You run a darn good consulting firm. And, as a darn good consulting firm leader you know that the path to new business is offering the Right Solution to the Right Target with the Right Chocolate Bribe at the Right Time.
But when, exactly is that time?
Most consulting firms have modest insight, at best, into when their prospects’ need for help will arise. That’s part of what makes consulting a lumpy business. (That and forgetting to use a whisk.)
Recently, a small boutique consulting firm we work with signed over $1 million in a single week. That was after a three month “slump” with less than $100,000 in total revenue. We’ve seen consulting firms close 50% of their year in a single month. That’s lumpier than any oatmeal cereal you’ve cooked—even the time you forgot to stir.
Solving for unpredictable timing is extremely important to your consulting firm’s financial health and your personal, emotional wellbeing. The financial anxiety that accompanies roller-coaster performance can knock you out of business or into the hospital.
The five tactics below will help you de-risk your consulting firm by spreading out your flow of projects and revenue.
5 Tactics to Smooth Your Consulting Firm’s Sales
Identify/Nurture Demand Swingpeople
A demand swingperson is someone you can turn to for work—usually subcontracting work, when your consulting firm is hitting a slow spell.
Good candidates include consulting platforms (e.g., Umbrex, BTG, Catalant), colleagues and firms you’ve hired as subcontractors on your projects, larger consulting firms that offer adjacent services, and even other consultancies that offer the exact same services as you.
Create relationships with potential demand swingpeople and treat those relationships as lovingly as you treat your prospective clients.
Stock Your Pipeline
Since every individual prospect’s need and desire is unpredictable, the best remedy is to keep pouring potential clients into the top of your consulting firm’s funnel. At any given time a few of them will be in the right frame of mind to discuss a project with you.
Stock your pipeline by touching a lot of people, by reaching out frequently enough that you’ll be top-of-mind when your consulting firm is needed, and by being easily findable when someone is looking for a consulting firm to scratch their particular itch.
Win Bread & Butter Projects
Bread & butter projects are easy, low-fee, plentiful work. Often (though not always) they generate lower margin for your consulting firm than larger projects.
They may not be as exciting as the big, intellectually challenging engagements; however, at 20-30% of your consulting firm’s revenue, bread & butter projects create a stable cushion of work and cash flow.
Create Need and Desire
The easiest way to win business is to fish where the fish are. But what if you’re fishing where the fish ain’t? Plenty of the prospects you talk with either won’t know they need your services or know it but don’t have the urgent desire that drives a project.
Walking away from prospects who aren’t eager to hire you is often the best solution. But it may be possible to coax those fish into the upper right box where you can reel them in as clients.
I’ve discussed this in other articles and will shortcut the topic here:
Create urgency by exploring the consequences of inaction, comparing to benchmarks, and removing impediments.
Reveal needs through diagnostics that generate an “Aha!” realization.
One benefit of a partnership with other consultants is that when one of you is slumping another might be thumping. As you add more and more rainmakers to your consulting firm, the lumpiness of your group’s overall revenue declines.
To be clear, I am not recommending you create a formal partnership if you’re a solo consultant or you bring on more partners if you’re already a boutique. There are good arguments for and against adding partners to your consultancy. (More arguments against than for.)
However, in the interest of completeness, it’s worth acknowledging that one way to reduce revenue swings is to share the load. Keep in mind though, that partnering only works if you truly share the ups and downs. An “eat what you kill” partnership isn’t an exit from the revenue roller coaster.
One more note on this topic: Don’t wait until you’ve hit a slump to get help with your business.
The best time to stock your pipeline is when you’re full, not when you’re already starving
How else have you smoothed the lumps in your consulting sales?
Text and images are © 2023 David A. Fields, all rights reserved.
David – Great tips here thanks for sharing these!
I love the analogies too and sense of humor…lol! Always helps to bring laughter to a **serious topic**..eehh!
I thought that looked like a map of a state, except TN first came to mind. Clearly I need to check back-in with my Geography and the States’ shapes!
Anyway yyeehhhaaawwhhooo! Enjoy your vacation!
I’d guess most folks in the U.S.A. couldn’t identify the majority of states by shape alone. There’s actually a web game out there somewhere in which you try to identify territories (mostly countries) using just the outline. It’s very humbling.
Thanks for your input and feedback, Rachel. Much appreciated.
I have found putting a percentage away each month from present fees in both high and not-as-high times is the best bet against future business downswing. All of the recommendations the article makes are nice-to-haves but they take time to start and continue nurturing and that takes time away from more direct communications with past, present and future clients. So, although I agree with all of the article my confidence is far more comforted by savings for the rainy day. Just one man’s two cents!
Smoothing your business operations and managing cash flow are, as you suggest, different kettles of fish than smoothing your sales/revenue. That’s a good point and one well worth paying attention to by most consulting firm leaders.
We typically recommend setting a clear MVP (Minimum Viable Practice) for your firm during your annual planning, then focusing first on foremost on hitting that MVP number. Once that revenue is obtained, all your expenses for the year are covered and you can focus on profit.
I’m glad you raised the opportunity to highlight the difference between managing revenue flow (income) and managing cash flow (income out expenses), Tom!
I’m still reading your book David but so far, I’m truly enjoying it. One thing that I will always remember is to seek for clients who have an urgent need and that are actually aware of it. I believe this is a key component to start creating an stable flow of income.
Thank you so much for sharing your knowledge on your book and through these useful articles!
You’re absolutely right, Maria Fernanda. Orienting your firm to the right market (Fishing Where the Fish Are) is absolutely the anchor point for creating a stable, successful consulting firm.
I appreciate your input, your comment and also your kind words, Maria Fernanda. Keep the comments coming!
I tend to think unconsciously about needing to land 1 ‘big’ job worth >$x each year, with the remainder coming from the ‘bread and butter’. Interestingly it’s the same clients just at different points in their planning and execution cycle. This tends to help me with my outreach focus, also.
Tim, you’re instinctively following a number of good practices: knowing the revenue you need to manage your firm (Minimum Viable Practice), considering different types of revenue (big client vs. bread and butter), and considering the mix of clients.
Thank you for providing a good example and case study that many other consultants can look to, Tim.