Case Study – Extracting Value From a Business Consulting Practice.
The recession, which followed the financial sector meltdown in 2008, had a disproportionate impact on small and independent business consulting practices. Larger practices may have seen some reduction in business as discretionary spending in client companies contracted, but a lot of smaller practices were completely decimated and saw many of our colleagues exit the industry and secure regular employment instead.
My own business consulting practice survived pretty well into 2010, but the continuing recession resulted in lots of clients reducing their spending and new clients became as scarce as hens’ teeth. There is always a certain amount of client churn in our industry, but how does a small practice cope with falling client numbers and a dearth of new ones to fill their place?
The consulting business is driven by confidence and economic buoyancy, which sees client companies investing in their future. When this confidence disappears, so does the investment. Like most professional services firms in the last few years, many consulting practices found themselves downsizing due to falling revenues. Solo-practitioners had to learn how to live on less. We all had to make changes to our businesses, as doing nothing new was simply not a realistic option.
Despite our best efforts to market ourselves as value generators, many clients and prospects view our services as a cost to their business. Even though we offer, and sometimes guarantee, a positive return on investment for the work we do, many businesses become so risk averse during poor economic times, that non-essential spending ceases completely.
I chose to look at my consulting business in a new way in order to combat the economic downturn. I closely examined where and how value gets delivered and I identified where and how costs were incurred during this delivery process. I recognized that time is the biggest enemy in our industry and that our revenues are capped by the amount of time we have available to us. Even if we don’t charge by the day or the hour, we are still limited by the number of billable days or hours we can deliver in a month.
I looked at the IP and knowledge I had accumulated over 35 years in business and I brainstormed new ways to share this knowledge and still get an economic return for doing so. I then examined how I could create a repository of this knowledge and a means for interested parties to gain access to the knowledge for a fee.
I looked at the successful knowledge business that I helped my young daughter to build for high school students – www.juniorcertmindmaps.com and www.leavingcertmindmaps.com. I noted how automation and clever software design could become the customer service arm of an online knowledge business.
I recognized how an online business can have an almost unlimited geographic footprint. I became aware of how it is possible to make a financial return on a business while asleep at night. This cloud of observations fermented for a while and I tried to figure out how to create an automated business consulting practice. The biggest challenge was getting past “it cannot be done”. It frequently assaulted my belief system that my knowledge was unique and that nobody would pay for machine delivered content instead of human delivery.
The breakthrough came when I recognized that clients are interested in getting value and that if the price is attractive, they will consider changing their buying habits. The challenge is to price it attractively so that it represents a significant discount on what they would normally pay for the service but not to price it too low, in case they assume it is so cheap that it cannot possibly work or deliver the value they need.
I ended up with two distinct but related business models. Firstly, I wanted to be able to serve small and medium businesses with a business assessment model that allowed them to get a detailed and independent view of their business, without the need to hire a business consultant. I call this product www.HowsMyBusinessDoing.com because it can tell a business owner how their business is performing in just 90 minutes of engagement with the software, in an online environment.
Secondly, I wanted to create a set of online tools for business consultants, advisors and coaches, which would enable them to eradicate the traditional costs of prospecting, providing free sessions, business analysis & benchmarking, and to enable them to rapidly understand prospect and client companies. This needed to be augmented by automated delivery of client reports, practice biographies, proposals and rate cards.
The key to success with this second model was the ability to automatically white-label the tool set for individual consulting practices and to give editorial control to the consultants to modify content and to deliver their own IP within the online application. I call this product www.GrowthOracle.com because it allows consulting practices to rapidly grow, without adding additional resources to the business.
Several years of design, trial and error, and software coding followed. I conducted tests on hundreds of businesses to ensure that the software delivered the expected value. I offered free trials to many consulting practices and to owners of small and medium businesses and I have used the feedback to move the software from minimum viable products to fully-functional rich business applications, which meet the needs of the two vertical markets I have chosen for the products.
The journey has been a difficult one and I suppose if it were easy, everybody would be doing it. The recession forced me to start thinking outside the box and to find a way to develop a sustainable business model that made use of my knowledge, without the need for me to directly engage with clients, unless I chose to do so. This is almost the anti-thesis of what the consulting business is all about. However, it has transformed the way in which I do business and it allows me to extract tangible value from my hard-earned knowledge and life skills, in a worldwide geographic market.