If you work in engineering, as I do, then you find yourself drawn to the large refineries, processing plants and petrochemical industries at some stage or other.
Sounds fair right? Lots of machines which must have lost of need for engineering.
Sounds fair, but it is wrong. In fact, if you are in my field then refineries and process plants are the last place you wan to go. Why? Everyone else has had the same thought as you have.
This means your growth is slowed because you have to sacrifice profits. And if you don't sacrifice profits you don't make the cut. Because for these companies, people like me aren't scarce. A new one knocks on their door every day.
You can take a lot away from this idea. Issues like extraordinary value, strong personal relationships with buyers, and strong brand equity all spring to mind.
But the real point, the one I have spent the past five years learning and relearing, is don't go to the lakes where all the fishermen are. Even IF their are lots of fish there.
If this is so simple and so obvious why isn't everyone doing it? The sheer size of the prize, regardless of how much the odds are actually stacked against you.
It is far better to fish where there are fewer fishermen about, even if the size of the prize is smaller. You will get further quicker by offering scarce services to industries where nobody else is looking. That might mean an industry sector, a left out department, a project or a new methodology.
Growth Rule? Go where others aren't.
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Showing posts with label Consulting Cashflow. Show all posts
Showing posts with label Consulting Cashflow. Show all posts
January 25, 2010
January 21, 2010
Retiring on Trust
I was poking around the internet on consultants sites recently, as I often do, and I came across Alan Weiss' site Summit Consulting.
Alan appears to have a brilliant retirement plan set up there. (Yes, I doubt he'll retire also)
He is licensing the IP he has built up over the years to consultants around the world in perpetuity. And doing so for a hefty fee also. (At first blush)
Here we see Alan giving us all a lesson in how multiple relationships built on trust can give you a lever large enough to move the world.
Even when Alan stops circling the world his books and articles will continue to be referred from one consultant to another for many years to come. His brand is one that does what it says on the tin, with a track record of consultant millionaires who have passed through his mentoring programs,
The market trusts his brand, they believe that it is of value, and it is now available only through the people Alan allows in the program. Trust, value and scarcity - great case study.
If you enjoyed this post please consider subscribing to this feed, or you can subscribe to Consulting Pulse by email.
Alan appears to have a brilliant retirement plan set up there. (Yes, I doubt he'll retire also)
He is licensing the IP he has built up over the years to consultants around the world in perpetuity. And doing so for a hefty fee also. (At first blush)
Here we see Alan giving us all a lesson in how multiple relationships built on trust can give you a lever large enough to move the world.
Even when Alan stops circling the world his books and articles will continue to be referred from one consultant to another for many years to come. His brand is one that does what it says on the tin, with a track record of consultant millionaires who have passed through his mentoring programs,
The market trusts his brand, they believe that it is of value, and it is now available only through the people Alan allows in the program. Trust, value and scarcity - great case study.
If you enjoyed this post please consider subscribing to this feed, or you can subscribe to Consulting Pulse by email.
January 19, 2010
Consulting Cashflow 101
A while ago I published this graphic on the blog. I think its a great illustration of the journey consultants make from time based billing through to maximum discretionary time.
Generating consistent cashflows is the killer for most sole consultants and early stage consulting companies. Over the years I have run a lot of posts on this via this blog and I thought I would try to list some of them together to help those of you stepping out on your own.
The key to generating consulting cash flows is Brand + IP. By generating a brand based on trust, and combining this with different elements of Intellectual property you can leverage your time and generate flows of cash to fuel your lifestyle, and your future consulting plans.
I hope these posts are of use, please do not hesitate to post feedback and highlight the areas where more information is required.
This is no silver bullet of course. No great enterprise ever started without extraordinary effort. But when it is done, it is done.
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June 17, 2009
Reverse Auctions for Management Consultants
Recently in the UK there was a series of articles about how British telecom had dramatically reduced its consultant workforce by conducting an aggressive reverse auction.
My experience with BT is that they are compelled to do things way over the top. A typical british process for the sake of process approach, so they probably needed to do something dramatic.
But in general the whole idea of auctions and reverse auctions is something that I ould recommend steering well clear of at all times.
The whole idea is that a service package or similar is placed online, and then everyone starts to bid for who can do it in the most cost effective manner. The winner is the lowest price, and if you can't get that low then you're outta there.
Taking part in this sort of foolishness only hastens the drive towards commoditization, and reduces the likelihood that you will get a fair price for the work that you do.
No check of value, track record, and absolutely no appreciation of the fact hat driving people out of business is no way to get to a great result. Particularly if they are your service providers...
But the point is not to attack these processes as such, that is predictable.
The point is to implore you and any other consultants out there not to participate in them at any time!
Auctions like this are springing up all over the place. From contracting, which is somewhat justified, and particularly in freelancing.
We see sites like Elance.com and others springing up where the end game is almost totally detemrined by price. The problem with this? The world is not flat, and there is always someone from low wage economies who will do it for the price of bread.
And that is no good either for us, or for them...
Stay out of them, do not allow them to get further footholds into the freelance or consulting game.
