Going It Alone: How to Start and Grow Your Own Consultancy

Key Takeaways

• High Failure Rate: Two in five consultancies fail within three years due to poor selling skills, bad niche selection, and lack of market adaptability.
• Essential Skills: Successful consultants need strong selling abilities, strategic niche focus, and regular market reevaluation.
• Preparation: A clear plan, robust network, and operational readiness are crucial before starting a consultancy.
• Survival Strategies: Focus on client acquisition, upfront charging, consistent marketing, and building reputation through associate work.
• Foundation Building: Specialize in a niche, standardize services, use SaaS tools, outsource admin tasks, and establish expert status.
• Growth Principles: Hire based on values, continuously improve, implement professional automation, and embed business development firm-wide.
• Client Focus: Prioritizing client needs ensures long-term success and fulfillment.

Most senior employees will be aware of the prices that many consultants charge for their work. Many will also have read the delivered reports and thought to themselves ‘I could do better for half the price’.

It is unsurprising then that some senior employees, and corporate consultants, decide to start up their own consultancy with a view to making a bit more money and having a lot more freedom.

The Potential and Pitfalls

However, two in five consultancies fail in their first three years. There are several reasons for this which, in descending order of importance are:

1. The Owner Can’t Sell:

Some of the best corporate consultants and employees I know are brilliant at delivery but would rather do anything other than sell. This is a problem for independent consultants because if you can’t sell, you can’t survive.

Selling requires persistence, a willingness to be rejected, and to be unembarrassed when discussing fees – attributes that not many of us possess.

2. The Niche is Badly Chosen:

Many independent consultants do what they have always done because it is comfortable for them. However, rebranding the service you deliver, delivering the same service in a different market, or moving into more strategic services can double your day-rate.

Many independent consultancies fail not because there is no business but because their day rates are so low.

3. Nothing Changes:

Consultancy is a fashion industry. Taylorism, Business Process Re-engineering, and Lean are all pretty much the same thing, but rebadged to make them more attractive to clients.

Additionally, a valuable and unique niche will, over time, become crowded and commodified as more consultancies enter the market. Technological innovation will often render some forms of consulting obsolete.

If you are not re-evaluating your proposition, your clients’ needs, and the competition at least once a year, you run the risk of becoming redundant. Literally.

Overcoming Growth Obstacles in Consultancy

So, now we know what causes new consultancies to fail, what helps them succeed? In my most recent book Growth, I interviewed 72 consultancy founders who grew and sold their firms.

I discovered a series of growth obstacles on the journey which are summarised below:

First, The Jump. When leaving to start your consultancy, the key thing is to hit the floor running.

A year or two before leaving you should have:

• A clear plan built around your needs. Will you build a lifestyle business? A solo consultancy? A growing firm? What are your one, three and five-year targets?
• Built your network – find potential buyers from family, ex-colleagues, old school friends, building relationships with them to the point that you should have a few contracts in hand before you leave.
• Created an email and LinkedIn database of potential leads that you are nurturing and to which you can send quality content or thought leadership.
• Created a company and got a bank account so you can start invoicing immediately. You don’t want to be wasting time designing logos when you should be out looking for work.

Establishing Your Consultancy and Building a Client Base

Second is Survival. Some consultancies can skip this stage, but many cannot. Here, the focus is on finding your feet, paying the bills and getting referrals and follow-on work.

Key Tips Here Include:

• Do what you must bring work through the door. If you can, specialise, but if you can’t just yet, don’t worry.
• Charge something upfront. Many consultants settle for charging at the end of the project resulting in cash-flow challenges.
• Market and sell regularly. If you get completely absorbed by delivery, you will have no pipeline when the project ends. New consultants can spend up to three days a week on marketing and sales.
• If you can’t get work, act as an associate for others. This will allow you to build a reputation and accumulate expertise, albeit on a lower day-rate.
• Ask for follow-on work, referrals and testimonials from your clients. These are the easiest way to get new work and the ones clients cite as their favourites.

Building a Solid Base for Your Consultancy

Third is Foundation. This focuses on building a solid foundation for future growth and saving you time and money to achieve this.

• Focus on a niche. This will allow you to market better, accumulate expertise faster, and charge higher fees.
• Standardise your services. This will save you time, allow more attractive marketing and provide the basis for a junior to do the work.
• Build systems for success. There are a lot of SaaS systems out there that will save you a lot of time. My Customer Relationship Management (CRM), digital marketing, invoicing, finance, and calendar management systems cost me a total of £45 a month.
• Outsource your administration. Using freelancer platforms like Fiverr and Upwork, I employ a virtual assistant, a web developer, a software coder and an SEO specialist for a fraction of the UK price.
• Become a recognised expert. Regularly create research-based, unique content and distribute it through digital marketing.

Expanding Your Consultancy and Maintaining Success

Finally is the Growth stage. Well, in reality, this is at least another four stages, but I’ve pulled the fundamental principles below.

• Recruit on values and fit. Your early hires will shape the culture of the company which will in turn shape the behaviours of everyone in it. Hire slow and sack fast.
• Continuously improve. The only consistent way to improve your prices is to consistently deliver more value to your clients. Your services, people, and proposition must be invested in.
• Invest in Professional Service Automation. When your firm gets to 30 people it will be too big to run on a few spreadsheets and whatever is in the heads of the Partners. You need integrated systems to ensure your firm is running like clockwork.
• Embed business development throughout the firm. Everyone must sell. It needs to be part of the training, the promotion criteria, and a core value of the firm.

The most important thing throughout the growth journey is to be entirely focused on providing value for your clients. If you have their needs at the heart of your firm and you really care about their challenges, this will not only make you much more successful, but will also make the work much more fulfilling.