8 Key Ingredients to a Profitable Consulting Business

Original Article

1. Implement real competitive differentiation. If your business card and website come across as just another advisor, consultant, or accountant, then don’t be surprised if price is the only focus. Internally, you also need to do things differently to rise above your peers. This includes how you find leads, close clients, and minimize free work or rework.
2. Shape your business by design, not by default. Announcing that you are a consultant, and hoping demand will set your focus, is not a good strategy. Focus on your passion and your vision of what you want to accomplish, and make that come alive in the design and delivery of everything you do. Picking a niche is another good way to focus.
3. Proactively build relationships with target clients. Passively waiting for transactions only makes you a commodity. Clients need to see you as a trusted value add, rather than just a service provider. Use your knowledge of evolving needs and technology to add more value than competitors, and introduce clients to each other to build partnerships.
4. Use visibility and social media to pull clients in. The days of a hardworking introvert hiding in the back room are gone. In addition to relationships, today’s clients want to see you and your expertise on videos online, industry conferences, and social media to feel the trust for differentiation. They expect reviews and testimonials from other clients.
5. Set pricing to assure both revenue and profit. Unless you have deep pockets, you won’t survive without an adequate margin, including all the costs of running a business and staying current with technologies and market changes. Flexible business models, including value-based pricing, bundling, and custom proposals are the places to begin.
6. Be targeted in marketing and lead generation. Just like product marketing, professional services requires a clear profile and demographics of your ideal client. To check your return on marketing investment, you need to define metrics and a formal process to evaluate progress and cost tradeoffs. Don’t forget seminars and events.
7. Raise the conversion rate with effective follow-up. Successful professionals today know they can’t work only from memory. They use customer relationship management systems (CRM) for more effective tracking and data. They match individual customer preferences, whether it be voice, email, texting, or social media, to close deals.
8. Maximize repeat business with existing clients. Just as with product marketing, it can cost five times as much to attract a new customer, compared to getting more business from current ones. It pays big dividends to make realistic promises and over-deliver the first time, and then follow-up to check for follow-on opportunities every three months.