The problem with competing on price is that you might win!
If you enjoyed this post please consider subscribing to this feed, or you can subscribe to Consulting Pulse by email.
My experience with BT is that they are compelled to do things way over the top. A typical british process for the sake of process approach, so they probably needed to do something dramatic.
But in general the whole idea of auctions and reverse auctions is something that I ould recommend steering well clear of at all times.
The whole idea is that a service package or similar is placed online, and then everyone starts to bid for who can do it in the most cost effective manner. The winner is the lowest price, and if you can't get that low then you're outta there.
Taking part in this sort of foolishness only hastens the drive towards commoditization, and reduces the likelihood that you will get a fair price for the work that you do.
No check of value, track record, and absolutely no appreciation of the fact hat driving people out of business is no way to get to a great result. Particularly if they are your service providers...
But the point is not to attack these processes as such, that is predictable.
The point is to implore you and any other consultants out there not to participate in them at any time!
Auctions like this are springing up all over the place. From contracting, which is somewhat justified, and particularly in freelancing.
We see sites like Elance.com and others springing up where the end game is almost totally detemrined by price. The problem with this? The world is not flat, and there is always someone from low wage economies who will do it for the price of bread.
And that is no good either for us, or for them...
Stay out of them, do not allow them to get further footholds into the freelance or consulting game.
The problem with competing on price is that you might win!
If you enjoyed this post please consider subscribing to this feed, or you can subscribe to Consulting Pulse by email.
April 23, 2009
Can you compete? (1 of 3)
Before you can sell, you need to know what you are selling. Before you can get that great job - you need to be able to pitch a compelling case for yourself. In fact, identifying and commercializing your competitive advantages is one of the areas where consultants regularly fail. (Sadly)
Over the next week we will be running three posts on this.
1) This one - what is competitive advantage
2) A follow up - Identifying what you already have
3) And a closer - Taking it to market
It is particularly important for consultants. Clients want us to be commodities, and often they try to force us to compete on price. Nothing wrong with that, I would do it if I were them.
But for us it means getting less than fair pay for our work. It means shrinking profits, reduced standards of living and limitations on the sorts of people we can draw into the consulting profession.
Competitive advantage for consultants comes in 5 separate streams as I see it.
1. Intellectual Property
The king of competitive advantage. The one that turns your consultancy from a job for you and the people you hire, to a sale-able product. Something that can be sold on once you decide to hang up your shingles.
I worked with a guy called John Moubray once. He developed an engineering consultancy that was based on one book, 6 or 7 presentations, some calculations and very powerful diagrams and troubleshooting tools.
His IP meant he could license his products to others, he could create a moat around his services that nobody could cross legally - unless they developed a suite of IP products that were equally as powerful as his were.
And when he passed on it meant that his life's work was able to be sold by his widow.
IP often gets used to speak about software, but it is far broader and a whole range of fee generating products.
Coca-Cola has very powerful and valuable IP in its original recipe. So too does Kentucky Fried Chicken and Google. Salesforce.com doesn't, and this can be seen in the number of copycat companies that have entered the SaaS environment following their lead.
If you have IP that is both scarce and of value then you get to set market prices, you get to draw in clients instead of hunting for them, and you get to create space between yourself and your clients.
2. Brand
I don't want people in engineering to say "Get me a reliability consultant". I want them to say "Get me Daryl Mather". My brand is my competitive advantage.
Your brand needs to stand for value, integrity, quick results, different and rapid approaches and whatever makes it work for your market sectors. Building your brand is a challenge, and one that you need to be dedicating at least 20% of your time each week to. (Regardless of whether it is a personal or company brand)
But be careful... personal brands need you to be at the helm at all times. Business brands enable you to take holidays at least.
Your brand is probably the second most powerful IP area. It drives repeat work, drives referrals, and will drive people to look for you - rather than you looking for them.
Sources of brand creation include your LinkedIn profile, articles and books that you write (including self published books), speeches that you give, You Tube videos you publish and a whole range of other items. Brand marketing tools like this create the likelihood that you will be at the top of their mind when they have problems you can help with.
3. Size
Whether it is because you are small and nimble or large and resource loaded, your size is a competitive advantage that you must be able to market fully and give examples of how it will add value to this engagement.
I have only recently joined a large organization. The difference is stark. I have access to capital, resources, marketing prowess and funds, and a range of specialists that I could never get my hands on as part of a smaller operation.
But... when I was part of a smaller operation we could move far quicker. We were far more flexible, our overheads were lower and we could change strategic direction in a heartbeat of the market told us to.
So it is up to you to work out what your size means to the market, and how that gives you advantages and in what areas.
Size doesn't only mean physical size however. It can also mean market size. Salesforce.com dominates CRM through its SaaS product. But it is now competing with SAP< Microsoft and Oracle.
And surprisingly it remains firmly in the lead. Why? Because it dominated the space before they entered, and it has been able to use that early dominance to maintain and increase its share of a growing market.
I used to work with a firm called AMT-Sybex Ltd in the UK. They were a relatively small IT firm specializing in what they called essential industries. Things like water, gas, electricity, rail infrastructure and so on.
