Part 1. Strategy: Establishing Your View of the Profession
The State of the Art
- professionals need certifications and have a clear definition
- consultant do not have these constraints
"A consultant is someone who provides value through specialised expertise, content, behaviour, skill, or other resources to assist a client in improving the status quo in return for mutually agreed compensation."
- consultants may be internal, working for organisation full time or external and hired on a situational basis - situation may vary in time, but should be brief (fairly brief)
Most important aspect of definition:
- bringing something of value to the equation that justifies a fee above and beyond client's normal business investment
- consulting not synonymous with implementing, delivering, instructions or executing (although may be).
- just because hired by company doesn't necessarily make you consultant
- part-time office hand is not typing consultant
- comfort, experience, relationships in one field (industry or pursuit). Content or work of that field provides basis to consult in it
- expertise that transcends industries and is applicable to variety of environments
- knowledge is largely experimental; "been those before". Knowledge a broader category than expertise, and includes understanding of process as opposed to content
- process of time management irrespective of content
- often referred to as process consultation
- interpersonal; facilitate groups to achieve conflict resolution or make presentations
- hired to be an "on stage" (not behind-the-scenes) and utility is over + role they play (which management cannot assume)
5. Special skills
- highly developed, well-defined skills that can be in demand
- often talent or innate ability
- may be called into help because of their contacts (lobbyists)
- i.e. introduce clients to key contacts in public or private life
Consultants bring one through to all of these competencies to help client move from status quo to improved position.
Three paths which must exist (must have all three)
1. Market need
2. Competency: skills to meet the market need. A buyer must perceive that you possess skills
How organisations choose consulting help
- selection process for consulting help not logical. However, best to follow buying habit
Major ways organisations secure consulting help:
1. Word of Mouth
- most comfortable, particularly at middle to upper management levels
- trusted endorsement saves time and minimises risk
After successful engagements:
- what other people do you know who can use these services
- may I use you personally as a reference
A peer-to-peer recommendation from one buyer to another
- heard of firm through third party, publicity or casual conversation
- popular with top executives who feel safer acquiring services of "name" firm to justify investment
A commercially published book.
3. Professional affiliations
- basic listings, memberships etc
- highly visable leadership positions
4. Internal data
- clients may maintain a file of consultant capabilities that they review whenever appropriate
- twice a year mail information to update materials
- not conducive to securing consulting contracts (works better for training and workshops) because mainly appeals to low-level managers who not in a position to purchase consulting help
- ultimate buyer usually relies on one of first four methods
Repeat appearances in common publications
6. Personal contact
- business meeting, third party introduction or random event
- not great leads, more about marketing
- superb networking skills + qualifying questions to discern buyers
- You will be judged on form as well as substance
1. Shared Values
3. Conceptual agreement
4. Proposal accepted
Values congruent, can establish comfortable relationship (mutual trust)
Honesty in sharing information and candor
3. value to client
Conceptual agreement leads to proposal
Leads to results, which reinforces relationship because you've accomplished what was agreed on
Sales process is a series of small "yesses".
Emphasise results, not tasks
Consultant: hired to provide unique abilities and talents that will improve client condition and constitutes a value-added component that client doesn't already possess.
- key is to describe results, not tasks
- interventions should be based on results and outcomes, not activities and tasks
- begin with "conceptual agreement": which is agreement on objectives to be met, measures to gauge progress and the value of doing so
- how subordinated to end-result
- superb consultants tailor and vary roles according to precise client needs. Act of helping client determine appropriate range of pragmatic interventions is initial consulting contribution
- determination should be collaborative, explicit, comfortable and conform to end results required
- important to embrace a variety of practical interventions, in order to step towards exponential growth
- excellent consultants will explore results that improve performance, service, quality and how well business goals are being met
- help establish objectives to be attained
The Right State of Mind
View your work as a career that is fulfilled by generating a series of client results, not as a succession of jobs that usurp time until completed.
