Being a consultant is the hot thing.
But building a business that delivers services is difficult and unique. (My company, SideraWorks, works with companies to navigate the cultural and operational changes that are critical to social business adoption).
If you’re really going to consult, it’s not just about managing and executing on projects (that’s contract work, which is awesome, but not the same). True consulting means that you are taking on the position of adviser, expert, and a trusted resource for your clients in order to help them make important business decisions. No small task.
Whether you’re going out on your own as a solo consultant or have plans to build and grow a consulting firm, there are a few things you need to make part of your foundation in order to build a practice that’s valuable to both you and your clients.
1. Get out of the hourly rate trap.
Hourly rates quantify the value of an engagement in terms of the hours applied to it rather than the expertise, insight, understanding, unique point of view, depth of experience, and specialized approaches that a good consultant brings to the table.
In short, it makes being an adviser a commodity.
Hourly rates are limiting for consultants and for clients, too. As clients we end up fretting about making a call or asking a question in email because we can practically hear the clock ticking. As consultants we end up fretting about scope creep, when to start the clock, and when to stop it.
It detracts from the work and becomes a distraction. Project-based fees or ongoing service retainers based on objectives and deliverables (not hours per month) are much more effective since they’re tied to outcomes, not inputs. Which brings me to…
2. Learn to understand *value*, not price.
This is the secret sauce of both being an awesome consultant and being an awesome client that gets the most out of the consultants they work with.
Price is what something costs. Value is what something is worth to a business, including intrinsic factors that can’t be easily calculated on a budget spreadsheet or assigned to tasks and project outcomes.
The best consultant-client relationships understand that exchange and provide value to everyone involved in terms of both fees and outcomes. If you want a calculator to figure this out, you’re doing it wrong. Figuring out value takes time and experience, and is always relative.
Working out that value exchange between you and your client is everything.
3. Present fees only when you can accurately summarize the objectives of the work.
Consultants want to get the best fee they can to reflect the work they do. Clients want to pay a reasonable fee for expertise that they need and don’t have.
In either case, the only way to derive fees that reflect the value of the consultant’s expertise in context of the client’s needs is to develop them only when the desired outcomes of the engagement have been established.
Estimates and ranges are okay sometimes — clients need to see if you’re even in the ballpark for working together — but be sure you understand how to articulate what that fee assumes and represents as an example. Fees must reflect not just deliverables (where most consultants stumble), but the value that is being provided to the business or client as a result of the engagement’s outcomes.
Quoting fees before that clarity is established is a recipe for all kinds of difficulty in the future. Get the understanding of the work down before numbers ever hit the table.
4. All clients are not created equal.
There are great clients, and there are troublesome ones. Not every dollar is earned with the same amount of effort.
You have to trust your gut, somewhat. Challenging projects are awesome. But if you spend all of your time managing a client who is nitpicking fees and expenses, obsessing over small details and deliverables, or not providing the right degree of transparency and access to the information and people you need to do your work, you’re already losing, and so are they.
Choose your clients as carefully as they would choose you.
5. Treat your clients like partners.
Not every client will think of you as a partner right off the bat — we’ve taught businesses to see consultants merely as providers of a service, and consultants have often taught companies that we think they’re inept, that we’re the almighty answer to everything, and that they couldn’t possibly survive without us.
Consider your clients as long-term investments that you are making as a business, and that they’re making in you. Realize that you bring specialized expertise, but that your job is to help them get smarter and better at solving their own business challenges. Do that well, and there will always be work for you to do.
Focus on improving someone’s business or life instead always trying to squeeze out more fees or make them dependent upon your presence, and you’ll forming a bond of trust and mutual investment that is very valuable and lasting.
6. Understand the purpose of a proposal.
If you do your job right, the proposal is about presenting a choice of solutions that you’ve already discussed, and that to some degree you’ve already agreed upon. It becomes a document that provides mutually agreeable ground for the project (i.e. this is what we’ve both agreed we’re here to do together) and in some cases, different ways to achieve that objective.
Don’t throw open-ended, menu-style proposals at the wall to see what sticks. You’re the adviser, here. Your job is to evaluate the situation and present appropriate solutions. They’re counting on you to help make their job easier, and at the proposal stage, that means summarizing your discussions and your understanding of the challenges, and showing them how what you do addresses that.
Think of the proposal as the clarifying step before you start work, a formality that finalizes what you’ve already discussed. Do it right, and they should be eager to sign and get started.
7. Learn to do great discovery.
The most valuable time you can ever spend as a consultant is the time you spend learning and understanding your client’s needs and challenges.
Asking the right questions is everything. That can be a preliminary client interview on the phone for a relatively straightforward engagement to a much more in-depth process of talking to leadership, employees, partners, and whomever else might have a stake in a large strategic plan. But don’t skimp here.
Some of this is going to be opportunity cost and investment on your part. Some of it you can build into the early phases of your paid work. But getting good at it means understanding your client better, and that ultimately means you’ll be a much more effective advisor.
8. Learn to pivot.
You’re in the business of designing solutions to clients’ challenges.
Those challenges are dynamic, which means that you’ve got to learn to adapt what you offer and how you deliver it to accommodate those shifts over time. Your offerings might change. Your services might grow in breadth or get more focused. You might need to find great partners and contractors to work with that can make your capacity more flexible and responsive.