And despite competing with everyone from SAP to IBM to Accenture, they were able to maintain their sizable market share in those industries. Why? Industry knowledge, industry relationships, long term results, and the fact that their track record had proved them as a safe pair of hands.
4. Cost...
The frightening one. As I have said here many times before the danger of competing on price is that you just might win.
But if you can produce from a low cost base, then you don't need to sacrifice profitability in order to get increased marketshare.
For example, Salesforce.com (again) has a subscription model. They have large volumes of companies and SME type organizations who pay low fees for use of their products. (Our license cost less than $600 for five of us for a year.)
KPMG and the rest of the big four (are there four now?) consultancies have all maximized their pull on low wage economies to get these advantages. Engineering drawings, coding, design work and many other analytical and repetitive types of work have been outsourced to low wage countries. meaning they can continue to offer their products and services at vastly increased profits or reduced costs for the clients.
Reducing costs can also relate to the way you structure your own business. Taking full advantage of online software applications, labor structures and contractual relationships, as well as savvy taxation planning and management means vastly reduced overheads for your business.
Something worth spending time on to get to a price (or profit) advantage.
5. Network
I do not think this is the least important. Maybe the other way around actually. My network is a continual source of information, leads and resources for me to draw from.
It is the network that allows AMT-Sybex Ltd, mentioned earlier, to continue to compete in a small market space against giants in the industry. It is your network that can make a solo consultant like you, able to sell up the hierarchy and chain as well as any large consultancy.
If you have a strong network. Filled with commercial decision makers and influencers, all of whom have trust in your character and abilities, then you get the work before anybody else every hears about it.
Next post we will start to get into issues around how you can maximize the advantages that you already have! Once you get moving it gets easier...
Related Resources
Over the next week we will be running three posts on this.
1) This one - what is competitive advantage
2) A follow up - Identifying what you already have
3) And a closer - Taking it to market
What is competitive advantage?
This is what Warren Buffet refers to as a "moat". A barrier to entry that protects the castle from the market invaders. And as he seems to have done okay for himself it seemed like a wise way to start this discussion.It is particularly important for consultants. Clients want us to be commodities, and often they try to force us to compete on price. Nothing wrong with that, I would do it if I were them.
But for us it means getting less than fair pay for our work. It means shrinking profits, reduced standards of living and limitations on the sorts of people we can draw into the consulting profession.
Competitive advantage for consultants comes in 5 separate streams as I see it.
1. Intellectual Property
The king of competitive advantage. The one that turns your consultancy from a job for you and the people you hire, to a sale-able product. Something that can be sold on once you decide to hang up your shingles.
I worked with a guy called John Moubray once. He developed an engineering consultancy that was based on one book, 6 or 7 presentations, some calculations and very powerful diagrams and troubleshooting tools.
His IP meant he could license his products to others, he could create a moat around his services that nobody could cross legally - unless they developed a suite of IP products that were equally as powerful as his were.
And when he passed on it meant that his life's work was able to be sold by his widow.
IP often gets used to speak about software, but it is far broader and a whole range of fee generating products.
Coca-Cola has very powerful and valuable IP in its original recipe. So too does Kentucky Fried Chicken and Google. Salesforce.com doesn't, and this can be seen in the number of copycat companies that have entered the SaaS environment following their lead.
If you have IP that is both scarce and of value then you get to set market prices, you get to draw in clients instead of hunting for them, and you get to create space between yourself and your clients.
2. Brand
I don't want people in engineering to say "Get me a reliability consultant". I want them to say "Get me Daryl Mather". My brand is my competitive advantage.
Your brand needs to stand for value, integrity, quick results, different and rapid approaches and whatever makes it work for your market sectors. Building your brand is a challenge, and one that you need to be dedicating at least 20% of your time each week to. (Regardless of whether it is a personal or company brand)
But be careful... personal brands need you to be at the helm at all times. Business brands enable you to take holidays at least.
Your brand is probably the second most powerful IP area. It drives repeat work, drives referrals, and will drive people to look for you - rather than you looking for them.
Sources of brand creation include your LinkedIn profile, articles and books that you write (including self published books), speeches that you give, You Tube videos you publish and a whole range of other items. Brand marketing tools like this create the likelihood that you will be at the top of their mind when they have problems you can help with.
3. Size
Whether it is because you are small and nimble or large and resource loaded, your size is a competitive advantage that you must be able to market fully and give examples of how it will add value to this engagement.
I have only recently joined a large organization. The difference is stark. I have access to capital, resources, marketing prowess and funds, and a range of specialists that I could never get my hands on as part of a smaller operation.
But... when I was part of a smaller operation we could move far quicker. We were far more flexible, our overheads were lower and we could change strategic direction in a heartbeat of the market told us to.
So it is up to you to work out what your size means to the market, and how that gives you advantages and in what areas.
Size doesn't only mean physical size however. It can also mean market size. Salesforce.com dominates CRM through its SaaS product. But it is now competing with SAP< Microsoft and Oracle.
