific experts who offer professional advice, guidance, and actionable solutions to businesses experiencing issues they can't deal with in-house."  While consulting businesses are skilled at helping other businesses reach their goals or solve their pain points, a scalable, growing consulting firm must follow the same common practices to grow their business as their clients' practice.  Below are common practices to grow a consulting business.

Common Practices to Grow a Consulting Business

  • Establish a business plan and brand strategy.

    A business plan is a roadmap for your business that outlines its goals and details how you plan to achieve those goals.  A business plan serves as a roadmap for your business.  According to a Palo Alto Software research study, businesses who completed business plans were twice as likely to succeed in growing their business than those who have no business plans.  Consulting businesses are no exception.  Additionally, a brand strategy aligns all areas of your organization, and a brand strategy clarifies where your organization is headed; what you are trying to achieve; and provides a map on how to get to where you want to go.  A brand strategy focuses on the purpose or "why" of your consulting business, and it expresses your business's promise to your client.  A brand strategy keeps your organization focused.  
  • Become a thought leader.

    To build trust, lead generation, brand positioning, and revenue work on becoming a thought leader.  Share your wisdom and thoughts by publishing content via blogs, social media posts, white papers, eBooks, case studies, speaking engagements, training sessions, etc.  
  • Don't work in a silo.  Work in an ecosystem.

    Consultants are subject matter experts.  They are not omnipotent.  Therefore, bringing a variety of subject matter experts together to solve client pain points will address the pain point holistically.  An ecosystem creates a higher value collectively than the members can create individually.  
  • Never stop building your sales pipeline. 

    Never assume that you will keep all of your clients, especially your big clients.  Always be working on your sales pipeline.  By having a well-stocked sales pipeline, you have warm leads to convert into clients.
  • Don't burn a bridge. 

    If you are learning from a soon-to-be ex-client, don't burn the bridge.  Don't become defensive and don't be hard on yourself.  The soon-to-be ex-client may not have come to this decision easily.  With empathy and strong listening skills, you may be able to negotiate a lengthy window of recovery time, and you may gain them back as a client in the future.
  • Focus on your existing customers. 

    Work on the business you already have, and you may find new ways to increase sales and services to your existing clients.  Remember that acquiring a new customer can cost five times more than retaining an existing customer.  In fact, according to invespcro, existing customers are 50% more likely to try new products and spend 31% more, when compared to new customers.
  • Don't waste time. 

    If you lose a big client, every minute counts.  Consider this "wartime", and focus every minute and every dollar on replacing the revenue you have lost.  If you have not lost your big client yet, make sure you take advantage of the opportunity to build your liquid cash reserve and sales pipeline.  Don't waste time or opportunities to grow the business.

  • Assess your services.

    Review your products and services in a way to consider how you can diversify your offerings and revenue streams.  Perhaps, what you offer to your larger clients can be broken down into smaller service offerings for small and ideal clients.

  • Evaluate your client concentration. 

    Just as in life in general, your client concentration should be well balanced.  Client concentration refers to the amount of total revenue generated by either your highest paying client or your top paying clients.  Business owners and advisors will often purport that a business should not have a client that comprises more than 10% of a business's revenue.  However, many professional services or consultancy businesses often have clients that contribute more than 10% of a business's revenue.  While it may be risky to be dependent on a handful of big clients, managing a plethora of small clients brings other challenges, like customer service issues, difficulties managing expectations, and profitability issues.  However, small clients can grow to be ideal clients, and if you manage your business well, those small clients will grow to be ideal LOYAL clients.  Therefore, diversify your client concentration.  For some businesses, it may make sense to keep their small clients to less than 15% of their business; their ideal clients to 60% of their business; and their big clients to less than 25% of their business.  However, to be able to follow this guideline, you need to understand what your ideal client looks like.  Your ideal client is the perfect blend of resource allocation and profitability. 
  • Maintain a liquid cash reserve.  

    Personal financial planners advise people to an emergency fund account that will help them pay the bills for three, six, or twelve months in preparation for an emergency, like losing a job.  We recommend that businesses maintain a liquid cash reserve that will cover their costs, if they face an emergency, like losing a big client, a consultant falling ill, etc.  So how much should your business have in a liquid cash reserve?  The answer lies in the needs and costs of the business, as well as your risk tolerance.  On average, I encourage most businesses to have enough liquid cash reserve to cover their costs for three to six months.  

Remember this quote from Eric Thomas, "When you want to succeed as bad as you want to breathe then you will be successful."  By focusing on your clients and these common practices, your consulting business will grow.  

 

 
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