You might even have to reframe your business completely when a big new opportunity comes to light because of a single project.
9. Believe that a rising tide lifts all boats.
There are lots of consultants. There are also lots of businesses, and we are in a heady, rapid-fire, changing landscape almost across the board.
For people who are excellent at assessing business problems and constructing effective solutions, there is no end of companies who need your help. We all have different expertise and strengths, too, which means that partnership and collaboration hold an immense amount of potential for the organizations and individual consultants who can be business-minded enough to see it. Scaling a services business is hard, maybe the hardest part there is.
When we work together to increase our capacity, share our knowledge, and make each other better, we all win, consultants and clients alike.
What would you add? What do you want from the consultants you work with, and how would you articulate the value of an excellent one? If you’re a consultant, what have you learned through your work that you can share with others and help them improve their firm?
The comments belong to you.
I have often been called to solve one problem and discovered there are many others, of higher priority. That doesn’t matter. What matters is getting to know the company and its challenges. Point #7 above is key. Further, I guarantee results. Once we agree on what we’re working on together, we meet those objectives or I keep working with the client until we do. For a consultant, trust and credibility are everything.
Beth, I think it’s important to be accountable for outcomes, and I think too few consultants do that because they can point to project- or task-based objectives that were met instead of results that were achieved. That’s the fault of the companies that work with them, too. Insisting on accountability in both directions is challenging and hard work, which is what makes it valuable. Thanks for the comment.
Great advice. Too many times consultants come in assuming they have all the answers – they have a pre-determined proces and work to fit all clients into standardized framework. Also, too many time #7 becomes too much of on the job education – that is the client spends all there time educating the consultant.
I like your #9 and clearly you live by this rule. Thanks!
Rick, you got it. Consultants are not all-knowing, and the best ones will tell you what they know they don’t know. And there’s nothing to say that clients and consultants can’t and shouldn’t discover the answers together. The value of a consultant is part expertise but it’s also partly having more brains to throw at a problem.
Good stuff… #7 especially, as Beth Agnew points out. Effective discovery uncovers TRUE client needs, and often needs the client doesn’t even realize they have. It also ensures there is a consensus understanding of what “winning” looks like at the end of the engagement, ensuring client and consultant expectations are in alignment.
Exactly. And expectations evolve as you learn more. We often work on projects that legitimately solve one challenge, but inevitably uncover others. If you help clients see and understand those, you become a valuable source of insight, not just someone to manage their projects. Can’t beat that. Thanks for the comment.
Sadly, consultants have to often taken the “prolonged problem” approach (See->http://www.despair.com/consulting.html) While it seemed all points could stand on their own, I especially appreciated #2 & #5
#2 – Moving away from the price point trap to a value perspective. As Beth pointed out, guaranteed services, increases the Trust factor and eliminates the clients “ticking clock” fears. In the Marines, we simply called it – Mission Accomplishment.
#5 – Humble yet confident communication develops a solid partnership. Realizing our clients were business savvy enough to build & sustain their business long before we came along. Simply bringing our “specialized expertise” to come alongside and help them grow further is the task.
Great article, well worth bookmarking for re-reads down the road, thanks!
Dan, the “prolonged problem” approach is…well…problematic. I firmly believe that if you do your job well as an adviser, you’re constantly trying to work yourself out of a job. And naturally, when you’ve helped a business grow in one way, they look to you to help them grow in others.
Thanks for the comment, and glad you enjoyed.
Fantastic summary and so timely as I wade into this path and away from one-on-one coaching to high level value driven consulting. I really appreciated this insight, even though in many ways it’s common sense. I also agree on finding red carpet clients who appreciate you as much as you appreciate them – makes the world of difference to any ongoing partnership.
Hi Natalie, thanks! I find that a lot of things that *should* be common sense…aren’t. 🙂 If they were, everyone would be rocking the hell out of their consulting business. Best of luck to you as you start your new adventure!
Amber, no one is perfect, but this article is ridiculously close I can spit. Thank you 1 million times for this. I might get it printed on a t-shirt! Seriously though, this is great content….Keep it coming! http://tamarraycain.com
Hourly rates predetermine the amount of time consultants can speak with clients. In some cases, this can disrupt the spontaneity and flow of the consultation, especially when the appointment turns out to be engaging and fruitful. Moreover, rushed consultations can be counter-productive.
Hi Amber,
I love the wealth of information here and appreciate the idea of “common sense” that quite frankly isn’t so common.
Consulting seems to be shifting from a dependency model to an interdependency model. To your point, if you deliver excellent results you are essentially delivering your way out of a job and I think this is the benefit of the dependency model. However, it doesn’t promote growth for the consultant or the company and seems to be why “consultant” was/is a swear word…
Creating an interdependency model where the consultant and the client co-create solutions based on a changing environment seems to be delivering the greatest result. In 9/10 cases, the client knows their business and their industry better than anyone. Hiring someone should not require a turn key solution or a secret sauce, but rather co-created solutions and solid implementation. And then the referrals start to roll in!
Also, I love what you said about raising the water level. It allows us all to learn and grow together and increase the amount of value provided to customers.
Thanks again for this information. It’s always helpful having everything in one spot!
Amber. What a great piece. To be able to succinctly put into words the tips, poiters and guidance is a real workj of art. Many thanks.