And surprisingly it remains firmly in the lead. Why? Because it dominated the space before they entered, and it has been able to use that early dominance to maintain and increase its share of a growing market.
I used to work with a firm called AMT-Sybex Ltd in the UK. They were a relatively small IT firm specializing in what they called essential industries. Things like water, gas, electricity, rail infrastructure and so on.
And despite competing with everyone from SAP to IBM to Accenture, they were able to maintain their sizable market share in those industries. Why? Industry knowledge, industry relationships, long term results, and the fact that their track record had proved them as a safe pair of hands.
4. Cost...
The frightening one. As I have said here many times before the danger of competing on price is that you just might win.
But if you can produce from a low cost base, then you don't need to sacrifice profitability in order to get increased marketshare.
For example, Salesforce.com (again) has a subscription model. They have large volumes of companies and SME type organizations who pay low fees for use of their products. (Our license cost less than $600 for five of us for a year.)
KPMG and the rest of the big four (are there four now?) consultancies have all maximized their pull on low wage economies to get these advantages. Engineering drawings, coding, design work and many other analytical and repetitive types of work have been outsourced to low wage countries. meaning they can continue to offer their products and services at vastly increased profits or reduced costs for the clients.
Reducing costs can also relate to the way you structure your own business. Taking full advantage of online software applications, labor structures and contractual relationships, as well as savvy taxation planning and management means vastly reduced overheads for your business.
Something worth spending time on to get to a price (or profit) advantage.
5. Network
I do not think this is the least important. Maybe the other way around actually. My network is a continual source of information, leads and resources for me to draw from.
It is the network that allows AMT-Sybex Ltd, mentioned earlier, to continue to compete in a small market space against giants in the industry. It is your network that can make a solo consultant like you, able to sell up the hierarchy and chain as well as any large consultancy.
If you have a strong network. Filled with commercial decision makers and influencers, all of whom have trust in your character and abilities, then you get the work before anybody else every hears about it.
Next post we will start to get into issues around how you can maximize the advantages that you already have! Once you get moving it gets easier...
Related Resources
April 19, 2009
The problem with great ideas
...is that everyone has them. In fact the average CEO, VP, Director or general manager is inundated with great and innovative ideas every single day.
People seem to think that the role of senior management is to assess the great ideas and place bets on those that could do well. No chance... there is no time; and these days there is no money either.
And once their great idea is off their chest they relax, safe in the knowledge that they have passed to torch to someone else so now it's their fault if nothing happens.
If you are a consultant selling great ideas, in this time of exploding ideas, then the competition will be fierce, and the market will be unkind, and your future will be limited more than it should be.
Instead of great ideas only (because some vision is vital) make sure to wrap them in practical details.
Who is going to be interested? Why? How are they going to implement them? How are they going to embed them? Why should they change anyway? And lastly, but most importantly of all... where's the beef? How much is it worth and how long will it take to get the money in the bank.
Ideas are like backsides. Everyone has one and thinks every one else's stinks.
People seem to think that the role of senior management is to assess the great ideas and place bets on those that could do well. No chance... there is no time; and these days there is no money either.
And once their great idea is off their chest they relax, safe in the knowledge that they have passed to torch to someone else so now it's their fault if nothing happens.
If you are a consultant selling great ideas, in this time of exploding ideas, then the competition will be fierce, and the market will be unkind, and your future will be limited more than it should be.
Instead of great ideas only (because some vision is vital) make sure to wrap them in practical details.
Who is going to be interested? Why? How are they going to implement them? How are they going to embed them? Why should they change anyway? And lastly, but most importantly of all... where's the beef? How much is it worth and how long will it take to get the money in the bank.
Ideas are like backsides. Everyone has one and thinks every one else's stinks.
Sometimes it is better to walk away
Is it always business at any cost? When is it smarter, and more profitable to walk away?
When you are faced with any form of auction. be it online freelance sites, price sensitive bidding only, and the dreaded reverse auctions I have seen recently. Get out of there, they do not value your work and they see you as a commodity.
There will be other chances, this won't be your last chance to bid on a large tranche of work, and there are many other prospects who do value what you can provide.
It is easy to be misled on size. "It's a huge opportunity / contract" has been the cry hat has sent even the largest of us into a profit losing spiral. (Check out the recent losses by BT, Accenture and Fujitsu )
When you are faced with any form of auction. be it online freelance sites, price sensitive bidding only, and the dreaded reverse auctions I have seen recently. Get out of there, they do not value your work and they see you as a commodity.
There will be other chances, this won't be your last chance to bid on a large tranche of work, and there are many other prospects who do value what you can provide.
It is easy to be misled on size. "It's a huge opportunity / contract" has been the cry hat has sent even the largest of us into a profit losing spiral. (Check out the recent losses by BT, Accenture and Fujitsu )
You have far better things to do with your time than spend several months or years fighting to implement an underfunded program with narrow or non-existent profits.
And the worst thing about competing on price is that you could win...
