Business Consulting Clients
A guide to finding the best and easiest types of clients for your Consulting Business
After being in business for nearly 50 years and being a business consultant since 2005, there aren’t many business types or sizes that I haven’t seen consulted to in some way. While all businesses can benefit from working with a consultant, I’ve observed that there are businesses that typically see greater improvements and businesses that are easier to secure as clients.
Let’s look at businesses through 2 different lenses; Size & Need for Help.
Prefer to watch or listen?
Check out Episode 64 of our Podcast Everything Business Consulting.
Business Consulting based on size
Startup (New Business)
We define a Startup business as a new business, that has generally been trading for less than a year and low, but growing revenues. The business can be self-funded or funded by external investors.
At this point in the lifecycle of a business, there is a lot of excitement, a low expectation of profitability, and generally a lack of pain. Often, the business owner is peaking on the Dunning Kruger graph, where they have a high level of confidence and positivity without having a high level of knowledge or competence.
The Dunning Kruger effect demonstrates that inexperienced Business Owners are over confident while lacking of competence. Most business owners are stuck in the “valley of struggle” without a way to improve their situation.
Although a new business could really benefit from a Consultant at this stage, and can generally afford it, they don’t see the value or need. We have had Business Consultants in our network who have chosen to charge lower-than-normal fees to work with businesses like this to help give back and grow startups.
In the future, startups will continue on through the business cycle and come to a point where they will see the value in a Business Consultant. Look to foster this type of business over the long term until they become a client.
Although a new business could really benefit from a Consultant at this stage, and can generally afford it, they often don’t see the value or need. We have had Business Consultants in our network who have chosen to charge lower-than-normal fees to work with businesses like this to help give back and grow startups.
In the future, startups will continue on through the business cycle and come to a point where they will see the value in a Business Consultant. Look to foster this type of business over the long term until they become a client.
Small Businesses (Less than $1M)
We define a small business as less than one million dollars in annual revenue. In most cases, this is run by the owner themself, almost always working in the business.
A business like this is not typically able to afford a high fee due to the relatively low revenue. With this said, the revenue can grow in the future, making them a great potential client over the long term - or, a percentage-based fee will allow your income to grow as you help their business grow.
The typical small business owner works in their business
Small Businesses can be very easy to sign as a client. The path to the business owner is straightforward without many gatekeepers, and the owner often feels overwhelmed by working in the business, making any solutions you’re offering look very attractive.
We recommend that you keep a relationship with small business owners with a view for the future. Your portfolio of clients should have a limited number of small businesses so it doesn’t drag down your consulting income.
Hint: We often see new consultants sign up too many small business clients because they’re fairly straightforward to sign up. This can stunt income potential and take excessive time from the start with a large number of lower-value clients.
Small-Medium Businesses ($1M-$10M)
A typical SME (Small to Medium Business) has an annual revenue of between one and ten million dollars. This business is of the size where the business owner will usually focus their attention on running the business with the aid of one or more managers.
An SME is generally able to afford a reasonable fee due to the level of revenue. Additionally, this size of business should be fairly agile and have the ability to quickly grow. Using the ConsultX Consulting Fee Structure, you’ll be able to increase your fee quickly in line with the revenue growth.
This category of businesses can be easy to sign as a client. Owners feel the pressure of juggling the day-to-day with the myriad of problems that come from staff, suppliers, and customers at this level. While gatekeepers can be present, the correct process can be used to make direct contact with the business owner, plus they are the regular attendees of business networking events.
SMEs offer balance for a Business Consultant, being fast to sign while having the ability to pay a fair fee.
We recommend that most business consultants target this type of business as their core client. They are fast and simple to sign up, represent a large number of businesses in the marketplace, and improvement can result in fast results.
Medium-Large Private Businesses ($10M+)
Above the ten-million-dollar annual revenue mark, businesses increase in complexity, with more moving parts and greater turnover, but the situation remains relatively similar to an SME business.
The situation of the owners can vary, with some experiencing success (as they define it) while others are struggling under huge pressure.
Acquiring these clients is all about moving in the right circles, having the right discussions with the right people at networking events, and connecting with the external accountants that may be able to refer you to the owner. A direct approach can work, however, the number of gatekeepers will increase as the size of this business increases.
Often, these businesses have plateaued, without direction or desire from key people to continue growth.
Although the larger nature of this company can slow the adoption of change, the potential for growth can be significant thanks to the higher level of manpower to get stuff done.
Some of these businesses will have a Board of Directors, which will need to approve your appointment as a Business Consultant. This provides an opportunity to network as well as the potential for opposition from board members who believe they don’t need your assistance.
We recommend that you keep a relationship with small business owners with a view for the future. Your portfolio of clients should have a limited number of small businesses so it doesn’t drag down your consulting income.
Large Corporate Company
This is a larger company owned by shareholders, generally with hundreds, or thousands of employees. A corporation will have a Board of Directors and a governance structure in place.
It can be very difficult to get into a Business Consulting role in this type of Business, however, it can also be very financially rewarding.
A large corporate can easily afford a high fee due to having high revenue.
The challenge in signing a client like this, will be connecting with the decision-makers and getting the Board of Directors to agree to this. Often, they will feel threatened or that your expertise isn’t needed.
A long period of time is usually needed to begin a discussion with this kind of Business, let alone get them as a client.
These challenges can be negotiated if approached with caution, networking is used to connect with the right people and worked at over the medium-long term.
It is also possible to act as a Business Consultant to a single department to a subsidiary.
We recommend that you only attempt to Consult with Large Corporations if you have experience in this type of business, a strong network, and the ability to wait over the long term to acquire clients, while also securing some smaller, easier-to-get clients.
Company directors often need convincing a Business Consultant is required.
Need for help
Although it’s not obvious to the untrained eye, an astonishing 75% of business owners are struggling and almost all have room for improvement. This means that most businesses have a need for help. Let’s look at the statistics for the SME sector, which reflect the majority of businesses our consultants work with.
The following information has been taken from our E-Book Become a Successful & High Earning Business Consultant: The ULTIMATE Guide. You can download it for free by clicking here.
5% of owners receive generous salaries. Their business pays a large dividend and the owner works on the business, not in it. This is a very valuable business.
20% of owners receive generous salaries but no dividends. They work in the business. This is a low-value business.
40% of owners receive a very low paid salary, with no dividend. They have a high mortgage as the business continually needs cash. No value in the business.
35% of owners receive no salary or dividend, they live off the equity growth in their home. The business loses money, it has no value. Failure is imminent.
When working with a business, we put categorize its needs based on the current situation and performance level:
Grow
Every business can be better. Opportunities exist to take the business to the next level. The right strategy needs to be developed with a clear plan, proper management and implementation across all areas of the business. Prevent this business from a backward step or decline in profitability that often comes from the complacency of a performing business.
Improve
Often there is significant profit leakage within the business that should be contributing to the income being made by the owner. The options then become available to properly strategize the growth path of the business and work on all the critical areas to make it successful and more profitable.
Rescue
The business requires immediate attention with a number of strategies required to release cash into the business. Profitability needs to be established and fixed first so that the business can be stabilized before it's too late.
All Businesses could benefit from a Consultant, Coach or Advisor
Most business owners lack the ability to accurately gauge how they’re actually doing in real-time.
On the other hand, Accountants, Consultants, and Advisors usually lack the tools to diagnose how a business is doing, and a solid methodology to improve them.
Coaches often struggle to acquire clients in the first place!
If you’d like to find out more about how ConsultX can help provide a better way, click the link below.