7 Lessons Learned From Running A Consulting Company

7 Lessons Learned From Running

a Consulting Company

Although I don’t do much consulting these days, I used to run a consulting

company. It was an Internet marketing agency that helped small and large
brands like GM, HP, Samsung, Viacom and AOL boost their traffic through
search engine optimization and social media marketing.
I did it for around six years, and boy did I make a lot of mistakes. Running a
consulting company is tough, and sadly it’s a lot less sexy than it seems.
Here are 7 lessons I learned from running a consulting company:
Lesson #1: The day you sign a client is the day

you start losing them
Consulting companies have a high churn rate. Some consultants claim that
they have never lost a client, but that’s a bunch of horse crap. If a customer
doesn’t renew their contract, I consider that a lost client.
You never know how long a client is going to last, so make sure you do
everything possible to keep them. Here’s what I used to do to ensure that
clients stay as long as possible:
 Set expectations from day one – before you take on a client, you
should let them know what they should expect and when to expect it by.
If they have unrealistic expectations, let them know why.
 Have a kick-off call – having one is a great way to ensure that things
start on the right foot. One unique thing you can do is send your client
some cookies or snacks in the mail so that they feel like they are with you
during the kick-off call.
 Weekly calls – every week, you should have at least a 5-minute call
with your client. Tell them what you did for the week and see if they have
any questions.
 Send industry updates – if you are a design agency, you should be
sending unique design news to your clients. If you have a marketing
agency, you should send them marketing information. Sending industry
related news to your clients not only shows that you know the latest and
the greatest, but it also makes them feel special.
 Monthly reports – at the end of each month, you should send your
clients a detailed report of everything you did. Ideally, it should include
pretty graphs and other forms of visual aids. You should go over the
report with the client over the phone or in person.
 Monthly surveys – at the end of each month, I recommend sending
your clients a quick survey. The survey shouldn’t have generic questions
like “are you happy?”, but instead it should have specific questions that
help you improve the quality of your work. Include questions such as
“how can we make the monthly report better?”
Lesson #2: Clients are always right, except when

they are wrong
You are always going to have clients telling you what they want. And although
they are paying you, they shouldn’t be telling you what you should be doing.
See, you were hired because you have a specific expertise that they don’t have.
This is why it should be you telling the client what is best for them. It doesn’t
matter if they like what you have to say or not. Your job as a consultant is to
do what’s best for the client.
If you focus on doing what’s best for them, your work will provide better
results for their company.
When trying to do what’s best for your client, you will run into roadblocks.
The best way to be prepared for this is to show them data that backs up what
you want to do and that shows that it is the best solution for them.
Lesson #3: You’re worth every penny, so show it

Every once in a while, you’ll have clients who will make snarky remarks about
how much they are paying you or that they feel they can do your job better
than you can. Don’t take crap from clients; make sure you show them that
you’re worth every penny.
You can do this by showing their return on investment. For example, with my
consulting company, we looked at three numbers: average revenue per
transaction, conversion rate, and search engine traffic. We used those metrics
to show how much additional revenue we brought in through our efforts.
This shows how valuable of an asset you are, assuming you are actually
providing results. The next time they are thinking about canning you, they’ll
think twice because they know you actually bring in more money than you
cost.
Lesson #4: You have to dress to impress
I already mentioned it last week, and I say it again: you have to dress to
impress. The better you dress, the higher of a consulting rate you can demand.
When I started off as a consultant, I dressed like a bum, and I wasn’t able to
make more than $100 an hour. Once I started to dress a bit nicer, I was able to
go up to $250 an hour. And when I dressed really nicely, I was able to
command rates in the four-figure range.
Not only does a nice wardrobe show potential clients that you are successful,
but it will help boost your confidence. Plus, clients want to pay people who are
successful as they hope they can bring that same success to their company.
Lesson #5: The more you charge, the less they

complain
One of the first things I learned is that there is an inverse correlation between
how much a client pays you and how many times they complain. In other
words, the more money a client pays you, the less they will complain.
Large paying clients usually have a lot more cash, so spending it isn’t that big
of a deal. They know that if they want to continue to grow, they have to spend
money. And when doing so, sometimes things work out, while other times
they don’t, but at the end of the day, they have to keep on making bets.
Smaller clients, on the other hand, don’t have that much money. So, if they
hire you and you mess up, they usually don’t have the luxury of hiring
someone else like the larger clients do.
When you first start off, you may have to take on smaller paying clients, but
your goal should be to transition to the larger paying ones as quickly as
possible.
Lesson #6: Fake it till you make it

As I mentioned in Lesson #5, you should be going after larger paying clients.
If you don’t have a bunch of case studies or years of experience under your
belt, don’t worry. You can still lock in the big guys.
All you have to do is figure out what separates your consulting company from
the larger ones. Big clients typically pay big consulting companies, but if you
can show why you are better than the bigger ones, you will lock them in.
At my consulting firm, I realized that clients loved the fact that I myself would
work on their projects compared to the practice of bigger firms assigning
junior consultants to them. Once I found this out, I would tell potential clients
that I personally would be working on their projects, which they would not get
with the bigger firms.
Lesson #7: When it rains, it pours

Like I mentioned earlier, you are going to lose clients. It’s just a matter of
time. Because of this, you should try to conserve as much cash as possible.
When things go south, you don’t want to have to fire people; instead, you want
to operate off your reserves.
A few ways you can conserve cash is:
1. Have a cheap office – my office was cheap and didn’t have windows.
I also didn’t have fancy furniture, and I made sure my clients didn’t see it
by only doing in-person meetings at their offices.
2. Create a variable compensation plan – when my business was
doing well, my employees got compensated well. And when it wasn’t,
they didn’t. Everyone had a low base salary and earned a percentage of
the profit.
3. Keep a healthy reserve – I never depleted my corporate bank
account by taking a high salary. I always left a 6-month to a 1-year
reserve in the bank before I paid myself well.
4. Don’t grow too fast – even if you are constantly getting new
clientèle, don’t hire too quickly. Consider outsourcing some of your work
to a local firm before you hire new employees. This way, if you lose a few
clients, you won’t have to fire any of your staff.
5. Always be closing – even when things look good, remember that
someone still has it better than you. Never stop trying to bring in more
clients as this will help your business stay afloat.
Conclusion
Running a consulting company isn’t easy. It’s a lot of work, and you have tons
of bosses (each one of your clients is your boss). Although it can pay very well,
at the same time it can be very stressful.
If you want to reduce your stress as a consultant, make sure you learn from
your mistakes and only take on clients you can actually provide results to
because being with a client is like being in a marriage. Sometimes you get into
it for the wrong reasons, and eventually it hits you in the face.
So do yourself a favor, don’t get into a marriage unless you know it will work.

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7 Lessons Learned From Running

Although I don’t do much consulting these days, I used to run a consulting

Here are 7 lessons I learned from running a consulting company:

Lesson #1: The day you sign a client is the day

Lesson #2: Clients are always right, except when

Lesson #3: You’re worth every penny, so show it

Lesson #5: The more you charge, the less they

Lesson #6: Fake it till you make it

Lesson #7: When it rains, it pours

A few ways you can conserve cash is:

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