Easy mistakes catch the best of us off guard. After 15 years as a consultant, I’ve seen it all – and done it all. Fortunately, I’d like to think most of my mistakes were in the early years and that I have at least moved on to mistakes that take experience to make. Ha!
So I’m in a great position to point out six easy mistakes many people make with their consulting businesses.
6 easy mistakes consultants make with their businesses
Only go to networking events that involve their competitors. If all you do is go to events where your competitors are, where will business come from? Only so many competitors are going to refer business to you, if at all! Get out there and make connections with the people in your target market, not just your industry.
- Mistake # 1 – Stop networkingas soon as they get a contract. If you aren’t developing your business, what exactly are you going to do at the end of that contract?
- Mistake # 2 – Remain uninformed about finances. You need to declare your income, keep on top of your taxes, be aware of tax write offs, invoice regularly, make sure you get paid and more. It’s not all that hard, but, if it gets the better of you, hire an accountant or bookkeeper.
- Mistake # 3 – Don’t use contracts. Sure, a contract is only as good as your ability to enforce it. But if you at least have the contract on paper, it’s a lot easier to enforce than an oral agreement, even in areas where oral contracts are binding. Having a good paper trail can help you if a client doesn’t pay – many clients will pay up when you remind them they signed a contract.
- Mistake # 4 – Ignore scope creep. Some clients will push and push, while others make tiny, incremental changes. But those changes add up and they take away from either your earning potential or your time off. Use a contract, remind the client of the scope and be sure to offer to accommodate their needs – but make sure you know what you’re trading away or else get more money. Take some time to learn about managing consulting client behavior.
- Mistake # 5 – Rely on one source of income, rather than having multiple income streams. Time and time again, some consultants rely on one income stream. For many consultants, this means having just one client (which makes me wonder about your 1099 status) or just doing one kind of consulting. While there are huge benefits in being an expert and specialist in a niche, you may sleep better at night if you have more than one way to bring in money. Many of the most successful consultants I know also teach, coach and write, among other things. It keeps them fresh, gives them more financial security and improves their networking and expert status too.
- Mistake # 6 – Neglect to think strategically about consulting fees. Your consulting fees are a complex signal about the value you offer, your position in the marketplace and even how easy it is to push you around (see scope creep). Pricing is one of the four P’s of marketing – and setting your consulting fee is thus an important part of your business strategy. Make sure you take the time to set and get a fee that reflects the value your solutions offer.
What are the biggest mistakes you see consultants making?
Update: Chip Camden at TechRepublic has added his own list. @Chip, I appreciate your ongoing shout outs.