2 Ways to Grow a Consulting Business: Volume vs Value

There’s really two ways to build a consulting business. You can do it based on volume or you can do it based on value.

The approach that you take will really determine and influence many factors in terms of how you go about growing your business, what strategies you’ll use, what type of marketing you’re going to employ, how you’re going to structure your pricing.

Volume-vs-Value

First, let’s just look at an example.

$500k Example

Let’s say that you want to earn half a million dollars this year as an independent consultant or a small consulting firm.

We’ll just use that number as an example. Your specific situation might be a lot higher or it might be lower.

Do you want a hundred clients or do you want to only need to have ten clients?

Whatever it is that doesn’t matter, but let’s say to generate $500,000 in income. One approach is that you could have an average sale, an average project, be $5000.

In order for you to generate that $500,000, that half a million dollars in income, you would then need to get a hundred clients at $5000 over that one year period for you to generate amount of money.

How Many Clients?

Do you want to work with a hundred clients within a 12-month period? That’s question number one.

The other factor or the other approach would be what about if you had an average sale, an average project of $50,000?

Now you only need to have ten clients over the period of 12 months for you to still generate that exact same number.

Do you want a hundred clients or do you want to only need to have ten clients?

That question is really what influences the volume-based value approach and should influence how you decide that you’re going to build your consulting business.

If you take the volume approach, you would need to get a hundred clients at $5000 for you to generate that half a million dollars.

Key Differences

The volume approach requires that obviously you have a lot more marketing to support landing a lot more clients. It also requires that you have a lot more infrastructure.

You typically need to have a lot more processes, systems, even people in place to help you to grow to that level.

The volume-based value approach, in terms of how you want to grow your business, is one that you should really think about.

Because not only do you have to win a hundred projects, you have to be able to service and deliver on those hundred projects.

If we flip to the other side, the value-based approach is one where in this case if your average project size is only $50,000 then you only need ten clients at that level.

You’ll require a lot less infrastructure, a lot less systems and processes, a lot less complexity and even fewer staff – in many cases, zero staff – are required to grow your business to half a million dollars.

Big Results Without Headaches

In many cases, even to the million-dollar level you can achieve that with no staff or just an assistant.

The volume-based value approach, in terms of how you want to grow your business, is one that you should really think about.

A lot of people don’t really consider that and so they’re not set in terms of their pricing.

If you’re currently pricing and you’re landing most of your projects, let’s say, at that $5000 then if your target is to grow your business significantly, it just means you’re going to have to have a lot more clients and that’s the volume approach.

Optimal Path

What most consultants do and the direction that I like to guide most consultants in going down is one based on value. Where you require significantly fewer clients but you’re earning higher fees.

When you know how to earn higher fees then again you could make a lot more with a lot less time involvement and also significantly fewer clients, less resources that are required, less systems, processes, infrastructure, and also lower cost.

You can run your business very, very lean when you’re doing it based on value because you’re able to provide significantly greater value for a fewer number of clients, but because you’re providing more value you can earn greater compensation.

Give some thought as to what model you’re using right now. Are you using the volume-based approach or are you using the value-based approach?

Want to learn how to consistently attract higher valued clients? Here’s a proven process and system you can use: Marketing for Consultants Program