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Starting a Consulting Business By Leveraging Your Work
Experience
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 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.
Written By: Cam Forbes
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