Educating the client:
- client expectations formed from first meeting and calcified by time proposal signed
- coversations, materials, demeanor, resistance and other dynamics will subliminally educate client about the relationship
- want expert to recommend precise course of action and clarify exactly what would occur
If asked how something should be accomplished:
- provide options together with pros and cons
- plus recommendation
Growth not like a production plant that builds out offering and then closes down plants during adverse economic conditions
- growth depends on abandoning some lines and types of business in the pursuit and acquisition of other
- growth is not just financial. It includes broadening experiences, higher level contacts, more sophisticated work and enhanced reputation
All business is not necessarily good business:
1. paint-yourself-in-a-corner syndrome
- reputation works in all directions. If you're known as an "inexpensive alternative" or "desperate to accept any job" will work against you
2. quality is sole measure of success, not quantity
- one client with $50K far better than 10 clients with $5K
- don't accept all business as quantitatively equal: quality matters
- $50K from one client is far more profitable that $5K from 10
3. effort applies to tasks, whereas payoff applies to results
- just as much effort to sell $10K job as $100K job
- accepting any business ensures consultant doomed to poor time investments
- everytime you raise fees or refuse to make concessions to gain business you lose the bottom 15% of market
- regularly abandon bottom 15% of market as a growth strategy because it frees you to expand into upper reaches of top 5%
- refer to up-and-coming consultants
- explain can no longer cost-effectively handle assignments, and not using that as a basis to raise fees
- offer to transfer skills to the client
- if local site of larger organisation, explain that it is time to move up to the parent
- if management refuses, you're in a business relationship you should abandon anyway
Goal is to retain 90% of fees.
Establish Ideal Goals
- strategic goals allow you to navigate circumstances
- must be able to explain in 60 seconds, and be in literature
- useful in explaining to prospects why they should hire you
"We will accept only short-term, value-added consulting assignments with specific result objectives and measurements that will be fee-based. We will unconditionally guarantee our work."
- your goals must grow and expand for your consulting business to expand
Timing is everything
- timing means in front of the buyer with a back scratcher when the buyer has an itch
- merging of prospects need (at some unanticipated time) with awareness to fill that need (from repeated contacts and visibility)
- far more powerful to have buyer call you than for you to call buyers
- when invited into office, you are working together to collaborate on a problem the buyer feels comfortable addressing with you
Market Gravity: an approach to increasing leads
- pro bono work, commercial publishing, position papers, radio interviews, TV appearances, advertising, passive listings, speaking website, electronic newsletters, word of mouth, trade association membership, third party endorsements, print newsletters, referrals, print interviews, teaching, alliances, products, networking
Look at the marketplace, evaluate what you have to offer and to which buyers, and decide how best to get those buyers to come to you while continually abandoning the bottom slice of your market to expand the top slice.
State of mind should not be that you have to "prove yourself". Create sufficient attraction so people approach you interested in how you might be of help. In this dynamic, fees are academic.
Prerequisites for growth
- strong people learn from setbacks and emerge stronger
- always investigate reasons why proposal not accepted or competitor chosen
- uncontrollable rejection: competitor offered outside capabilities, motivation, or fee structure
- controllable rejection: something to improve on
Important to keep pushing the envelope until rejected, so as to stretch abilities
Growth: Expanding expertise, talents, reputation and experience and income
Establishing Firm's Image
- potentially use company for cosmetic reasons and to dispel sole trader/lone wolf image
- start giving out office number
- image should represent what you can do for clients in the future, not what you've accomplished in the past
- break out of mold from the past
- way to grow your business is to grow your approaches and that requires you to take some risks
Accepting Prudent Risk
- You can earn significant money by accepting assignments that call for you doing something new
- When assignments are undertaken as collaborative ventures with a client, you are able to expand the nature of your activities with prudent risk
- Consulting is a relationships business: must carefully craft relationships
- strategies for growth hinge on relationships you forge, nurture and expand
- the best consultants strive to establish special relationships with clients, irrespective of their products, services, techniques and offerings
- relationships represent an incalculable, intrinsic worth that clients don't even try to put a price on
- must focus on developing unique relationships with clients
- products are viewed as commodities and are very price-sensitive
- products may accentuate unique brand
- service needs to be better than competitive, or else client will se no differentiation
- breakthrough category should be relationship with the client
- relationships based on qualitative not quantitative judgements
The ideal client relationship is one in which the client trusts the consultant to make determinations about capabilities, meaning that the client approaches the consultant with a fundamental assumption that the consultant will act responsibly to improve the client's condition.
