7 lessons learned from running a consulting company – revisited

I read a great article from Neil Patel over on quicksprout.com on the 7 Lessons He Learned from Running a Consulting Company. That article was written back in 2011. Since then I’ve worked for a global consulting business, in a multinational consulting firm to build their management consulting practice in the UK, and for the past 4 years I’ve been running consulting businesses of my own. So I thought I’d take the opportunity to revisit Neil’s article to see if anything has changed.

Neil’s number 1 lesson was that:

The day you sign a client is the day you start losing them

Whilst I can see where Neil is coming from, I don’t agree with him on this one. We’re working with many of the same clients now as we were 4 years ago when we started. And we continue to win projects with those same clients, often in competition with much larger, more established firms. Now that’s not to say that we haven’t had other clients in between that we haven’t been successful in winning additional work from. And those clients that we continue to work have not given us non-stop continuous work in that time. But if you nurture the client relationship correctly; if you build a real and honest relationship where you care for your client’s success as much as, if not more than your own, then you can be successful in keeping a client for many, many years.

The 2nd lesson from Neil’s article was:

Clients are always right, except when they are wrong

Neil’s writing on this topic is absolutely spot on. In summary, Neil states that your client shouldn’t be telling you what to do as you were hired to provide expertise.

The reality is that all clients want to have a say in what you are doing for them. Now that doesn’t mean that they’re right. You do have to be tough with your clients at times. What gets in the way of this, however, is not having enough clients! When you only have a tiny handful of clients you become much more worried about upsetting them; about standing up to them. Because what if…what if they sack you? Then what? So, the secret to giving your clients your honest opinion is to have lots of clients.

Neil’s 3rd lesson was:

You’re worth every penny, so show it

The point Neil is making here is that clients can and will question how much they are paying you from time to time. They will argue as to whether they’re getting value – an ROI. And you need to be ready to show that they are. You must have the data.

Now, if you’re a digital marketing agency, you have an abundance of data to show them. But what if this data is much harder to come by? What if you’re a management consultant working on the delivery of something where the value won’t be delivered for some time to come?

In my team we’ve recently been helping a construction and engineering firm to develop a standard project delivery methodology. We’re also designing and developing a training, exam and certification programme for them to help role out the methodology. And it’s taking a long time. There’s no way to shortcut it because the work is difficult; intricate; and there’s a lot of stakeholders that we need to get in agreement. So how do we demonstrate value?

The easy, and lowest valuable option, would be to produce timesheets. Yuk! I hate timesheets. They devalue you. They reinforce that you are giving up your time for money. They don’t allow you to define a value-based fee. Although defining a value-based fee on a non-fixed fee engagement is rather difficult.

In this situation you need to create a very clear picture of what success looks like. You need to sell the vision. And then you need to find ways to demonstrate your progress to achieving that vision. This will buy you the time you need to deliver the results. Find ways to deliver smaller results early. For instance, we created 1-day Foundation training course and delivered a pilot. This enabled us to demonstrate progress and deliver value earlier than waiting for the full methodology that we’re developing with the client.

One thing I hear repeatedly in respect to showing that you’re worth it, is that you should increase your fees. I’ve lost count of the number of business coaches and gurus who’s first comment is, ‘Increase your fees’. This is immediately followed by a claim that they help their clients increase revenue by 25%-50%. Believe me when I say that’s nonsense! These so called business coaches have one conversation where they say, “increase your fees” then they claim success. Rubbish!

If you want to increase your fees, the simple reality is that you need to increase your value. You’re not going to know what every other consulting firm is charging so you can’t simply benchmark. Although I do suggest you get some idea of what others are charging as a guide at least. How do you do that? Ask! Ask your competitors. Ask your friends. Ask your clients what they’re paying others. Now some people are going to exaggerate one way or the other, but at least you’ll get a range.

Now, back to increasing value. How can you do that? My main advice is to focus on the client’s business, and the value that you’ll bring to it, and focus on the client too. How will you help him/her deliver results that get him/her their bonus, or the promotion that they’ve been seeking. The number one thing I always want to know from my clients is “How do you get paid?”. We live in a capitalist world, and for the most part people work to get paid. So find out how your client gets paid, and work out how you can help them earn more! That’s how you add value. And if you’re adding value, if you truly believe that you’re adding value, then you’ll have the confidence to charge more for your services.

The 4th lesson in Neil’s article is:

Dress to impress

We’ve all seen those tech startups on stage wearing a T-shirt and jeans. You’ve maybe watched videos of Gary Vaynerchuck wearing jeans and hoodie. So do you really need to dress to impress? Neil Patel believes that the better you dress, the higher a consulting rate you can demand. Old wisdom says to dress like your boss. Or dress as if you’ve got the top job already.

So, how should you dress in your consulting business? I’ll tell you what I do. I dress in response to: a) my audience, and b) my frame of mind. Let me expand on that. I think as a consultant you should be one of the smartest dressed people in the room. You really do have to look the part. You are expensive. You are high cost. But you’re worth it! When people say to your client, “Who is that guy?”, you want your client to have a sense of pride when he responds, “That’s the consultant I was telling you about”. You must make your client feel proud, and reinforce that he’s made the right decision. So look the part. Wear a nice suit. Wear a quality shirt and tie. And polish your shoes!

