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3 Pillars Of Revenue Generation For Consultants with Paul Klein
I’m excited to have Paul Klein joining us. Paul, welcome.
Michael, I’m glad to be here.
I’m excited about this discussion. We talked when I was on your podcast. It’s great to role-reversal. I’m looking forward to this conversation because you’ve worked with some very well-known brands such as Target, Slack, UC Berkeley, Cracker Barrel, Holiday Inn, KFC, Taco Bell, Yum! Brands, JC Penney, Sherwin-Williams. You started off in construction and building code enforcement then decided to go out on your own and establish a couple of different companies focusing on the accessibility compliance and Americans with Disabilities Act. Is that correct?
We have a background in construction and inspection with local and private companies for eighteen years. I left many years ago in the heat of the recession ‘09. I never was to be a W2 employee ever again. I’d been consulting ever since with many of those brands you’ve mentioned and many others.
For everyone outside of the US, W2 means you’re a full-time employee. You get your W2 at the end of the year to show how much you made. You went from being an employee in an organization to launching your own consulting business. The companies like Target, Slack and Taco Bell, were these clients of the accessibility compliance consulting and software company that you have?
Yeah, mainly the software company we started a few years ago. When I transferred from my organization and being a professional mid-manager into my own consulting business, I honed in on being hyper-niched or super-niched. It was solving a specific problem in the marketplace for a specific need. In that particular case, it was for anyone or any facilities, whether they’re Fortune 500 companies or mom and pop shops in the main street that’s related to the Americans with Disabilities Act. I started out with mom and pop shops locally. I started small and organically. Over time, I invoked what I call the three pillars of revenue and eventually, through my training courses and networking, I got my first Fortune 500 client. It branched from there for over ten years. It didn’t take long to break into that because I was so hyper-niched or focused down to a specific area. When you solve that specific problem people need, they’ll find.If you want to transition from corporate to consulting, leverage on your existing contact. Click To Tweet
There are a lot of good lessons in there, I love how you’re saying it didn’t take long. You mentioned ten years, it’s the same as a lot of people are saying with overnight success, ten years in the making. Let’s dig more into that because I want people to understand your area of expertise. What exactly is your consulting company about? What services and products are you providing in relation to accessibility compliance and the software that you also develop for that?
I have three companies. My personal brand and podcasting are separate. The company that I’ve had for many years is related directly to Americans with Disabilities or ADA compliance. In America, all facilities have to be made to comply for persons with disabilities. There’s a certain percentage of the population that have inherent disabilities as well as vets and other population. Having them inclusive and included in the society and be able to go out on their business and have the freedom like we do as able-bodied people is very important, which is why the US adopted this law back in the early ‘90s. For a lot of the businesses and a lot of these big corporations, it’s a very complex law. It’s enforced through lawsuits and litigation as opposed to an authority or an inspector or something. It’s all self-regulated. They need consultants and they need experts to come in and say, “How do we make our facilities compliant?” You have to mix in all the state regulations. Every state has its own separate set of regulations. It’s a complex niche but it’s related to architecture, construction and engineering.
Are you getting involved before a building is actually built or are you brought in once it’s already in place and then you go to work?
It’s both. A lot of the larger companies that you mentioned have 3,000 sites nationwide. They’ll freshen up their brand with a facade and image update every five to seven years. We would go in and do what we call a pre-inspection and we would capture all the issues and so forth. They can take that report and incorporate it into their design and their construction phase. We would come back and do a post-inspection. It’s a property audit or an inspection type report.
You mentioned that you started organically, very focused, got some mom and pop shops or the smaller businesses which then down the road leading to the much larger global brands that you’ve worked with. Take us back to how you went about getting your first client. Were you knocking on doors? Did you leverage some relationships and referrals? How did you go about getting that first client?
Speaking And Training Programs
I had an eighteen-year career. I was 40 when I left and went out on my own. I had a lot of industry contacts. It’s putting a stake in the sand and saying, “I’m doing this now. I was a big part of it.” I was able to leverage that with some of my existing networks. As many people make that transition from corporate to consulting, you’ve got to lean on your existing clientele. Once you put that stake in the sand so to speak, then you’ll attract those people. I started working with that existing network and then I also reached out. I had a rule back then. I would go anywhere within driving distance to speak for up to two hours for free. I wouldn’t do this as a sleazy marketing, “Buy from me.” I would truly be interested in helping the businesses and the community, whatever organization I was speaking to and helping them have a better understanding of that niche. That led to consulting opportunities and numerous of them over time. Soon, I found myself so busy. It was bringing on additional resources and what we call 1099 or sub-consultants.