- client asks consultant to collaborate to meet a need: "Work with me so that we can be successful" - best growth mechanism is trusting client who wants to use services, believing will provide reason if cannot accommodate the request. In effect, selection moves from client to consultant
10 ways to develop breakthrough relationships:
1. Provide valuable information
- eg. webinar material, info packs etc
- every quarter
2. Provide essential phone numbers
3. Raise crucial issues
- raise issues that demand attention even if not part of the project
4. Recommend Other Resources
- don't hesitate to suggest other service or product suppliers
5. Go the Extra Mile
6. Facilitate Client Publicity
7. Charitable Contribution
8. Help subordinates
9. Don't be afraid to take a stand
- don't be sycophant
10. Treat Clients as Partners
Relationship-building is the core value of consulting success.
Accelerating in the turns
Most important transition period is escaping thinking that confines you to small successes.
The breakdown of business:
1. business not consistent with growth but you want to retain because can be developed into better business
- priority: a sound, historically valuable business that you want to retain and further develop, but not in current relationship
2. business that already represents your new, growth-orientated strategy
3. business that is strictly "old" image should be abandoned because it cannot lead to new heights
- retaining can be more damaging than not obtaining new business because it will "cement" you to wherever you are today
Key to transition:
1. strategic plan for major categories of business
2. establish traffic light system to protect attractive business, nurture evolutionary business, and abandon inappropriate business
3. assess progress monthly to ensure not blinded by temporary victories
4. do not waver
Develop a mindset that reassures you of the use of debt financing as a legitimate business tool.
Part 2. Tactics: Implementing Your Vision of Your Firm
- improve by 1% per day to become million dollar consultant
- full fee in advance for 10% discount
- contact client/prospect every quarter with something
- mailings for example
- publishing in periodicals
- pro bono
- request for referrals
- human interest stories in newspaper
Most objections sound like:
- I don't know if we're ready for this
- I'd like to look at some other people and get back to you
- We've tried that and it hasn't worked
- I need more details and references
- We'll have to have guarantee
- We have other priority at the moment
Real Objections are:
1. I don't trust you
2. I don't need what you have
3. I don't have time to do this
4. I don't have the money to do this
You must be talking to an economic buyer. That is, you must be dealing with the person who can write the check and make the ultimate decision.
Don't bother rebutting gatekeeper objections, spend time to work through or around gatekeeper to find the true buyer.
- money usually must be found: economic buyers can find money easily
- never focus on price, rather value
"Let's not even worry about budget for the moment. Let's focus on what you need and how much an improved condition might mean to you and the organisation."
- objects at cost tend to stay at rest. Have to create urgency.
"what happens if you do nothing?"
- condition isn't stable but worsening, brief window of opportunity will be lost
- when you're told timing isn't right, means they don't feel sufficient sense of value to overcome inertia
"You can't afford not to act quickly, and I want to show you exactly what this means to you and the orgnisation."
- buyer doesn't see applicability or ROI for solution or initiative
"Let me provide you with some evidence of where you're falling behind the competition because you're looking through a microscope instead of a telescope. It's not about increasing sales, it's about reaching brand new markets."
- most serious and basic of objections because speaks to core issue
- credentials, experience, demeanor, materials, explanations
- build solid relationship prior to trying to make sale
"I'd like to know something about your issues and explain my background. So you can make a mutual decision as to whether we should go the next step together. My projects are partnerships and collaborations, so its important we share our thinking with each other."
Cast of Thousands
- provide resumes on your letterhead along with salient info
"These aren't all fulltime staffers but people used situationally, which allows us to cover a wide range of assignments with the least overhead, which is of tremendous value to our clients." - have all communications go through office (could provide company email on business cards)
Never pay subcontractors based on the size of your project or provide them a "piece of the action". Only partners get a piece of you action - because they are bringing you a piece of their action.