March 31, 2009
Taking the costs out of consulting (new Squidoo Lens)
I just finished working on a Squidoo lens on bootstrapping tools for consultants. (http://www.squidoo.com/Online-Apps)
It is my first real lens, so please leave comments to tell me what I am doing wrong. I thought the information would be very useful to have in one place. I am going to keep updating it over the next few weeks if it gets a lot of attention.
Going to be doing a bit of experimenting with Squidoo. Seems like something that could really add value.
Does anybody know how to create those lists where the items reorganize themselves based on the number of clicks they get?
It is my first real lens, so please leave comments to tell me what I am doing wrong. I thought the information would be very useful to have in one place. I am going to keep updating it over the next few weeks if it gets a lot of attention.
Going to be doing a bit of experimenting with Squidoo. Seems like something that could really add value.
Does anybody know how to create those lists where the items reorganize themselves based on the number of clicks they get?
Publish eMagazines - Free... another bootstrapping tool
Amazing how rapidly value disintergrates on the Internet. Webex used to sell a product of value, now DimDim.com gives it away. (And I love it) Self publishing used to be a pretty big sub-industry in the publishing game. LuLu.com and CreateSpace.com (Amazon) have pretty much put an end to all of that. There used to be a raft of companies who charged to provide you with the services or software for publishing professional looking eBooks - today we have MyeBook.com.
Personally I still have doubts about whether eMagazines are truly ready for prime time, but there are areas and sectors where I have seen them be somewhat successful. (I may even consider doing a monthly version for the newsletter)
I haven't used it yet, and I am seriuously considering it. But I love the concept. Free publishing of eBooks can only add to the quality stuff ou there to read and consume. They also state that they have the ability to tie in text and audio. The eBook I browsed on Bob Marley definitely had audio and it was a pretty good effect.
Delivery of services free or at cut price is one of the very great benefits businesses are able to get out of being more internet savvy. Wonderful time to be in business...
March 27, 2009
When can I submit a quote?
I am running at about 80% right now. That means that 80% of the quotes I submit go through to orders for work.
Hard work. I could be a lot worse but I don't just quote on anything. Quotes need to be personal and relevant, so they take time.
it is tempting to sling in a quote at the first sniff of an opportunity. But I prefer to look for the following signals.
1. The money definitely exists, and they are definitely interested in spending it on this work.
2. The person who will receive your quote is the person who will sign the check.
3. They have a full understanding and appreciation of the value of the work.
4. It is not an auction. This is vital. Quoting on work where there are already a number of people in the game is hazardous to your utilization rates. Companies that set up situations like this are not after value, and often don't really understand it. They are trying to commoditize consultancy services. Stay away from these.
When these four things line up then your chance of striking is very high. When anyone of these is not in alignment, your chances diminish significantly.
Hard work. I could be a lot worse but I don't just quote on anything. Quotes need to be personal and relevant, so they take time.
it is tempting to sling in a quote at the first sniff of an opportunity. But I prefer to look for the following signals.
1. The money definitely exists, and they are definitely interested in spending it on this work.
2. The person who will receive your quote is the person who will sign the check.
3. They have a full understanding and appreciation of the value of the work.
4. It is not an auction. This is vital. Quoting on work where there are already a number of people in the game is hazardous to your utilization rates. Companies that set up situations like this are not after value, and often don't really understand it. They are trying to commoditize consultancy services. Stay away from these.
When these four things line up then your chance of striking is very high. When anyone of these is not in alignment, your chances diminish significantly.
March 8, 2009
Pssst.. wanna buy a dollar for 50 cents?
So you have fought tooth and nail and made it through the last month/quarter whatever. You've been very active and managed to sustain / grow your consulting engagements, personal financial commitments have been met, and you have a surplus of funds.
Now what? What do you do with them?
In business you have three options, you can
a) Put them back into the business to try to create additional value
b) Purchase growth through expansion or acquisition, or
c) Return them to the shareholders (you) for them to reinvest where they can get a better return.
These are your options every time you have excess capital to allocate within the business world. (Or even the private investment world)
All are valid options and any right thinking consultant in the early 21st century should at times be doing all three of these. But for now lets look at option a) reinvesting in the business.
Going for growth means increasing the return on capital invested, either through increased revenues or improved margins.
Cost reduction is something we have spoken about here a lot, and with the abundance of software and technology out there today there is no reason why you cannot slash a lot of the infrastructure costs associated with running a small to medium sized consultancy.
Increasing revenue through investment.. now thats a different story. As I have always seen it you have two options.. You can invest in either (1) your assets, those things that by themselves will produce revenue, or (2) your enablers. (Those things that will not produce revenue without something else)
The choice is clear and the decision is pretty straightforward. Where will you get the best return on capital? Think like a client, they won't spend money with you unless it provides the best returns for what they are trying to do.
Why should you be any different?
Option 2 is really about enablers and abilities. This is very wise to consider if you are lacking in skills that can earn you more revenue. Sales training for example, with a reputable vendor, can provide you with a powerful skill set that will return you many times the investment.
But the skills need to be something that will add to your bottom line, or that will allow you to expand your offerings into other commercial areas somehow.