They are contractors or other people within the organization to support your growth. At that early stage, you were leveraging your network but you also mentioned that you went to go speaking and that also brought in opportunities. Was speaking more powerful than leveraging your network or was there something else that was contributing to the leads and the inflow in those early days?
Initially, for the first contracts and the first initial jobs, it was leveraging my network. My speaking led me to my first Fortune 500 clients. The three pillars of revenue, having a web presence or an e-presence, social footprint and then having a speaking presence and then training and education or speaking presence. It all worked together. What happened is we started doing speaking and training engagements and one of the Fortune 500 companies sent their people that were from the department that handled this thing through our training. They spent four days with me so the relationship was built. That relationship didn’t develop almost a year later to an actual check coming into my bank account. The path was set in place early on by doing speaking and training. I think the speaking and training component can add to leveraging your existing client network and then helping you bootstrap up or climb up that ladder.
For those who are going, “I can see that. That makes sense. I understand I should be doing some speaking.” How do they go about doing it? Step-by-step, how do you identify where to speak and how do you get onstage?
The first thing is I don’t consider myself a speaker, although now I’m trying to get into more of that and I officially call myself a speaker, but early on I’m an introvert. I don’t want to be on stage. The trick is you mask it in training, you’re training people and your expertise. If you love and care about what you’re doing, if you love your niche and your area of expertise, just think of it as training. You’re training some people in that area and that’s where your passion will come out. That’s where your excitement will come out and then that will help you get over the fear of talking in front of people. Whether I was talking to five people or 500 people, I was training at that point and talking about my area of the subject that I dove into it.
What were you doing to get on stage? How do you know who to reach out to? Was this the specific accessibility and disability-related groups, events or associations? Tell us a little bit more about how you identify who to target.
At first, we started doing local businesses. In America, we have the Chamber of Commerce where there’s a lot of business community. We’re going where they were. We reached out to regional annual business meetings, AIA conferences, industry conferences, restaurant, retail conferences, things like that that were bigger and more regionally bigger.If you love and care about your niche and your area of expertise, you train people in that area. Click To Tweet
The Chamber of Commerce were the initial ones. What would you do? I’m going to target the Northern California Chamber of Commerce or whatever it is. Who do you send an email to or who do you get on the phone? Take us through what you did there and who it was.
A perfect example is I’m sure you knew where Napa is, wine country. Napa had a chamber person. I reached out to her via the web. I said, “If you’re interested in having a workgroup session for your business community and you’d like to learn more about the Americans With Disabilities Act and how it can help your businesses, let me know. I’d be willing to come over and talk to you.” They said, “That’s perfect.”
You were not talking about fees. They didn’t have to pay or anything. You’re just saying, “If you want me to come by, I’m happy to talk about this.” You call it a working session?
Yeah, it’s an informative workshop. At that time, I would speak up for two hours without any fees. It was quasi-marketing. We were still young, my business partner. We weren’t established yet, so we couldn’t charge. Now, to get us for two hours is not cheap. We don’t do that anymore. When we first started out, that was absolutely the way to go. Starting small and being willing to invest in other people first, then once you get your foothold in the marketplace and established, it takes time. It doesn’t happen overnight.
How long did it take you from doing that first speaking event or workshop or training to seeing that turn into a paying client?
It happened right away. What would happen is once we got in front of people and a relationship was built, inevitably a week or two later after those types of workshops, we would get a phone call and get hired. That’s why when you’re first starting out as a consultant, getting out and doing a free one-hour, two-hour informative workshop in the business community industry will jumpstart your consulting business. Not only that, but you’ll also get a return. It’s like podcasting, you’ve got to put a lot of effort into it. To go out and talk for two hours on your topic, it’s quasi-marketing and you’re there to serve and it has a ripple effect that you may see two weeks, three weeks or six weeks later.
I like to describe it as planting seeds. Everything that you do in marketing, as long as you’re in this business for the long-term, you can start seeing results in the short–term. You have to approach it with the mindset of a long–term. Plant those seeds now because the sooner you plant them, the sooner that you’re going to start to reap the rewards and the benefits of that beautiful fruit or flower, whatever it is you’re planting. That’s a great example. What’s important for people to recognize is even though you might get that first one and it’s free and it’s not a big audience, it doesn’t matter because you’re now getting leverage. You can now approach another place and say, “I spoke to the Napa Chamber of Commerce or XYZ Chamber of Commerce. I’d love to come to speak in yours.” In their mind, it’s like, “You spoke there, sure.” For people to understand that it doesn’t matter how small you start, every step, every accomplishment helps to build the next one.