Breakdown of partnerships + alliances
- 80% of business repeat business
- higher sales velocity
- use contractors to free you up to nurture and evolve existing client relationships
Working Outside the Corporate World
- options exist outside corporate markets
Do not charge by the day or hour
- consultant's real value added is to improve clients condition with minimum involvement
- if request time for which they'll pay a fee if discussions don't lead to a project, request expenses be paid
"Think of the fourth sale first"
Collaborate work dictates people should never hesitate to call
Market-demand methods for establishing fees
Emulate competition's fees
- has shortcomings
Perceived value as a basis on which to establish fees
- do superb work and be paid high fees
- base your fee on clients perceived value of your assistance plus ask for high fees
1. Never cite a fee before prepared to do so
2. Don't provide breakdown: work from conceptual sale
3. You must spend time building the relationship to point sale is made conceptually and all important decision makers are on board
4. If client does want to negotiate fee down, do so by explaining kinds of value that will be lost. Never lower fee and keep all services and value. Client should never benefit from sacrificing margins. That's not collaborative, rather wealth transfer to client
5. Be prepared to walk away from business
- you must be perceived as someone who does superb work, requires high investment and will not lower fees without commensurate sacrifice of value
- beware estimates around commodities like editing time, crew and so on
- box constructed by citing feed based on activities and tangible deliverables
- hard to differentiate it at high end of comparisons clients will make in shopping around
Establishing the Value of Clients Investment
1. What is the outcome of this project worth to the client?
a. if quantitative, what is the amount?
b. if qualitative, what are the effects?
c. how does client describe a successful outcome?
d. to what degree is client condition improved?
2. What is your direct contribution to that outcome?
a. are you accelerating what would have occurred anyway?
b. is the outcome dependent on your unique talents?
c. are you facilitating or also delivering?
d. are you observing, diagnosing or prescribing?
3. What is your current relationship with the client?
a. is this a longtime client?
b. does assignment provide for professional growth?
c. does the assignment present stressful conditions?
d. are these difficult deadlines?
4. What are the costs to complete the assignment?
a. was there a marketing cost or other cost of acquisition?
b. to what degree are subcontractors required?
c. are there extensive travel requirements?
d. are there materials or other deliverables required?
How to Write a Proposal the Closes Business
Proposal is a summation of conceptual agreement: objectives, measures and value to client. It demonstrates options, with attendant return on investment.
10 Steps to Proposal Formulation
1. Find the economic buyer. If not dealing with the buyer, nothing else matters
2. Establish trusted relationship with the buyer
3. Establish objectives for the proposed project. Should be business outcomes (not deliverables, task or methodology)
- what would you like the end result to be?
- how would things be different now to at conclusion?
- ideally, what 3 things must be accomplished?
- how would you like to be known as a result of this project?
- what must be changed, fixed or improved the most?
4. Establish measures of success for the project. These metrics govern agreement on progress and your role in that progress
- how will know outcomes have been achieved
- what indices will use to tell you're on the right track?
- what is minimally successful, and what represents overwhelming success?
- what current measures are you using that can apply?
- what measures should be created unique to this project?
5. Establish value to client organisation (and/or buyer personally)
- what will outcome mean to you and organisation?
- how much improvement conservatively, do you expect from a successful project?
- what is this worth annualised on longer-term basis?
- what does this mean quantitively (sales, market share, profit)
- what does this mean qualitatively (repute, health, comfort etc)
6. Suggest there are options available. Subtly moving from "Should I use X?" to "How should I use X?"
7. Do not focus on methodology or deliverables
8. Do not mention fees
9. Present proposal in quickest timeframe
10. Establish clear follow up
Components of Proposal
1. Situational Appraisal
3. Measures of Success
4. Value to the Organisation
5. Methodology and Options
- discussion around options
7. Joint Accountabilities
8. Terms and Conditions
Investing in Success
- you don't get business you don't ask for
- establish ongoing dialogue with clients. At very least a monologue
- establish an approach for each individual client
- speaking and publishing
Turning Change into Opportunity
- sales pipeline
- ways to diversify
- keep spending regardless of conditions
The Technological Consultant
- market via web
- visualisations are gold: forces buyer to think about point conceptually rather than fee and matches agenda to yours.
