If you’re having trouble accelerating your consulting firm’s revenue growth, it could be because you’ve forgotten to create a stable revenue base.
“Bread and Butter” work (outlined in this classic article) is the most common and straightforward path to establish a solid, bedrock of revenue for your consulting firm. However, you have another interesting option:
Your consulting firm houses a treasure trove of assets, all of which are sellable to create a steady revenue stream that supports your consulting work.
A half-dozen assets that you could possibly leverage into cash flow are outlined below:
You can rent out your people to clients at a fee-for-time rate. This is staff augmentation, not consulting, and it’s a tried-and-true revenue generator.
In some industries, such as IT, staff augmentation margins are razor thin; however, some of our clients earn north of 50% margins on staff augmentation engagements.
Clients hire your consulting firm in large part because of your approach to solving their problems. You understandably guard your approach jealously and view it as a secret sauce that you don’t want to share. However, that precious resource could also line your coffers.
Licensing or franchising your consulting firm’s approach can yield generous income streams while potentially boosting awareness and demand for your services.
If your consulting firm’s thinking can be captured or enabled by software, you possess a highly scalable and, perhaps, a highly valuable asset.
Freestanding software can be sold to clients and also to other consulting firms to create a revenue annuity that funds your core consulting business. Apps that enable your consulting firm’s solution can energize a high-volume roll-out that creates marketing buzz and a financial ch-ching.
Your consulting firm is unlikely to generate significant revenue from low-end products such as books and inexpensive, online courses. Yet, there’s no rule against packaging up your content into an online academy, an evergreen certification program or a multi-volume manual that you offer for tens (or hundreds) of thousands of dollars.
If you regularly survey your clients or conduct surveys for your clients, you likely own a lake of data. Data fuel insights and create benchmarks, both of which clients will pay handsomely to attain.
Once you decide data will serve as a source of Bread & Butter income, you can arrange your projects and self-funded research to maximize the value of your data lake.
Many of your consulting firm’s clients would eagerly welcome connections with executives at other companies. Heck, after a year working from home, your clients crave connection more than status or promotions!
Hence, you could potentially monetize a community anchored by your clients. Peer groups, roundtables, and forums organized by your consulting firm all can produce meaningful revenue.
While all these assets offer tremendous revenue potential for your consulting firm, be wary when you approach them. They can lure you onto the dangerous shoals of strategic confusion, brand dilution and revenue diminution.
Remember that selling assets is a source of incremental, steady revenue, not an equal partner to your core, consulting mission.
It’s extremely difficult to build an asset-based business on top of a consulting practice. The two types of business are so different in terms of structure, sales approach, personnel needs, etc., that they don’t co-exist happily very often.
Hence, if you stray too far from your core, you’ll find you no longer lead a consulting firm. Instead you’ll be running a struggling software company or a product company that happens to have a professional services arm.
The best asset plays fit naturally with your consulting firm’s strategic direction and the worst are a massive distraction. In other words, if you’re going to develop a revenue stream around an asset, it must fit naturally with your current work so that you don’t bifurcate your focus, your business development efforts and your consulting firm’s energy.
What alternate sources of revenue have worked (or have not worked) for you and your consulting firm?
Text and images are © 2021 David A. Fields, all rights reserved.