- 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.