Option 1 is where I like to invest. What can I put cash into today that I can leverage to sell more consulting and generate greater revenue. These are assets, not enablers. Enablers will, when combined with assets, hlp you to generate more wealth.
Assets, well marketed, will generate revenues with little additional efforts.
Software, SaaS products, training course development, Intellectual Property, and online communities are all forms of assets. All examples of how you can leverage todays cash to produce tomorrows revenues.
So are any of these a $1 for 50cent option? This is a hard one to sort out. Given that you have already canvassed your client base, and you see a real opportunity there, not just a pie in the sky dream, then this may help.
Now what? What do you do with them?
In business you have three options, you can
a) Put them back into the business to try to create additional value
b) Purchase growth through expansion or acquisition, or
c) Return them to the shareholders (you) for them to reinvest where they can get a better return.
These are your options every time you have excess capital to allocate within the business world. (Or even the private investment world)
All are valid options and any right thinking consultant in the early 21st century should at times be doing all three of these. But for now lets look at option a) reinvesting in the business.
Going for growth means increasing the return on capital invested, either through increased revenues or improved margins.
Cost reduction is something we have spoken about here a lot, and with the abundance of software and technology out there today there is no reason why you cannot slash a lot of the infrastructure costs associated with running a small to medium sized consultancy.
Increasing revenue through investment.. now thats a different story. As I have always seen it you have two options.. You can invest in either (1) your assets, those things that by themselves will produce revenue, or (2) your enablers. (Those things that will not produce revenue without something else)
The choice is clear and the decision is pretty straightforward. Where will you get the best return on capital? Think like a client, they won't spend money with you unless it provides the best returns for what they are trying to do.
Why should you be any different?
Option 2 is really about enablers and abilities. This is very wise to consider if you are lacking in skills that can earn you more revenue. Sales training for example, with a reputable vendor, can provide you with a powerful skill set that will return you many times the investment.
But the skills need to be something that will add to your bottom line, or that will allow you to expand your offerings into other commercial areas somehow.
Option 1 is where I like to invest. What can I put cash into today that I can leverage to sell more consulting and generate greater revenue. These are assets, not enablers. Enablers will, when combined with assets, hlp you to generate more wealth.
Assets, well marketed, will generate revenues with little additional efforts.
Software, SaaS products, training course development, Intellectual Property, and online communities are all forms of assets. All examples of how you can leverage todays cash to produce tomorrows revenues.
So are any of these a $1 for 50cent option? This is a hard one to sort out. Given that you have already canvassed your client base, and you see a real opportunity there, not just a pie in the sky dream, then this may help.
What is the ROIC (Return on invested capital) for existing revenue streams? Which are growing at a steady rate? For example, say you run a services arm focused on delivering business process work for Salesforce.com.
How much do you spend on that every year? How much profit does it generate? Is it steady, does it dip or is it growing?
Or maybe you deliver some range of productivity software, what is the ROIC on that product? Same deal, is it growing, steady or shrinking?
This can give you a pretty good idea of what your market is likely to go after, as well as what the market you have exposure to like to spend money on. With todays technology for advertising you can take this a step further and try to calculate the ROIC for your online advertising also.
Once you know where the money is likely to come from, then you need to work out how to get into it for less than the price you would normally pay.
If it is about your webpage then get a quote locally. With this in hand take time to scour Rentacoder.com and other freelancer sites. Again, you are looking for the same value (now that you have calculated the value) but at a discount.
That way if you get it wrong, and the product or service is going to return 10% instead of 15% then you have less at risk, and you are still likely to turn a dollar over.
What are your investment options this quarter?
February 4, 2009
Funding the next stage of growth
The other day I was thinking - "If Barrack Obama can go straight to the public for fund raising, why can't businesses do the same?"
Raising capital to fund the next growth stage has always been fraught with problems. Finding amenable angel investors, an IPO, selling off equity to some industry insiders. All part of the complicated process of getting access to capital.
And these have only compounded recently as credit has dried up.
For example, gold mining companies haven't earned money like this for over a decade at least. Yet they cannot get credit and have to cut expansion works out of OPEX or sell off equity.
Unfortunately, as always happens, I was about 6 months behind the curve with my brilliant insight. (Thats how my Facebook idea was stolen - dammit!)
have a look at GrowthWire which seems to be set up for this purpose. I haven't played around with it too much but it seems to be a marketplace where high value investors can match up with projects from $50,000 to $50 million.
I do know that it is run by an ex-high flier on the Australian Stock Exchange. (If I read that right)
Good luck to them, it seems like a good idea.
Raising capital to fund the next growth stage has always been fraught with problems. Finding amenable angel investors, an IPO, selling off equity to some industry insiders. All part of the complicated process of getting access to capital.
And these have only compounded recently as credit has dried up.
For example, gold mining companies haven't earned money like this for over a decade at least. Yet they cannot get credit and have to cut expansion works out of OPEX or sell off equity.
Unfortunately, as always happens, I was about 6 months behind the curve with my brilliant insight. (Thats how my Facebook idea was stolen - dammit!)
have a look at GrowthWire which seems to be set up for this purpose. I haven't played around with it too much but it seems to be a marketplace where high value investors can match up with projects from $50,000 to $50 million.