For example, quadrant about types of buyer. "So how do we move our customers to the upper right quadrant." -> bingo
Consulting is a process that uses models according to client needs and conditions.
Must get buyer "under you spell". The lure of value and pragmatism of your approach must outweigh traditional inertia against buying.
Managing the Buying Dynamics
- You must manage meeting with client
- reflective listening to ensure you new concerns
- however, far more must use what you hear to demonstrate value
- value not features and benefits of product, service, expertise, rather its your ability to connect with the buyer's desires and needs, and you often have to accentuate them far beyond the buyer's own words.
- visual aids that create involvement, agreement on principles focus on results and implied value is so important
- key step to "conceptual agreement"
- centerpiece of large projects and enduring relationships
Part 3. Success: Achieving Self-Realisation
Once a "going concern", treat your bankers like a client - as partners in a relationship business.
1. Get Business Finances into Shape
- obtain a payroll service
- find a financial advisor. With diverse professional clients so circumstances won't be pigeonholed into a model financial approach
- should be part of a firm, preferable a principal
- should handle firms business taxes and affairs + personal taxes and affairs
- strong ties to local bank to assist with credit lines
- strong ties with local business to assist with leads
- sufficient staff to answer questions
- computerised tax
- in-depth small business knowledge
- primary consideration should be elementary: whether appreciates business and intent and empathise with growth plans and challenges
2. Sweat the Financial Details Yourself
- rolling 1-year forecast
- sales, advance payments, scheduled payments, proposals submitted opportunities, probability of success
- construct personal financial statement
3. Court the Banker as a Partner
Choose bankers that:
- offer credit lines based on home and business
- personalised services for key customers
- similar relationships with professionals
- sound, stable and convenient
- you're a buyer
- rolling projections and financial statement
- business strategy
- articles published, clients worked with, project examples. Client references and press kit
- last several years tax returns for yourself and business
- illustrate growth you've achieved and growth you've projected
- ask what bank can do for you - you're exploring alternatives
- you are not seeking a loan, you are seeking a relationship that will support your growth
- let banker sell you
- work relationship like any other
- mailing list, lunch, provide tax and financial statements
- try minimum of $50,000 dedicated to your business credit line. Always try for upper limit. Don't have to use it, but difficult in desperate circumstances - every year when submit financials, explore possibility of raising credit limit
- In full prior to commencement - 10% discount
- In full at commencement - 5% discount
- Partial on commencement, balance on progress
- set repayment schedule to actual dates, not activity
- never accept at conclusion only
You develop business by maximising income. The velocity or speed that you receive income as important as volume (cashflow). Never tolerate client who owes you beyond agreed on terms, and always make terms as favourable for you as possible.
1. Maximise number of bills you pay on credit card or account
- risk passes to credit card company for non-service
2. Pay local vendors promptly
3. Make an expense budget and compare actual expenditures quarterly
4. Use a Travel Agent, and make preferences clear
5. Pay Bills Twice a Month at Single Setting
6. Buy Equipment (rather than lease) and Pass Up Long-Term Service Contracts
7. Request Prepayment of Expenses as well as Fees
8. Always Ask for the Best Rate
9. Don't Prepay You Own Bills
10. Establish a Clear, Written and Signed Expense Policy with your Employees and Subcontractors
Growth does not always equal expansion:
- $1 million in annual billings for their practice
- Image building/marketing/public relations
1. Author scholarly research
- become an authority
- establish a recognised, credible source within community with strict standards for intellectual honesty and disciplined research
2. Present Papers, Theories and Findings at Conferences
3. Appear on Radio Talk Shows/TV
- PR, image-building firms will organise appearance
4. Place "Nonadvertisements"
- endorsements or "support"
5. Seek out and apply for honours and awards
6. Press releases
7. Conduct Independent Surveys
Perception is reality. Act like a "going concern" and a large firm and others will regard you that way. Self-image becomes general image. The first sale is always to yourself.
