An Insider's Guide to Building a Successful Consulting Practice
IN THIS SUMMARY
For people who long to be independent in their work and to make the most of their time, independent consulting may be the ideal. An Insider’s Guide to Building a Successful Consulting Practice by Bruce L. Katcher and Adam Snyder provides information that new consultants need to build their business and existing consultants need to accelerate their business. To be a successful independent consultant, it is important to develop a niche, market diligently, provide value to clients, and network for additional business. Independent consulting is not for everyone; but for those who are so inclined, independent consulting can lead to greater satisfaction, greater income, and greater freedom of time.
An Insider's Guide to Building a Successful Consulting Practice
AN INSIDER’S GUIDE TO BUILDING A SUCCESSFUL CONSULTING PRACTICE AUTHOR: Bruce L. Katcher, Ph.D. with Adam Snyder PUBLISHER: American Management Association DATE OF PUBLICATION: 2010 253 pages
FEATURES OF THE BOOK Written for both independent consultants trying to build a business from scratch and experienced independent consultants looking to grow their current business, An Insider’s Guide to Building a Successful Consulting Business offers direct problems and solutions, as well as case studies designed to help independent consultants be the best they can be.
THE BIG IDEA <ul><li>Bruce L. Katcher lays out several important points from deciding to embark on a career in independent consulting to marketing and growing a consulting business in An Insider’s Guide to Building a Successful Consulting Practice . </li></ul><ul><li>Not everyone is cut out to be an independent consultant, and it is important to do the research into the economic realities of the self-employed. </li></ul><ul><li>The most important part of building a consulting business is the business plan. A business model is a framework from which a business operates. .. </li></ul>
INTRODUCTION For people who long to be independent in their work and to make the most of their time, independent consulting may be the ideal career. An Insider’s Guide to Building a Successful Consulting Practice provides information that new consultants need to build their business and existing consultants need to accelerate their business.
BUILDING A CONSULTING BUSINESS The most important part of building a consulting business is the business plan. A business model is a framework from which a business operates. Katcher proposes that there are twenty-two different business models for independent consultants: Time-Based Model : Consultants charge clients for time, and are paid for each actual hour of work. This is a good model for new consultants who may be unsure how much to charge clients. Project-Based Model : Independent consultants perform specific project functions for a set amount of money. This model requires the consultant to predict the amount of effort a job may take in advance of doing the work.
BUILDING A CONSULTING BUSINESS Retainer-Based Model : Consultants charge clients a set amount of money for a set time of ongoing services, such as a lawyer or accountant “on call.” Some clients, however, may expect more work than the retainer covers. Results-Based Model : The consultant’s fee is based on the results achieved. Consultants using this model can charge more, but they will not make money if they do not succeed. Annuity Service Model : Consultants provide ongoing service, paid on a regular basis. The danger in this model is that clients may cease to need this particular service at some point.
BUILDING A CONSULTING BUSINESS Consulting Firm Model : Consultants sell the services of others, typically their employees. The consultant must be prepared for the cost and effort of managing employees. Outsourcer Service Model : Consultants provide outsourced services to companies, typically in long-term agreements. Consultants are more like employees under this model. Product Sales Model : Consultants develop, market, and sell products for a fee. Many consultants use this model to supplement other income.
BUILDING A CONSULTING BUSINESS Razor Blade Consulting Sales Model : Consultants develop a product and sell it very cheaply, but also develop and sell a contributing product at a higher mark-up. (As razor handles are sold cheap, but the razor blades are very expensive.) Subscription Model : Consultants publish valuable information and sell subscriptions. This model is particularly lucrative for experts with knowledge other people do not have. Distributer Consulting Model : Consultants distribute products and services developed by others. Consultants who utilize this model are at a disadvantage because they do not own the products they are distributing.
BUILDING A CONSULTING BUSINESS Publisher Consulting Model : Consultants publish tools, then certify, license, and resell those tools to other consultants. Ongoing support for the products published may be needed. Franchiser Consulting Model : Consultants develop methods and materials for other consultants to provide services. In this model, consultants do not have to market or deliver services directly to clients. Franchisee Model : Consultants market, sell, and deliver services as specified by a franchiser. There may be start-up costs associated with the franchise.
