78 ◾ Odyssey—The Business of Consulting
I had delayed going to my dentist because I do not much like the den-
tist’s chair. On one occasion, my dentist asked me why I had taken so long
to make the appointment. I told him that I did not like pain.
He responded with a profoundly wise statement, “You only prolong the pain
by delaying the decision to come to the dentist.” Point taken and lesson learned.
Eight Ways to Increase Your Consulting Revenues
Your survival in the consulting business depends on the generation of rev-
enue, consistent cash flow, and profit. It is surprising how the word “profit”
is frequently absent from the vocabulary of many consultants. The reality
of course is that it is priority number one. The second related priority cen-
ters on how you allocate the money that comes into your business within
that business, that is, admin, marketing, travel expenses, and so forth. That
allocation determines your profit levels. It is critically important to have a
good grasp of your financial well-being on a monthly basis. To grow your
2. Develop
longer-term
retainer-type
contracts.
3. Create
passive or
parallel product
income
streams.
4. Broaden
your strategic
positioning.
1. Expand
your client
base.
1.
E
y
o
u
b
8. Develop
strategic
partnering
relationships.
B
7. Reduce the
cost of client
acquisition.
e business
of consulting
6. Improve
assignment
profit margins.
4.
B
y
our
pos
i
4.
B
.
5. Justify
higher fees by
creating higher
perceived
value.
Figure 4.2 Eight ways to increase your consulting revenues.
Applying a Client-Centered Value Strategy ◾ 79
consulting practice, you must develop strategies that will address both rev-
enue and profit growth (Figure 4.2). Here are eight ways to increase your
consulting business and market share:
1. Expand your client base.
2. Develop longer-term retainer-type contracts.
3. Create passive or parallel product income streams.
4. Broaden your strategic positioning.
5. Justify higher fees by creating higher perceived value.
6. Improve assignment profit margins.
7. Reduce the cost of client acquisition.
8. Develop strategic partnering relationships.
Expand Your Client Base and Attract New Clients
The first and most obvious way to increase consulting revenues is simply to
charge out more fees to similar kinds of clients as those you have at present.
It is vital, however, that the clients you identify are Ideal Clients, as dis-
cussed in Chapter 2.
Develop Longer-Term Retainer-Type Contracts
A great way to increase fees is to offer value propositions for extended peri-
ods of time. Explore the possibility of rescoping arrangements with existing
clients to a monthly, quarterly, or yearly basis. Think about what value you
can offer your clients for these extended contracts; are there recurring events
that provide opportunities here? Is the client experiencing particular prob-
lems that only longer-term solutions can solve?
Capitalize on Your Original Cost of Acquisition
byCreatingPassive or Parallel Product Income Streams
Making product sales to your clients can have a double benefit, quite apart
from generating passive, additional income. Embedding tools in the client
organization keeps you in contact with them, something that frequently rep-
resents a challenge for consultants. Moreover, clients can easily forget good
work done for a client. Products such as assessments, books, and e-training
modules serve as a reminder of your value and provide a valuable “keep in
80 ◾ Odyssey—The Business of Consulting
touch” mechanism once an assignment is wound up. Second, these products
can act as high-impact marketing tools before a prospect becomes a client,
for example, a free one-to-one assessment with a follow-up interpretation
session.
Broaden Your Strategic Positioning: Sell Larger Assignments
Obtaining larger assignments—double, triple, quadruple, or even ten times
your current contract size—automatically increases your revenues. Breaking
out of Level 1 and Level 2 product-based assignments to Trusted Advisor
level interventions is the essence of that expansion. Rather than simply
selling time or a product, consider the scope for leveraging your existing
relationship. Think about what you can change in your consulting busi-
ness to obtain significantly larger contracts. The Odyssey Transformational
MasterClass has seen several participants expand their strategic mind-set and
service offerings.
Justify Higher Fees by Creating Higher Perceived Value
To justify higher fees to your client, you must increase the perceived value
of your portfolio of solutions. Value is truly in the eye of the beholder. Your
sales and marketing strategies together with your personal and professional
branding are critical to positively differentiating your offering in the minds of
your clients. Think about your image, your website, and your logo. Do these
suggest to the client that you are a high-value proposition? Ask yourself what
you have to change about who you are and what you do to significantly
increase your charge-out fees.