The Ultimate Relationships
The very act of growing creates a momentum that generates additional opportunities that hadn't been anticipated.
- intelligently manage growth
- long-term contracts
- invite satisfied customers to free conference at posh resort with spouses welcome
-strategic marketing tool using peer influence (social proof)
- clients selling to prospects through communications channels you establish
- spend $50,000 or more for high profile keynote, for example Henry Kissenger
- One exec to another: "Use this consultant. I thank my stars we did."
- must invite more than just clients
- strong mix of people, clients and prospects alike
- start with breakfast or lunch meetings (miniconferences)
- invite 25 local potential buyers, clients and prospects to hotel conference room
- 90 mins max
- Pay for conference room and facilities. Use guess speaker around theme
- $1,000 per head, invitation nontransferable
- another option is business roundtables
- Client Advisory Groups. (separate to advisory board)
- clients/non clients. (not lawyer or financial adviser)
- 8 members, meet infrequently (2 a year)
- 2 days at decent place, with social time
- peer influence
- 2-3 nonclients, exec level only
- save to cement existing client relationships by forming a collaborative effort on behalf of you business. Also develop potential relationships among nonclient members and member contacts.
- Goals always same regardless of councils, committees, conferences, boards etc
- create peer influence to sell your services to prospects and to create opportunities to solidify and extend the ongoing relationship you've formed with existing clients
Value-added discounting principle of never losing clients
- million dollar business is through establishing long-term relationships
- based on creating/implementing value-added qualities that enable you to improve clients conditions
- sustaining this creates bond which is difficult to break
- your value-add is exponentially greater over time as you obtain insight from your previous assignments
- replacing you is more expensive than not!
- in tough times, clients cut expenses, not wisedom.
Ultimate Relationship: wise person whose contributions synthesise personal talents, organisational knowledge, interpersonal relationships established with top management.
Accelerating Renewal and Repeat Business
- a key factor to consistently growing practices is ability to increase the velocity of sales
- velocity: the speed from lead to meeting to conceptual agreement to signed proposal
- velocity is vitally important
- cash in bank, less cost to acquire, etc.
Velocity driven by sales process:
1. initial contact
2. ascertain if contact is economic buyer
3. if no, gain agreement for intro to economic buyer
4. if yes, gain agreement to meet in person
5. establish trusting relationship with economic buyer
6. gain conceptual agreement (objectives, measures, value to organisation)
7. submit proposal
8. begin work
- process is a series of yeses
- sales process is a series of small yeses
How to handle the sales process
Meeting the wrong person
- sometimes necessary to go through gatekeeper
- not always. Don't accept meeting by default
- ask who is the economic buyer: "Who's sponsoring this project?", "Who is funding this initiative?"
- state your process is to meet with that person to ascertain whether project makes sense
- meeting wrong people has two adverse effects
1. you'll be delayed, perhaps fatally by people unwilling to move forward
2. you may be regarded as a peer if lower people even if you do meet economic buyer (meaning you will be relegated back to them)
Fear of hurting feelings of wrong people
Must boldly move past gatekeeper:
"I am happy to work with you on the ongoing implementation of this project, but ethically I must meet the person who is actually approving the expenditure so I can be sure that his or her expectations are realistic and that I have the resources to meet them."
Failing to establish a trusting relationship
- must establish trust overtime
Failing to move toward conceptual agreement
1. establish objectives:
- What will the scope of the project be, and what results will delight the buyer?
2. establish metrics:
- How will buyer know that progress is being made specifically attributed to your work together on this project?
3. establish the value to the organisation
- if the metrics indicate that objectives have been met, then what is the return for the organisation and the buyer?
Think about fourth sale first
- think about lifetime value
- vast benefit from relationships with economic buyer and well implemented and results well documented (objectives, measures/values)