BUILDING A CONSULTING BUSINESS Strategic Relationship Model : Consultants establish a relationship with another consultant to provide services in tandem. There may not be enough revenue for two incomes, and it is important to be certain that both consultants are pulling their weight. General Contractor Model : Consultants manage subcontractors and handle client relationships. Consultants in this model are performing management tasks rather than doing direct consulting. Subcontractor Model : Consultants contract services to general contractors. The management tasks are removed in this model, but there may be a limit to the fees consultants can charge.
BUILDING A CONSULTING BUSINESS Freemium Model : Consultants give away base models on the Internet, but charge clients for premium services. This model capitalizes on viral marketing on the Web. Association Model : Consultants start professional associations. This model allows the consultant to become an authority in his or her field. Speaking Model : Consultants deliver speeches for pay. This model is often a supplement to other streams of revenue.
BUILDING A CONSULTING BUSINESS Public Seminar Model : Consultants market and prepare public seminars for other consultants or clients. The majority of this work is administrative. Author Model : Consultants publish books and receive royalties. Many business books sell less than five thousand copies, so this is a risky model and should be used to supplement another model.
MARKETING A CONSULTING BUSINESS There are seven criteria that should be used when deciding on and implementing a marketing plan: Cost : Is there a startup budget to support marketing efforts? Time Commitment : Is there time in the schedule to devote to marketing? Time Horizon : How long until the marketing efforts provide a dividend? Ease of Delegating : Can the marketing activities be delegated to employees or subcontractors?
MARKETING A CONSULTING BUSINESS Writing Skills : Do the marketing activities require a good writer? Presentation Skills: Do the marketing activities require good presentation skills? Interpersonal Skills : Do the marketing activities require strong interpersonal communication skills?
GROWING A CONSULTING BUSINESS The most important factor in growing a consulting business is being able to sell, and the first rule of sales is to listen to the client. Prospects do not want their consultants to understand; they want to be understood by their consultants. Consultants must also be sure to speak with decision-makers. It is a waste of time to try and sell consulting services to someone who is unable to make the decision whether or not to purchase them. When discussing consulting services, be sure to ask lots of questions about what the client needs, and be sure to listen to the answers.
GROWING A CONSULTING BUSINESS <ul><li>Once consultants have been in business for a while, it is imperative to reevaluate the business plan at regular intervals. It is easy to become complacent when the business is operating at a comfortable level. However, consultants should ask themselves: </li></ul><ul><li>Is the business receiving a sufficient amount of new leads? </li></ul><ul><li>Is the business receiving the right type of leads? </li></ul><ul><li>How good a job is the consultant doing at converting leads into new business? </li></ul><ul><li>How long does it take to convert a lead into a new client? </li></ul>
MAINTAINING A CONSULTING BUSINESS Perhaps the single most important thing to avoid when attempting to maintain a consulting business is to avoid diluting the business model. Some independent contractors find such great success that they begin to branch out into different aspects of marketing, or they take on more clients than they can handle. Sometimes growing a business can dilute the ultimate product and harm the brand as a whole. There are three methods to avoid diluting a consulting business: Limit or avoid subcontracting : Obviously, some business plans call for subcontracting as the core concept. However, it is not advisable for contractors to take on so much work that they have to hire subcontractors if that is not a part of their business plan.
MAINTAINING A CONSULTING BUSINESS Limit or avoid partnering : Partnering with another consultant can reduce potential earnings, as well as make it difficult for the partnered consultants to make it as self-sufficient independent consultants. Some people also form partnerships to avoid having to complete tasks they dislike, which can further dilute their ability to function as a consultant on their own. Be cautious about deviating from the business plan : If an independent consultant believes that his or her current business model is not working, they should first evaluate their marketing, niche, and services before drastically changing the business model.
MAINTAINING A CONSULTING BUSINESS To be a successful independent consultant, it is important to develop a niche, market diligently, provide value to clients, and network for additional business. Independent consulting is not for everyone; but for those who are so inclined, independent consulting can lead to greater satisfaction, greater income, and greater freedom of time. By incorporating the tools and tips in An Insider’s Guide to Building a Successful Consulting Practice , independent consultants can grow their businesses to any level of commitment they desire.
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