It wasn’t long after that, we were at downtown San Francisco at the AIA San Francisco, one of the biggest AIA chapters in the nation. People started hearing about it and it just snowballed. You don’t get an immediate return, but you do get a ripple effect and it comes back to you in many ways very quickly.
Running On Autopilot
We’ve been talking a little about how you got started. There are people tuning in who already have established businesses like you have an established business. You actually have more than one. What’s working for you now? Fast forward several years later, the business has done well, you’ve worked with some very well–known clients. What’s working best for you right now to generate leads and opportunities for your consulting business?
I wish I could say I have some fancy secret for you, but because we have a ten-year track record and a developed client base, I am not spending any money on ad words or anything and my funnel keeps coming. I’m not even trying to work or build on that business. Clients are coming to me through referrals and existing networks because I’m building my personal brand over at PaulKlein.net, which is my pricing and coaching program. My existing business is pretty much on autopilot. I’ve invested over many years in that, so the network is there. The beauty of it is once you put in all the hard work, grind your teeth and pounded the pavement, it’s a six-figure business. It’s on autopilot. I could ramp it up if I put more effort into it. I’m branching off into the speaking and coaching stuff like many of your audience are. Eventually, that business will ramp down as my other one ramps up and so forth.
How many people do you have in that business? How many team members?
Here’s the thing, my business partner and I, we both had managed employees for many years and our number one rule is no employees. It’s hampered our growth probably to some extent, but I believe in what I call the six or seven-figure small. That is being lean and mean much like you, Michael, and your brother. You don’t need to have a big agency and hundreds of employees to do well and have the freedom and the lifestyle that you want. We lean on a lot of sub-consultants or what we call 1099s in America here or people that are team members. We bring them in for projects, all on a project base, “I’ve got a big project out in the Midwest. Can you do it? If you can’t do it, I’ve got another guy that can do it.” We worked that way. I’ve got probably a team of about less than ten sub-consultants that help me at any given time that I can lean on whenever I need to.Partnership in business is like marriage, you have to be very careful. Click To Tweet
When you’re working in that type of model, what margin are you typically seeing as you’re working with those 1099 and other contractors? Is it across the board like your standard margin is 30%, 60%, 80%? Can you give us a sense of where you are as you’re working with contractors as opposed to having employees full-time in-house?
It varies on job to job. My whole business has very high margin because we have such low overhead. We don’t have employees. We don’t have office buildings, cars, planes or anything like that. It’s very low overhead and high margin. On my most recent job, it was a small job. It was a $10,000 job and my sub-consultants for everything was $2,500 or $3,500 out of a $10,000 bill. I don’t know what the margin of that is.
You have a 60%, 65% give or take. It depends on everything else you have going into, but on the project basis. You have a cofounder in that business, is that correct?
Yeah. Mark is my business partner in the ADA consulting business as well as my SaaS company.
Working With A Partner
What’s been your experience of having a partner? You mentioned Sam, who’s like a brother to me. He’s my cousin, our fathers are twins. We’ve been building multiple businesses together. We’ve sold businesses over the years. There are lots of good things. What’s been your experience of working with a partner or a cofounder in your business?
I have a different take on it than I did many years ago. A part of that is in the arrangement I have in our SaaS business, great guys, great partners and everything, as well as Mark in my other business. Moving forward in what I teach people, somebody said, “The only ship that doesn’t float is a partnership.” I think that’s true to some extent. It’s like a marriage, you have to be careful. A better approach for a lot of people is have one person be the lead, the prime, the owner, the shareholder or whatever it is on paper and then have a high pay, even share the profits 50/50 with somebody, but don’t make them necessarily the owner in the LLC or the C-Corp or whatever it is. Bring them on as a high paid partner, but not a legal partner.
Why is that? What’s been your experience in whatever you’re comfortable sharing here so others can benefit from being able to see around the corner of what could come? It sounds like you’re saying that maybe when it comes to leadership or using the analogy of the ship, maybe both people are trying to steer in different directions and that could cause some issues. Is that what you’re referring to or is there something beyond that?