There are times when I don’t wear a suit. I’ll wear jeans, smart brown shoes (don’t wear black shoes with jeans or I’ll be forced to call the style police!), a single-cuff shirt with cutaway collar and collar stiffeners, or a button-down collar, and I’ll wear a smart-casual jacket (don’t wear a formal suit jacket with jeans either – that style is confined to TV chefs like James Martin and Gordon Ramsey!). If I am wearing jeans, it’s because my client is too. The only time I dress down from a suit is when the client does. And you’ll never see me in front of a client in anything less than a shirt.

You can still be a bit rebellious. For example, I gave up wearing black socks a long time ago, and I now wear stripy or coloured socks. Don’t worry, they don’t have slogans or pictures on them (if you wear socks with pictures you probably wear ties with pictures too, in which case you should work in the public sector, or maybe read the weather on the regional news!).

Now, I said frame of mind too. What I mean by this is, if I’m working, I dress to work. It might be a Saturday or Sunday and I’m working form the home office. When I’m working, I dress to work. I wear a shirt. Polo shirts and T-shirts, for me at least, show me that I’m not working.

Here are my golden rules for how to dress to impress as a consultant:

  1. Always wear a suit and tie when you meet a client for the first time
  2. Always polish your shoes
  3. Only wear jeans if the client is
  4. Always wear a shirt

The 5th lesson on Neil’s article is:

The more you charge, the less they complain

Charging what you are worth is about understanding the value that you’re providing to the client at hand. We covered that above. What Neil is talking about here is that the clients that pay you the most money typically have the most money. Therefore, they are more comfortable at spending it. Again, Neil is spot-on here. A better way to describe this rule is: stop working for small clients, and work for big clients with money to spend.

It’s funny how people behave, and how they see their true value. A consultant might go from working for a big four, like Deloitte’s or McKinsey, and working for large global clients, but then when they start out on their own they go looking for small clients because they don’t believe in themselves enough. They think that they won’t be taken seriously by the bigger companies. Let me tell you that they’re wrong. and if you think this way, you’re wrong too!

I started my IT Management Consultancy selling to Clifford Chance, one of the world’s biggest law firms. My one-man company was selling to a company of nearly 10,000! Don’t ever believe that you’re not big enough.

Neil’s 6th lesson is:

Fake it till you make it

Neil talks here about selling to big companies and competing against larger consulting firms. His advice is to work out how you differentiate. I wholly concur with Neil when he says that a key differentiator for a micro-business consultancy is that YOU are selling YOU. You’re not a senior partner who’s going to win the job, then send in the grads on day 2 like you would in a big firm. You’ll be seeing the project through to the end. Once you start delivering huge value to your client, they will start asking you to get others involved from your firm so that they can get you take on other challenges for them.

The final lesson in Neil’s article is:

When it rains, it pours

What Neil is getting at here is a multitude of things that can be summarised as:

  1. You’re going to lose clients, and it will be at the worst possible time
  2. Keep your costs low and don’t blow all your money on needless things
  3. Don’t grow too fast as you might end up crashing fast
  4. Always be closing (if you’re not familiar with ABC, watch this brilliant scene from Alec Baldwin in Glengarry Glenross)

I can tell you from bitter experience that running a startup consultancy takes guts! It takes bravery, and probably a large dose of foolishness. I can remember in my second year, when all of my big projects dried up, and I had just under £1,000 left in the bank. I had no savings. No wealthy parents to call upon. A mortgage, a wife and 2 children to support. (I should note that most of those things remain the same!). I’ve never had sleepless nights before. I’ve never felt levels of stress and fear like it. But all throughout I had been working on opportunities. And luck would have it (although I don’t believe in luck – I created the luck), two opportunities landed that had been taking forever to close. I was saved at the eleventh hour by myself. By my hardwork and determination.  So, as Alec Baldwin (and Neil Patel) says, Always Be Closing!

When it comes to money, it always amazes me that when you’re running a business there’s so many other businesses and people that are ready and willing to take your money. And for vast majority I’ve learnt that they’re not overly concerned about delivering you value. They’re focused on meeting their own revenue goals. Before you invest in anything in your business, think long and hard about what the return is going to be, or how you can reduce the spend. I spent thousands of pounds in the early days on marketing – cold calling, exhibitions, digital marketing agencies – and I got zero return. That was because I didn’t know what I was doing. But not one of those companies I invested money in offered me the right kind of advice and help. They just took their money. Or should I say, my money!

 

In conclusion, running a consulting business is brilliant, but bloody hard work. It takes a huge amount of time and effort. And if there’s one thing I’d advise anyone starting a business to do, it’s learn to market. In time you can pay other people to do the marketing for you. Delivering consulting is the easy bit. And making a sale from someone who wants to buy isn’t that difficult. It’s finding clients that’s the hard bit, and that’s all about marketing. Or, if you only sell on referrals, then its all about luck! And as I said, I don’t believe in luck.

 

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