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Starting a Consulting Business By Leveraging Your Work

Article:

There have been many discussions about what is necessary to

"engage" a client. Engaging a client becomes even more critical

for a consulting firm which is just establishing itself,

especially since the firm probably does not have many (or any)

prior clients to use as a reference.

A firm should perform preliminary research to identify the types

of services capable of being offered. They should then perform a

comparative analysis of these services in relationship to the

services being offered by competitive firms (if any), and they

should also review the current needs of identified target

markets.

A consulting firm sells professional services. The consulting

firm must ascertain the value of the professional qualifications

which they are bringing to the market place. The consulting firm

must also assess the perceived value of these services from the

perspective of the target market. If the consulting firm has a

valuable service to offer, then this service is what they should

be marketing to potential clients.

For start-up consulting firms, the fact that they probably do

not have a long list of previous clients poses numerous

problems. Since they can't identify what they've done with

previous clients, they sometimes tend to reduce the value of the

professional services capable of being provided by reducing the

dollar value of services proposed. This is definitely a flaw on

the part of the consulting firm, and every effort should be made

to prevent this type of "negotiating tactic" to be used when

engaging preliminary clients.

Reduction of fees to engage initial clients should not be a

device which is used to obtain a client base necessary to

substantiate the value of services offered. In other words, if

the firm is not convinced in its' own mind that the professional

services they bring to market are valuable to potential clients,

a reduction in the consultant fees to engage clients will do

very little to validate the actual value of the professional

services offered.

Another way to view this dilemma would be: Does the actual value

of professional services offered increase as the firm's client

base increases? It may be true that a firm's experience and

proficiency may increase over time, but are the professional

services minimal at the outset, or, is the level of client

experience the only thing which a firm lacks when it first

starts out.

A firm may chose to take certain steps to address the lack of

client experience, but it does not seem prudent to reduce the

value of the professional services offered merely due to the

fact that the firm has minimal client experience.

A firm may chose to provide certain fixed services on a pro-bono

basis, separate and aside from the proposed work they are

performing. These pro-bono services may reduce the total cost of

services provided to the client, but the for fee services are

still being provided at the normal rate. Reducing the fee

creates numerous potential problems with the fee vs. value of

services offered. Providing additional services at no charge

avoids this problem, and also addresses some of the needs which

start-up firms experience in their attempt to engage new

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clients. Charging $100./hr and providing some additional

pro-bono work is definitely different than doing all of the work

for $80./hr., although the net cost to the client may be the

same.

It should be easier to refuse to do something for free, than it

would be to convince a client that the value of your services

have increased by $20./hr!

A firm should determine how to adjust for a lack of previous

client experience, and this should be something which is

addressed in their operating and marketing procedures. It is

another operational responsibility (similar to managing the

firm, accounting, human resources) which is required to be dealt

with in order to maintain a successful firm.

Finally, if a firm does reduce the value of professional

services offered, at what time will they feel confident enough

to place an accurate value on these services, and how will this

be accomplished with existing clients, and potential clients who

are aware of existing fee structures?

About the author:

Cam Forbes, founder and Managing Partner of Opus One Ventures

has been speaking, training and coaching business owners,

entrepreneurs, and sales people around the world. For more

information about Forbes' "Consulting Solution Toolkit" and how

to get started in Consulting, visit

http://www.consultingstartupkit.com or to receive his free

report about getting started in consulting visit

http://www.consultingstartupkit.com/free_report.html.