Building a successful consulting business takes more than just good luck. If you mix together key ingredients, you can build a successful consulting business even if you’re not a business wiz. Whether you do it yourself or hire someone else, these five areas will help you run your consulting business.
What’s that saying? If you fail to plan, you plan to fail? Well, it’s true. If you don’t plan ahead, you’ll make reactive decisions, not strategic decisions. You’ll be blindsided by competitors, customers and even your own employees. By putting together strategic, business, contingency and human resources plans (and buying insurance), you can help keep your small business on track. (At Consultant Journal, we value business plans so much that we created our own business plan kit.)
A few years ago, a company hired me to improve their sales. They’d grown sales by a large amount in the previous year and they wanted me to build on that success. However, when I examined their numbers, I discovered that their accounts receivable has tripled and the average collection period was more than a year. In other words, the company’s growth had been achieved by pretty much giving away their product, since they hadn’t bothered to invoice or enforce payment! Don’t let your clients use you as a free line of credit. Develop a credit policy, invoice regularly and follow up to enforce payment. Finance and credit are key.
Your marketing should be about more than goodwill and brand name recognition. Strategic marketing serves to help you increase revenues, attract customers, retain profitable customers, and meet your targets. When you’re running a consulting business, you’re doing more than working at a job. You need to work hard at getting work, not just working.
If you don’t keep track of where your money is, you’ve pretty much lost it. If you don’t know when bills are due (to collect or to pay), when it’s time to respond to customers’ requests, or when to deliver projects, you’re bleeding money. Make sure you know how to set fees, read a balance sheet, figure out your cash flow and measure growth. If you don’t know the finance and numbers behind your consulting business, you’re giving your money away.
Do prospective clients ever invite you to long meetings, then never contact you again? If you’re doing more talking than questioning in a sales meeting, you’re giving your services (and income) away. As a consultant, you should be asking questions, not giving answers until you’ve got a contract in place. Otherwise, your prospective clients may simply enjoy a free consulting session that remove the need to actually hire you.
The good news is that you don’t have to master all these skills. If you’re not good at accounting or marketing, outsource your work. Hire an administrative assistant or, if you have more complex and strategic needs, hire a consultant. By tapping the skills of subject matter experts, you may be in a better position to make money. Heck, that’s why people hire you, right?
"Successful consulting practice: 5 building blocks" from Become a Consultant at ConsultantJournal.com.