David A. Fields Consulting Group Sales slumps are disheartening, frustrating, and border on panic-inducing for consulting firm leaders.
If you have proven you can win consulting engagements steadily in the past, and now you’re facing a revenue lull, your first step is to determine which of the three varieties of sales decline you’re confronting.
Natural Trough – Your consulting firm handles a low number of engagements each year (say, under 30) and, therefore, the inevitable ebbs and flows of business feel very pronounced. If you cannot trace your slump back to one of the other varieties listed below, you may be in a natural trough.
Weather Change – Demand for your consulting firm’s services is flagging either due to internal shifts in your target market such as innovation-driven disruption, or external factors such as the economy or regulation.
Dry Well – You have relied on a limited number of relationships to sustain your consulting firm, and those clients no longer need or want your services.
You must determine which type of slump you’re in. The paths out are very different, and if you choose the wrong path you may exacerbate your sales problem.
Pause, re-read the three varieties, and assess your situation.
Natural Trough
Timing and normal variations in demand are virtually impossible to control. Fortunately, they are also temporary.
Action Plan:
Your path out of a Natural Trough is to ignore it. Stay confident in your proven Business Development engine, and use the extra time to bump up your current visibility-building activities.
Weather Change
Some weather changes are long-duration, like climate change, and others pass in a season.
If you’re facing a fundamental climate change in your industry, meaning your target’s priorities have changed for the long term, your consulting firm faces a difficult challenge.
However, markets rarely shift all at once and there are still buyers for your consulting firm’s offerings. They’re just increasingly difficult to find, like water in an expanding desert.
Action Plan:
Cast your net wider. Increase and broaden your visibility-building efforts, particularly networking.
Longer term, you’ll have to head back to the Problemeter exercise and identify new issues your consulting firm can address that are urgent and expensive for your target market. (Alternatively, you can find new markets for your solution–that’s typically more difficult.)
If you’re facing a seasonal weather change, for instance the economy has taken a downturn, then your clients may have become more risk averse.
Action Plan:
Develop new versions of your consulting offering that reduce the risk of working with your firm.
Offer pilot programs or break your typical engagement into shorter phases in order to reduce the apparent risk of signing a project with your consulting firm.
Dry Well
Unfortunately, many consultants and consulting firms never establish a solid, Business Development engine. Winning engagements appears easy because a few, outstanding relationships deliver a steady stream of revenue for a number of years. (Usually up to five years, but occasionally more.)
Then the music stops. Those relationships age out or your consulting firm has completed all the work that you can reasonably take on for that client.
A Dry Well is the hardest slump to climb out of. At first it appears like a revenue dip, but it’s actually of a revelation that you didn’t have a Business Development engine in the first place.
Action Plan:
Your route out of a Dry Well, assuming you’re addressing a high-demand market need with a compelling solution, is to dramatically ramp up your visibility-building.
Triple your networking activity. Invest in relationships with prospects and, especially, partners who can increase your visibility.
Since building a reliable Business Development engine takes time, turn to subcontracting and take more bread-and-butter projects.
Next week’s article is a list of Dos and Don’ts when you’re in a sales slump. Start thinking about those.
In the meantime, have you ever recovered from a dip in your consulting firm’s revenue?
If so, what quick tip can you give to other readers?
Text and images are © 2024 David A. Fields, all rights reserved.
As a solopreneur I’ve fallen into all three in some variation and a common theme to move forward has been to expand the network leading to new clients and, more importantly to me, new partnerships that expand my reach and broaden my network. We all bring something to the table so build and broaden to build your business with the gift of new colleagues and opportunities to learn too!
You’re exactly right, Bill. The single, proven method out of any kind of slump is to continue to build your Network Core and to nurture it. That process can be painful and geologically slow for many consultants who don’t have good outreach hygiene and habits.
I appreciate your sharing a bit about your own journey, Bill. You’ve presented great case study of persevering through challenging times.
While I have done a lot of networking in the past it was for other reasons. How do you go about approaching people without coming off as sales-y? I have no problem reaching out to strangers but the last thing I want to do is make a sales pitch right up front. In my corporate roles, I was on the receiving end of those daily and I know how I reacted.
Good question, Geoff. The way you reach out without being salesy is by not selling. Reach out to build relationships. You’ll find a lot of answers to your questions in this book, Geoff. I appreciate your asking!
Great points…thank you!
You’re welcome, Michael, and thank you for providing feedback. Every consultant and consulting firm goes through these periods. Understanding them better then responding correctly can shorten the downturn and reduce the magnitude.
As a solopreneur, I know that when I have a lot of work I usually focus on getting assignments done and dollars in letting marketing fall by the wayside. I have learned to force myself to market the first hour of each day plus utilize technology (email, website, PPC, etc) to keep my name in front of prospects. I still have hills and valleys but not as pronounced.
Outstanding, Dianna! Particularly as a solo consultant, it’s important for you to devote at least 20% of your time to marketing. It sounds like you’re getting close to that level, which is helping to sustain your practice. Well done.
I’m glad you contributed your experience, Dianna. Very helpful!
I appreciate the structured take on this issue. It helped me see I am in a seasonal weather change, since I’ve also heard about the slump from others who do similar consulting to me, and my next steps. It’s all about visibility and networking!
Exactly, Martha. The consulting industry is experiencing a bit of softness right now, though it’s not evident in every sub-sector or with every firm. Visibility, networking and, if it’s a seasonal weather change, reduce risk to engage with you.
Thank you for weighing in, Martha. A lot of other readers are probably experiencing what you’re experiencing, and seeing your comment will reassure them.
I just landed my first large retainer for bread & butter work. Value-based pricing and expect it will take me around 15 hours / week and generate around 70% of what I need to be profitable. I got this one because the engagement is for a former boss and we were friends before I ever worked for him, so I had a definite in and he actually came to me with it.
Ideally I’d like to get myself to profitability with the retainer-based work for stability. If that takes up 20-25 hours / week total, then I can devote the rest of my focus to some higher-priced project work and BD activities.
So my question is, what are the best ways to find subcontracting and other low-hanging fruit work like that? The implication from the article is that since it takes time to build a BD engine (which I’ve been working on), do this type of work in the meantime. I landed this one through networking, which IS a core BD activity, so how would I go about getting, say, 1 more smaller bread & butter engagement quickly that wouldn’t require a bunch of BD effort?
Thanks for sharing these details. I have had luck with subcontracting by reaching out to existing consulting firms such as Point B, Accenture, EY, and PWC. Most of these opportunities are longer duration and full-time capacity.
Diane, your approach echoes my answer to Nick too. Thank you for chiming in! The only cautionary note I’d throw out there is to be careful of projects with bad terms (e.g., full-time work onsite, hourly fees). In many cases you can negotiate past those terms, but if you can’t consider walking away. That’s the type of bread-and-butter that leaves no room for good meals.
I appreciate your joining the conversation, Diane!
Congratulations on your first, large engagement, Nick! That’s outstanding. You’ve asked a great question. As my childhood friend might have phrased it, “Yo, David, where the projects at?”
First, until you visibility-building and BD engines are moving reliably, there’s no such thing as winning projects steadily with no effort. Even winning bread-and-butter projects takes some application. Having noted that caveat, you find such projects in three places:
You path to all of these is still networking and a highly responsive BD approach. Reach out to other firms and other consultants. Establish relationships with the staffing firms and nurture those relationships. That will produce more bread-and-butter opportunities.
Thank you for asking the question, Nick, which I’m sure is what many other readers were wondering too.