Still Selling?
Now that you're fully engaged with a great client, guess what? Time to start marketing again. "Market consistently, in good times and bad," said the late Howard Shenson in Shenson on Consulting (New York: John Wiley, 1990).
Fortunately, some of the best ongoing marketing is indistinguishable from your performance. For example, doing outstanding work and letting word of mouth do your talking is central to the growth of any practice. Beyond that:
- Are you projecting an image that will keep current clients proud to be using you and attract new clients?
- Do your offices have the appearance of professionalism and success?
- Does your brochure or marketing letter continue to reflect the best of what you can deliver?
- Are you active in professional associations and community groups that expose you to potential clients?
- Do you do any pro bono work to build goodwill?
- Are you having breakfast or lunch at least once a week with client prospects or others in a position to recommend you?
- Have you done a mailing lately that informs clients and prospects of your recent achievements?
- Do you advertise, and should you?
- Would you benefit from some well placed PR? Could you generate it by writing an article, or doing some research that would merit news coverage?
- Do you make the occasional (or regular) cold call?
One of the big reasons for continuous marketing is to avoid the mistake Robin Sykes made. Soon after entering consulting as an independent air conditioning contractor, Sykes hit pay dirt with a $180,000 contract from a large company that manages apartment complexes. He figured he was set. Who needed to market beyond that?
Sykes found out four months later when his client changed gears and decided not to renew. The client gave Sykes a week's notice. As Sykes told The Wall Street Journal, "You can be rolling along with one major relationship, pulling in great money, and boom! You're history. You're just a bum out of work."
The secret, when you're highly dependent on one client, is to take advantage of the moment to explore other opportunities. Says Chicago financial consultant Townsend Albright, "Having the comfort level of one big client and the energy to explore opportunities to make the client less important to you is the best position to be in."
Some consultants say, on the other hand, that the best situation is never to have a client so important that you can allow yourself to get lazy. Scrambling for business, and having a variety of small project experiences, may contribute more to your professional development than any single extended engagement with a key client. Being overly dependent on one client can also compromise your ability to challenge your client appropriately in order to achieve results.
Best of all, a nice mix of clients eventually turns the traditional insecurity of being a consultant into something that's actually more secure than having a job. After all, having a job is really like having only one client who, when fortunes turn, can make you "just a bum out of work." But having a generous, well balanced handful of clients lessens greatly the chances that a single defection will have significant impact on your career.
I started my consulting practice with a key client that, at the time, had the power to make or break me. So, while agreeing to work on a per diem basis, I asked that client to guarantee me at least 30 days of work, and to pay half that amount in advance. The client agreed.
With that much of a cushion to help me get rolling, I busied myself in accepting a variety of smaller projects to lessen the load of significance my initial client carried. (I was very lucky not to have to solicit beyond a simple announcement of my launch.) Sure enough, just over halfway through that first big engagement, client Number One shocked me one day by announcing that the engagement could end abruptly; management was balking at committing to our recommendations. At this writing, the project is continuing, but at a slower rate. I count 10 other active clients among my great blessings.
These clients are blessings not only for my financial security, but for the dignity of my practice. With pride, I can say to client Number One: "Look, I want to work for you only if we have a reasonable likelihood of achieving results. I'm not here because you're the only organization that wants me."
A Word on Fees
Consulting fees are literally all over the map they vary according to where you're located and the kind of client base that's available there. In small towns, consulting to small businesses, you might find that fees of $50 to $100 per hour are all the market will bear. In major urban centers, Fortune 500 corporations are comfortable spending much more than that for highly skilled and experienced advisers.
In both kinds of work, many consultants make the mistake of charging too little. "A lot of people who become consultants somehow think less of themselves and are afraid to charge what they're really worth," says Marge Lovero, president of The Entrepreneurial Center Inc. in Purchase, NY.
She cites the example of a senior executive who'd been earning a high six figure salary, lost his job, entered consulting at $1000 a day, then discounted it to a prospective Japanese client that wanted to enter the U.S. market. Yet his proposal was turned down.
Lovero suggested that the consultant raise his fee, reasoning that the client may have felt that at such a low rate, the consultant didn't have enough regard for himself and therefore may not be the best person for the job. Soon after he quintupled his per diem to $5000 a day, he won an engagement from a German firm that wanted to enter the U.S. market.
You may not have to quintuple your fee to get your client's attention, but $1000 a day is on the low side of what a consultant with solid expertise should earn working for a large or highly sophisticated organization. Here's one way to figure it: A general rule of thumb is to earn one billable day of consulting for every three days worked. In other words, for every day in which you're actually executing client work, you'll likely spend two days developing that business and carrying out all the other duties of running a consulting practice.
I used this same rule of thumb (see Chapter 4) when I established a goal of billing for 90 days during my first year. If you were to establish a similar target number of days and charge $1000 per day, you'll gross $90,000, which may or may not be enough, depending on your overhead and personal needs.
Some experienced consultants push themselves to much higher utilization rates once they're well established. Dr. C. David Weimer, an engineering consultant in Poway, CA, now in his 18th year of solo consulting, bills for about 220 consulting days per year, which generates a very nice living while keeping his rates quite reasonable. His secret: A high rate of repeat business (about 70%).
Most consultants end up considering rates comparable to what lawyers and accountants charge, but with a greater range. That's due to the variety of work and the possibility of extreme specialization, which gives rise to such exceptionally high rates as the $5000 per day I cited earlier.
If you plan to buck the trend, and are thinking that you will afford to sell your services for only a few bucks more than you earned on a corporate salary, forget it. The costs of being in business and of bringing in business require much higher rates than that. Never underestimate the value of what you'll contribute.