I do know that it is run by an ex-high flier on the Australian Stock Exchange. (If I read that right)
Good luck to them, it seems like a good idea.
January 25, 2009
The Value of Scarce
Godin, in one of his wonderful books, chided the CEO of Accenture for not being reachable, stating that he was missing out on a great opportunity.
I think Seth may have missed the point. The CEO of Accenture is accessible- to the right people. Not for everyone, not for you, and definitely not for me.
But he can be reached by CEO's, CFO's and other key decision makers. He has (I am sure) a network of people in positions such as these who rely on him and his organization as trusted advisors.
And, lets face it, he leads one of the most successful consultancies in the world today. In fact, many of his clients probably run companies smaller than Accenture.
His time is valuable, his advice is priceless, as are the connections he brings to the table.
His value is not because he is everywhere trying to help everyone. His value is precisely because he is a scarce resource. He is not available to everyone - only to those people important enough to matter.
And if you matter, then you can get his attention for your problems and issues. Part of an exclusive club if you like. Scarcity and exclusivity go hand in hand.
Exclusivity through pricing, invitation only events, and the strength of your brand are undoubtedly great ways to leverage your earning potential as a consultant.
One of our consultants is an absolute guru in fracture mechanics and failure analysis. This is a very rare area where many play but only a few master.
When they need him - they really need him - and there is only one of him. So they will pay whatever it takes to get him.
Scarcity, and the air of exclusivity, are the only real things that separate you from commodity pricing - so it would be wise to factor it into your strategy.
I think Seth may have missed the point. The CEO of Accenture is accessible- to the right people. Not for everyone, not for you, and definitely not for me.
But he can be reached by CEO's, CFO's and other key decision makers. He has (I am sure) a network of people in positions such as these who rely on him and his organization as trusted advisors.
And, lets face it, he leads one of the most successful consultancies in the world today. In fact, many of his clients probably run companies smaller than Accenture.
His time is valuable, his advice is priceless, as are the connections he brings to the table.
His value is not because he is everywhere trying to help everyone. His value is precisely because he is a scarce resource. He is not available to everyone - only to those people important enough to matter.
And if you matter, then you can get his attention for your problems and issues. Part of an exclusive club if you like. Scarcity and exclusivity go hand in hand.
Exclusivity through pricing, invitation only events, and the strength of your brand are undoubtedly great ways to leverage your earning potential as a consultant.
One of our consultants is an absolute guru in fracture mechanics and failure analysis. This is a very rare area where many play but only a few master.
When they need him - they really need him - and there is only one of him. So they will pay whatever it takes to get him.
Scarcity, and the air of exclusivity, are the only real things that separate you from commodity pricing - so it would be wise to factor it into your strategy.
January 18, 2009
Do you have to write all of your reports?
I have been wondering about this for a long time now, I think I am going to dip my toe in shortly to check it out.
For years now there has been quite a ruckus about students paying for others to write their research papers for them. The Wikipedia entry shows this to be unethical because the students are not writing their own papers, instead they are either copying others, or having someone else write them for them. (Points for initiative in my book I have to admit)
Fair enough - but what about business? They also offer a custom research report service. So if you can send them the research, your raw data, and point them to other articles of substance on the subject, them would this also be unethical?
I'm not so sure. Your information, your research, you have to proof read and double check before you send it out. It is just written by somebody else - a technical ghost writer if you like.
I am really interested in seeing if these sites can help me reduce my writing workload, while allowing me to continue to have high quality research materials to send out as leave behinds or marketing tools.
If you check out these sites you often find that they have a range of free research papers for you to download and run through. Gives you a feel for the writing style, and the depth of each theme.
I'm curious, what do you think?
For years now there has been quite a ruckus about students paying for others to write their research papers for them. The Wikipedia entry shows this to be unethical because the students are not writing their own papers, instead they are either copying others, or having someone else write them for them. (Points for initiative in my book I have to admit)
Fair enough - but what about business? They also offer a custom research report service. So if you can send them the research, your raw data, and point them to other articles of substance on the subject, them would this also be unethical?
I'm not so sure. Your information, your research, you have to proof read and double check before you send it out. It is just written by somebody else - a technical ghost writer if you like.
I am really interested in seeing if these sites can help me reduce my writing workload, while allowing me to continue to have high quality research materials to send out as leave behinds or marketing tools.
If you check out these sites you often find that they have a range of free research papers for you to download and run through. Gives you a feel for the writing style, and the depth of each theme.
I'm curious, what do you think?
January 17, 2009
ERP partnering under the radar
Winning is incredibly important. We often overlook the fact that the leaders earn at least 2 times what their nearest competitors achieve in revenues. Winners polarize their markets.
People are for or against Google, not for Yahoo.
When we think of the ERP markets our minds tend to go directly to the top tier players. We all know the names, they have been shifting positions and purchasing their competitor now right through the roaring nineties and into the 21st century.