That and also sometimes when you have even a 50/50 partnership, there’s always this cloud hanging over like, “I’m putting in twelve hours a day and Joe over here who’s 50/50 partner is only putting in six hours or he’s taken off to go with the family. I’m working over Labor Day weekend.” It feels weird and then if it gets weird enough that you want to make a break, now it’s, “How do we dispose of the company? Who gets what?” It can get ugly quick. Whereas if one person was the lead and you were a high paid partner or a profit-sharing partner, now it’s easy to make a clean break. It’s also easy to say, “Whatever you earn or put in, you get and whatever I do, I get and then whatever we do jointly, we share on.” That’s how we’ve structured it. Mark and I, his line-item or my line-item and then a joint when we do joint projects. I never have to look over my shoulder with him. He’s semi-retired so he’ll work two hours a week, but it doesn’t matter because it doesn’t affect me the way we set it up. You have to be careful and intentional on those things and get them vetted out early. Don’t just partner up with anybody because when you want to make a break, it can get ugly really quick.
This is a good discussion and what we’re exploring here that may unlock what you don’t think about much. What I’ve observed is that especially in the early days, people tend to lean on or look for a partner because they want to offload certain things that they’re not comfortable doing. They think that’s probably the best thing for them. What they don’t see is what you and I are discussing, which is what could happen in the future. All the legal stuff is so important to have in place. Even though Sam is like a brother to me. He’s a cousin. We’ve done multiple businesses together. We’ve had businesses separately. We’ve been through a lot like challenging situations but also great experiences.
We have everything also documented professionally because it’s like a good insurance policy. It’s the peace of mind. You’re probably never going to need it. Hopefully, you won’t but if one day you do, it keeps everything clear. You could be down the road and maybe at the beginning, you both were on the same mindset and have the same understanding, but now when money is involved, different things happen. One party can look at the other and go, “That is not what I meant.” If you have everything documented properly, it doesn’t matter what we’re thinking right now, “Here’s what we’ve agreed to at that time. Here’s what we’re legally following.”
I see a lot of people who are very successful in using or leveraging partnerships. We had Roland Frasier on the show. He’s a big proponent of partnerships. I also see a lot of people that are leaning to partnerships because it seemed like it could be something easier to do. They could accomplish more, but they’re not thinking long-term and then they bring in the wrong person and start to experience a lot of the things you mentioned you’ve gone through as well. I appreciate you sharing that. Let’s now switch and talk about pricing because that’s an area that you’ve done a lot of work in. I want to hear from you in terms of what’s your experience when it comes to pricing projects as a consultant. What do you see as being the biggest thing that holds consultants back from earning higher fees on their engagements?
They undervalue their services so badly. We’re all guilty of that. As Ellen White says, “If you don’t believe in the value and the service that you’re providing, neither will the marketplace or your clients.” I worked with a lot of coaches, consultants, freelancers, C-Suites that want to go out on their own. I’m like, “You’re charging what? My perception is you should be way up here and you’re way down there.” What happens is what comes easy to them, they think is less valuable because it comes easy to them. What’s easy to them is gold to somebody else. The biggest problem is that mindset. I know you’re big on mindset and valuing yourself, not undervaluing and undercharging for your services.Don’t be afraid of failure. It’s not a bad thing. Click To Tweet
What do you say to someone who goes, “I get that Paul, I know I need to be charging more, but something’s holding me back. Maybe my average project is $15,000. I know it should be at $50,000 or more, but I’ve been at this for a little while now and nothing’s changed.” What do you say to that person? What have you found to be the difference in being able to go from where someone is right now to moving their fees up to that next level?
It’s changing that perception or their mindset. What’s holding them back is their view of the situation or their view of the value or their view of the $15,000 like, “I can’t charge $50,000.” To you, that’s a crazy amount but to your client, that’s pocket change. Blair Enns says, “You price the client, not the service,” in his book, Pricing Creativity. You have to look at what the value is that you’re bringing to the client, put the value in from their perspective, not your own. It could be I’m self-centered. Look at it from your client’s point of view, not what the dollar amount is in your world.
The Three Pillars Of Revenue
You talked about the three pillars that you’ve used in your own consulting businesses that have helped you to grow. Take us through what those three pillars are.
