Not all clients are the same. They certainly aren’t all worth the same to your business.
Yet consultants often pay little attention to this truth.
In the consulting business there are two core approaches to growth:
1) Focus on volume – where you take on as many projects as you can. The more projects the more income. To service those projects you need more staff, resources and infrastructure. Revenues can be high. Margins lower. This model often uses hourly billing or lower cost projects.
2) Focus on value – you work with fewer clients. Each project you take on is worth considerably more. Revenues may not be as high as the volume approach yet margins are much higher. Many consultants including myself have scaled our businesses this way above $500k and even $1M+.
The volume approach is the route the large consulting firms take. They bill high hourly fees and constantly need competent staff to execute and work with clients, who they pay a lower hourly rate to.
The value approach is chosen by most independent consultants and small firms. This has always been the approach I’ve used and one I’ve become an expert at helping others create as well.
Mix and Match?
Some consultants haven’t thought this through however. They run a small firm or are working solo, yet they operate their consulting business more like a volume based one.
They experience overwhelm, working long hours, lower profitability and have trouble figuring out what they are doing wrong. Why the success they want so badly isn’t coming their way.
The fastest way to fix this is to switch your approach to one focused on value. Continue Reading