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.
There’s a lot more I can say on this and I will in a future post. Or if you want help right now to make this switch in your business and start attracting more high-paying clients get in touch about coaching here.
Are Small Clients Worth It?
The argument for working with higher-paying clients (value focused) is clear. So the question is, should you ever work with small clients and projects again?
The answer is yes. But only if it matches one or more of these criteria:
- You see great potential in this client. Maybe they are a startup with funding and you can clearly see more work, greater opportunity and value around the corner.
- It’s a small project BUT with a large company. Sometimes getting into a BIG company requires the first project to be a small one. There’s nothing wrong with this. It’s your foot in the door. An opportunity to show them how good you are.
- The client can open bigger doors for you. The buyer may be a very well connected executive who has left a big firm to start their own. You helping them with a small project could open many doors for you.
- You’re just getting started in the consulting business and you want to ease into it. Gain some initial experience that you can then use to create case studies and showcase results to win larger projects down the road.
- It’s your passion. You enjoy working with smaller clients and you’re okay with making less income.
Is It For You?
When deciding to take or reject a new client give these criteria some thought. If you can’t find one of these criteria to be true for you rejecting the project may be your best decision.
Sure, you might lose that initial income. But remember, if you’re filling your schedule with small clients and lower paying projects it leaves you with no room or time to take on larger clients and higher paying projects.
What are your thoughts? What percentage of your clients are small clients vs. large clients? Are you happy with the balance you have or do you want to make a change? Let me know in the comments below.