It’s in order to have a balance to write off those highs and lows in income. As you know it comes and goes. It’s either feast or famine. What I talked about is the three pillars of revenue. The first one is your basic consulting services, whatever your deliverables are that you’re doing with your one-on-one clients, your high–ticket consulting and so forth. The second one is a training and education or even could be a speaking program. That’s where I’m talking about getting out to chambers, industry conferences and even getting paid for that. Do up to two hours for free. Anything over two hours up to eight or multiple days, you should be paid for. The third revenue is online ePresence. You have all your productized services, eBooks, all your freebies, lead magnets. It’s like on the Consulting Success site, you have all sorts of great materials on there. You have great ePresence. You also have a great speaking, workshop and training program. Then you have your regular consulting that you could do too for the one-on-one. You have all three of those pillars working together, which is why you’re successful.
Going back to that Americans with Disabilities Act and accessibility consulting business that you have, what were you doing? What’s an example for people to maybe make it a little more tangible? When you talk about ePresence or online presence, what were you doing at that time? Is that something that you recognize later on and maybe you haven’t done? Give us a sense of what did that look like for you.
I stumbled across it on accident. What ended up happening is there also was a regulatory exam or testing. If you’re in real estate, CEUs, there are lots of industries and verticals that have those types of regulatory or association CEUs. If you can wrap some training or online program that satisfies those requirements, that’s a sweet spot because now you have a captive audience. That’s exactly what we had. I curated a bunch of content on the internet and put it into a PDF. I charge $29 for it. In the first year, we did $29,000 in sales and that happened by accident. I was putting it together to help people and I thought I’ll put a price on it for $29 and see what happens.
Were you actively marketing that like sending paid traffic to it or did you put it up on your website? How does that work?
This was ‘09, ‘10. There wasn’t a whole lot of paid traffic yet. I think I played with Google AdWords a little bit early on. I was building my email list because I had an old-fashioned lead magnet PDF. My email list grew. It’s up to 5,000 or 6,000 people now. It grew over time early on and then I ping those people. It was a great supplement when I first started out on my own.
Paul, what habit have you developed that you feel is central to your success? A personal habit that you feel has catapulted and supported your success as a consultant, a business owner and leader.
The biggest thing is not being afraid to fail. Everybody thought I was crazy when I left in ‘09. I had three kids and a $3,000 a month paying mortgage. In the heat of the recession, the stock market crash, the world was ending. It was bad if you remember back then. I left my eighteen-year career, high six-figure a year job, full benefits and retirement and went out on my own. Everybody thought I was crazy, but I knew I would succeed. I blocked it out and if I failed, I’d figure it out. I still do that. I’ll start things. I’ll make mistakes. A lot of people don’t act or are afraid to take action because they’re afraid how they’re going to look. What are people going to say? Life’s too short. You’ve got to try it and see what works and course-correct as you go. Don’t be afraid of failure. It’s not a bad thing.
I’m a big believer of the exact same thing. I don’t call failure a failure. I call it a learning experience. You get to learn. There’s no such thing as learning only positives. If you do something and it doesn’t work all the way you thought, now you’re closer to figuring out what does work because you’ve eliminated something that doesn’t work. We see this all the time with our clients and in the coaching that we do with consultants. They’re doing something uncomfortable. They’re venturing into the unknown zone because they’re doing new things. There’s hesitation around that, but the moment that you do it, you learn something. You might hit over the park and that’s fantastic or you might go, “That didn’t work quite the way that I want to, but at least now I’m a lot closer to figuring out what does work and making that adjustment to my messaging or my marketing.” That consistency and taking action around it is what creates success for people.
Would we rather be on our deathbed going, “I sure wish I would’ve launched that product instead of having thought about it for twenty years?” When I launched my first group coaching program, I had one sale. I was a little depressed at first and my wife saw me sulking. She kicked me in the butt, which was a good thing. I’m course–correcting. The market told me what I was doing was not what it wanted. I’m fixing that.
Paul, this has been a great conversation. I appreciate you coming on. I want to make sure people can learn more about your consulting business and what you have going on. Where is the best place for them to go?
The best place is at PaulKlein.net. That’s my webpage from a personal brand. I’ve got a free product pricing roadmap that talks about creating productized services and having your value ladder for your different products and services, as well as anchoring sheets that you can fill out. I also have the Pricing Is Positioning Podcast. We’re up above 35 episodes or so. Michael, you’ll be on there. We’ve got a lot of great guests in the consulting world and so forth. PricingIsPositioning.com or on your iTunes, Spotify app, as well as PaulKlein.net.
Paul, thanks so much for coming on.
Thank you for having me, Michael.
- Paul Klein
- Roland Frasier – previous episode
- Pricing Creativity
- Pricing Is Positioning Podcast