Improve Assignment Profit Margins:
FocusonIdeal Clients and Solutions
Many consultants tend to overlook the fact that profit is a normal part of
the discourse of business and fail to include a profit margin in their fees.
Maximizing profit margins and careful cash flow management are as impor-
tant as increasing revenues if you are to achieve the ultimate goal of grow-
ing your consulting practice. Case by case, consider how to engineer a better
profit margin from key assignments. The pricing of consultant expertise,
know-how, and face time with the client organization is often overlooked.
Do not neglect admin and fixed costs in calculating fees.
Applying a Client-Centered Value Strategy ◾ 81
Reduce the Cost of Client Acquisition
How you invest your time, money, and energy in acquiring business from
new or existing clients has a critical impact on the financial health and
future prospects of your consulting business. Reducing the cost of client
acquisition is frequently a function of positioning. Are you doing Executive
Briefings (EBs) on a regular basis? Are you seeking ways to position yourself
as a thought leader when you make presentations? Are you presenting to the
right people? Critically assess your positioning process to see how you can
better leverage your existing network. Avoid valueless association meetings.
Evaluate on a cost/benefit basis whether social events simply assuage the
ego and take your time but deliver little or no business opportunity.
Develop Strategic Partnering Relationships
Your expertise, processes, products, or methodology may be very useful to
other consultants and professionals outside your field. For example, lawyers,
accountants, venture capitalists, financial planners, and even banks encoun-
ter problems that require consulting analysis and expertise. These profes-
sionals do not provide these services but you do. Being on the on-call list is
an opportunity to expand your consulting practice. EBs are an excellent way
of getting the word out to potential partners about your services and creat-
ing a referral chain.
The Professional Service Firm
The term “professional service firm” used to refer solely to the regulated pro-
fessions: accountancy, law, medicine, architecture, and so on. Over time, the
definition broadened to include advertising agencies, investment banks, and
consulting firms. Today, there are three aspects of the professional service
firm that place the consulting business squarely within that definition.
Resource Base
Invariably, the consulting firm’s resource base is narrow. It exists
solely in the person of the consultant. The value of the consulting firm
derives exclusively from the technical knowledge, expertise, and experi-
ence possessed by its professional staff. They are knowledge workers;
their professional status derives from what they know.
82 ◾ Odyssey—The Business of Consulting
Organizational Form
Similarly, the organizational form is often small, taking the form of a
sole trader or a partnership with several contracted associates. The cor-
porate model gives a much higher degree of autonomy than that which
typically exists in conventional firms, and may be optimized to deliver
strategic and tax advantage.
Professional Identity
This is a vital component of any consulting firm and captures the
firm’s brand, its presence, how it communicates, its tone, and the very
essence of what it does. Your professional identity reflects the reality
that when the client retains your services, they are essentially buying
you. They understand, through that identity, that you have the expertise
and the presence to provide the services that they need.
Distinctiveness of Professional Service Firms
The consulting business is not like other businesses. Consultants do not sell
standardized products or services. To achieve results for their clients, they must
develop customized solutions, which are then delivered by highly talented pro-
fessionals. The consulting firm differs in its focus, not on volume or transaction
but on delivering the optimal portfolio of solutions to its client base.
Although conventional businesses and consulting businesses may differ
as discussed, there is one way in which they are identical. They both exist
to generate profit. In the context of a highly personalized business, it is easy
to lose sight of this fact. Consultants frequently place too much emphasis
on revenue generation, without focusing on the vital role of profit in their
business. If you are unable to quantify your profit in consulting, it begs the
question, Do you actually have a business?
The reality of course is that consulting has become a highly profitable
business, and as a result, it is growing rapidly. During the last ten years,
consulting has grown by 16% per annum to become a $120 billion indus-
try. There are currently in excess of 1 million consultants plying their trade
across the globe.
It is estimated that the big players in the industry divide half of that $120
billion among them, with the remaining $60 billion spread among smaller
firms and independent consultants. Although the charge-out fees of those
one million consultants averages out at $120,000 per annum, the reality of
course is that fee levels vary widely within the industry. Typically, however,
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