What is the best consulting business model?
These days, I see advertisements all over the web — and even in workshops and in seminars — of people talking about the “best” consulting business model.
They claim that you should be selling high ticket offers. Or, you should be doing products and setting up passive income streams. Or, you should be jumping on webinars, podcasts, Instagram, and Pinterest.
All these flashy ideas and models that people are marketing are bound to confuse. And because they often do such a good job of marketing the idea, people get excited about it.
However, all the options and excitement lead many consultants to feel overwhelmed and wondering: “What is the right business model for me?”
Take a minute and step back. Don’t rush into choosing your consulting business model based on what seems to be hot right now.
By the end of this article, you’ll know how to determine the best consulting firm model for you.
- Find The Right Consulting Business Model
- 3 Proven Consulting Business Models
- What Type of Impact Do You Want To Make?
- The BEST Consulting Business Model For You?
- Get Help Creating Your Profitable Consulting Business Model
Find The Right Consulting Business Model
You want to choose a consulting firm model that is the right fit for you and your consulting business.
First, you’ll have to think about how big you want your firm to be:
What size firm do you want to create?
- Do you want to be a solo consultant or an independent consultant?
- Do you want to have a consulting firm that has two, three, four, five employees — or do you want a firm that has 10 or 20 or 50 or 100 employees?
- How do you feel about managing teams, people, systems and processes?
Your answers to these questions will influence what type of model, offers, and price points you use.
What about your revenue goals? Consider…
- What level of income do you want to achieve?
- Are you happy generating a quarter of a million dollars a year, or do you want to reach half a million dollars — or even a million dollars in personal income?
- Is profitability what you value most, or are you okay delaying big payouts to scale your consulting business?
- Do you want to see revenues of $5 million, $10 million, $50 million?
Your revenue goals will also influence what type of model, strategy, and tactics you use to achieve it.
You’ll also have to consider the amount of complexity you want in your consulting business:
- How do you feel about a business that has many moving parts — where you require more infrastructure, more employees or contractors, and more systems?
- Or would you prefer to have a business that is much simpler — where you provide one type of product or service or offering?
- Would you prefer to spend time creating products or offerings but not as much time working directly with clients?
Think carefully about these questions first. Once you’ve answered them, then you can start exploring the different models out there.
[Would you like to have true clarity on your business model for your situation and a marketing plan that helps you to reach your full potential? Each month, we work closely with a select handful of consultants to accelerate the growth of their consulting business. If you’re interested, schedule a Free Growth Session Call to learn more.]
3 Proven Consulting Business Models
There are 3 tried and true consulting business models.
1. Firm Model
Think of the typical large consulting firm. These firms employ many consultants, associates, junior, and senior people.
As the owner, your role starts off as doing a bit of everything — but quickly becomes more about how to hire, train and manage people.
You move from spending all your time on delivery of client projects and business development to management, strategy and business development. It’s your team of consultants who will do most of the client-facing work.
Money is made on the margin: the difference between what clients pay your company, and what you pay your team.
The more clients running through the business — at higher value engagements — the better.
Growth comes from working with more clients and hiring more staff.
The pros of the firm model are…
- Firms scale well you can add more consultants to take on more work
- Removes you from doing the day-to-day client work
- The business can run without you
- Firms are a higher-value asset and are much easier to sell
The cons of the firm model are…
- Requires a lot of people management
- There is a lower profit margin
- Firms requires more infrastructure to keep running
- More people depend on you (and you’ve got to make payroll)
2. Solo / Independent Model
As a solo consultant, your business is usually just you — maybe some contractors or assistants.
You’re doing everything from client work to marketing and sales.
Your work tends to be customized for each client. Your focus is on working with fewer, higher dollar-value clients.
The pros of the solo model are…
- Lean and profitable
- Flexible and easy to adapt or change
- Lifestyle focus — you can customize it to the type of life you want to live
The cons of the solo model are…
- Hard to sell because you become the face of the business
- You are the business — if you stop working, it’s difficult to earn revenue
3. Productized Model
The productized consulting firm model often stems from one of the above models.
You identify one problem your ideal clients have, and you develop a solution to that one problem.
With a productized model, everything is focused on solving that core problem for a specific type of client. You develop systems and processes to solve the problem. You do the same thing over and over. This repetition causes you to become very efficient at solving it.
Often 80% of what you’re doing is the same for each client, with about 20% being customized to them.
With systems in place, your focus moves from doing it all one-by-one — to delegating or hiring people (full time or freelance/contractors) to manage delivery, service, sales, and marketing.
With these systems in place, you can scale. You’ll go for high volume and low, medium, and high-value clients.
The pros of the productized model are…
- You’re creating a salable asset
- High multiple potential with recurring revenue
- There is a big opportunity to scale
- You can remove yourself from the day-to-day work
The cons of the productized model are…
- Some find doing the same thing over and over to lack excitement
- You have to hire people to carry out the work
- Training and managing people is required
- Management of many clients is a must
4. Hybrid Model
There’s also a fourth consulting business model: and that’s the HYBRID model.
With the hybrid model, you take elements from more than one of these models to create the perfect consulting business model just for you.
(Learn more about our Clarity Coaching Program — and how we’ve helped over 370 consultants create their own hybrid models to reach their desired income and lifestyle goals with a stable, consistent and confident plan.)
What Type Of Impact Do You Want To Make?
Give some thought to the impact that you want to make in your consulting business.
If you want to make a greater impact, you might have to work closely with your clients.
For example: writing a book or recording a course usually won’t allow you to make the same level of impact compared to if you’re providing direct consulting, coaching, or ‘done for you’ services for your clients.
When you work up close and personal with your clients, you’re more involved — and thus, will often have a greater impact on their business.
The BEST Consulting Business Model for YOU?
The reality, my friend, is that there is no BEST business model.
Each of these factors will influence the model that you choose.
You shouldn’t jump on a model because it’s the latest thing. Just because someone is marketing it to you effectively online doesn’t mean that it’s the right model for your business.
Selling $50,000 or $500,000 projects to corporate clients is a great model. But so is offering $5,000 or $25,000 packages.
For others, selling $1000 to $2500 products can be extremely rewarding and profitable.
There is no right or wrong answer. There is no “one-size-fits-all” best consulting model.
Consider your business, your situation, and your goals carefully first — and then, you’ll make a much more informed decision about the best consulting firm model for you.
Get Help Creating Your Profitable Consulting Business Model
If you’d like help to develop and refine a profitable consulting model for your business, check out our Clarity Coaching Program.
We’ve helped over 370 consultants just like you create tailor-made business models that help consultants earn their target income — and live their ideal lifestyle.