Consultant Rob Nixon says he differentiates himself by the success of his clients. “If the client case study is a success then I can differentiate,” Nixon says. “Too many consultants do not want to give away their perceived intellectual property. They hold it close to their chest because they want to sell it. When in actual fact, if they gave away some value then they would get more business. I like to give for free the ‘what to do’ but sell the ‘how to do it’. Differentiation is a marketing opportunity.”
Joel Barolsky, a principal of Beaton who trains consultants, says differentiating yourself when you are a one-man band in a crowded market is the challenge. “Finding a niche and finding a focus makes it easier,” Barolsky says. “You have to define your pond. Which pond do you want to go fishing in? And if you define it too broadly where it becomes the ocean, where would you put your effort? Then you have to work out what the bait and hook will look like.”
Barolsky says the biggest attraction of working as a consultant is the variety. “I have been a consultant for 15 years and not one day has been the same as the next. Each day is different, every problem is different.”
“Secondly, you are constantly learning. The world changes and problems change. You always have to be gaining new knowledge and testing your assumptions and the pushing the boundaries all the time.”
Will says the other great attraction is self-sufficiency. “Some consultants choose that model because they want some work/life balance and also be the makers of their own destiny,” Will says. “Working for someone or being an employee won’t necessarily provide the same flexibility.”
The downside? Living with uncertainty and prospecting for the next job when you are flat out working on a particular project. The insecurity, Barolsky says, is inevitable which is why many who enter consultancy return to paid employment. It mightn’t have the variety and learning challenges but at least it’s a job.
The good consultants, Barolsky says, structure their practice to see them through quiet times, like for example, in December and January when work is scarce. That creates a sustainable business. “Some consultants structure their practice so they have a couple of clients on a retainer. If you get two or three of those, it pays the mortgage and basic infrastructure costs,” he says.
Most of the work comes in from referrals. But the good consultants will put in time networking to spread their name. Special breakfasts and thought leadership sessions, and writing in industry journals will all help.
But as Barolsky says, it’s not for everyone. Good consultants have distinctive skills and a certain mindset. “A number of people in commerce who have had line management roles think they can just take a package and set themselves up as a consultant,” he says. “Quite often, consulting does have a different set of skills. Sometimes, people are fantastic line managers and business managers, and hopeless consultants.”
Nixon says consultants should not charge by the hour or the day. That’s no way to build a sustainable business.
“This is promoting the wrong things to the client,” Nixon says. “It is not promoting speed of fixing or improving the situation. They should charge a fixed fee based on the value they provide to the client. Consultants must build leverage into their business. Instead of doing everything themselves they should sub-contract and bring in help.”
“To build a sustainable business somehow consultants need to leverage their intellectual property into product – DVDs, manuals, etc. If a consultant can develop something specific to them they can trademark it. I have been able to leverage my coaching model by getting other people to do it. I have also leveraged my coaching model in to a separate franchise business where we after two years have 52 franchisees. The rest is marketing.”
A warning though: consulting is not easy and you should look before you leap. But if you can make it work, it’s more rewarding than being miserable in a supposedly “secure” job.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
