Consulting firms often experience swings or surges in clients and projects. You can smooth your ride and enjoy your consulting practice more by reversing your priorities. Not sure what that means? Read on…
Some things that go up and down are fun: pogo sticks, hydraulic presses, roller coasters (when I was a kid).
On the other hand, other ups and downs are decidedly less fun: sailboats on a stormy sea, shower water temperature, roller coasters (now that I’m older).
Add an up and down consulting business to the not-fun list.
Alas, consulting is a lumpy business. If you can trace the lion’s share of your consulting firm’s annual revenue to a small number of projects and even fewer clients, you’re not alone. It’s not unusual for a consulting firm’s largest client or a couple of projects to account for 20% or more of the firm’s total revenue in a year. Some consulting firms only have one client!
As a result, winning just one or two significant, new projects can strain your consulting firm’s capacity. On the flip side, losing a large client can provoke a gut-wrenching revenue decline.
Consulting’s long sales cycle is exacerbating your feast-or-famine seesaw.
While you’re riding high, you let your business development efforts slip (or abandon them in fear you’ll close business you can’t deliver). Then, the lag time between effort and results kicks in, and new opportunities slow to a trickle just when you’re wrapping up your current projects. Now what?
You throw everything you’ve got at winning new business and, while you’re delightedly working on the first projects that close, the wave of new opportunities stimulated by your marketing efforts starts to break. Oh no!
Is there a way to escape these painful oscillations and enjoy your consulting firm more?
Reverse your priorities:
Hunt for more work when your project load is heavy. Increase your marketing efforts, and keep your business-development activities in full gear. That’s how you’ll stay busy and avoid the revenue plunge.
Practically speaking, since you lead a small consulting firm, always devote at least 20% of your time to business-development efforts (a.k.a. the Five Marketing Musts). When your coffers are full, pour more of those funds into client-attracting activities.
On the flip side, when work is scarce, upgrade your operations, systemize and automate everything within reach, and locate talented, swing capacity that you can tap when the need arises.
In other words, when every fibre of your business soul is screaming at you to find new projects, carve at least 20% of your time away from business development efforts and apply it to improving your ability to deliver value efficiently.
Even when you apply this counter-cyclical strategy, your consulting firm is likey to experience noticeable ups and downs. That’s the nature of running a small practice. However, if you can summon the fortitude to flip your priorities, you’ll enjoy smoother sailing.
Have you experienced the feast-or-famine roller coaster in consulting? Please share your experience, below.
Text and images are © 2019 David A. Fields, all rights reserved.