But in the up and coming tiers is a company called IBS. A mid sized ERP vendor with strong credentials as a provider of Supply Chain Management Software . IBS has been on my radar for a while now ever since I stumbled across it a few years ago in Honeywell Aerospace.
With a client base filled with OEM's and vendors, IBS seems to go a step further in delivering a full suite of IT related services alongside their Distribution Software.
That's all well and good, but what's in it for us? (you?)
Well... like many serious contenders in the ERP space, IBS also has a partnership program. I have seen partnership programs work incredibly well, particularly with a company I dealt with in the UK.
So this could provide you with additional revenues for referrals, or even extending into the delivery of solutions through the IBS product range. Partnerships are often overlooked, and when they are considered everyone immediately thinks of the sector leaders.
But if your compay is able to, then an enterprise like IBS, who with 22 countries already under their belt are obviously bent on the leadership position, could be one of the under the radar opportunities for you.
One thing is for certain - if you continue to look where everyone else is looking then you are destined to see only what everyone else sees. No advantages in that...
People are for or against Google, not for Yahoo.
When we think of the ERP markets our minds tend to go directly to the top tier players. We all know the names, they have been shifting positions and purchasing their competitor now right through the roaring nineties and into the 21st century.
But in the up and coming tiers is a company called IBS. A mid sized ERP vendor with strong credentials as a provider of Supply Chain Management Software . IBS has been on my radar for a while now ever since I stumbled across it a few years ago in Honeywell Aerospace.
With a client base filled with OEM's and vendors, IBS seems to go a step further in delivering a full suite of IT related services alongside their Distribution Software.
That's all well and good, but what's in it for us? (you?)
Well... like many serious contenders in the ERP space, IBS also has a partnership program. I have seen partnership programs work incredibly well, particularly with a company I dealt with in the UK.
So this could provide you with additional revenues for referrals, or even extending into the delivery of solutions through the IBS product range. Partnerships are often overlooked, and when they are considered everyone immediately thinks of the sector leaders.
But if your compay is able to, then an enterprise like IBS, who with 22 countries already under their belt are obviously bent on the leadership position, could be one of the under the radar opportunities for you.
One thing is for certain - if you continue to look where everyone else is looking then you are destined to see only what everyone else sees. No advantages in that...
January 5, 2009
Not at any cost...
Sometimes you cannot avoid being classified as a commodity. You have built up your value approach, you have developed results producing IP, and you are able to differentiate yourself with others through your track record of astounding achievements.
But the client insists on subjecting you to auctions, demanding you cut price, and giving you a "my way or the highway"approach to terms and conditions.
Some negotiation is inevitable, some flexibility is wise and very practical. But you simply cannot take work at any price.
Once they have knocked you down on price, they become convinced that they got the better deal, and that you were holding out on them. If they hire you through these online auctions such as elance.com and rentacoder.com then you are price based rather than value based.
And if they force unworkable terms and conditions on you then you will not be able to make them work. (Strange that)
Get out. Walk away. Turn to the next option and stop wasting your time, effort and aspirational power with these types of clients. There are planty (PLENTY) of other fish in the sea, and it is their loss not yours.
The problem with competing on price is that you could win... and we all know just how much that hurts.
But the client insists on subjecting you to auctions, demanding you cut price, and giving you a "my way or the highway"approach to terms and conditions.
Some negotiation is inevitable, some flexibility is wise and very practical. But you simply cannot take work at any price.
Once they have knocked you down on price, they become convinced that they got the better deal, and that you were holding out on them. If they hire you through these online auctions such as elance.com and rentacoder.com then you are price based rather than value based.
And if they force unworkable terms and conditions on you then you will not be able to make them work. (Strange that)
Get out. Walk away. Turn to the next option and stop wasting your time, effort and aspirational power with these types of clients. There are planty (PLENTY) of other fish in the sea, and it is their loss not yours.
The problem with competing on price is that you could win... and we all know just how much that hurts.
December 27, 2008
Cheap = Stupid
Frugality is wise. If you are going to maximize revenues then you need to be frugal, and I have posted a lot on this. But don't be cheap.
Consultancies, more than any other industry, needs to have good people. Your people are your brand - period. And when you are cheap, instead of frugal, then you cut the profits out of the hide of your talented workers.
You make them stay in cut price hotels for the long periods they stay away from their families...
You make them fly economy for 18 hour flights that they have to take every month...
And you work them to death instead of hiring additional resources... the resources you actually quoted!
This isn't smart. It might seem smart, but it isn't. You are cheap because you under-quoted, meaning your products, services or sales people can't compete; or you are cheap because you are greedy.
And those who can leave you - will leave you. But they won't leave their clients, our clients know it's all about talent. Thats what they pay for anyway, remember?
Consultancies, more than any other industry, needs to have good people. Your people are your brand - period. And when you are cheap, instead of frugal, then you cut the profits out of the hide of your talented workers.
You make them stay in cut price hotels for the long periods they stay away from their families...
You make them fly economy for 18 hour flights that they have to take every month...
And you work them to death instead of hiring additional resources... the resources you actually quoted!
This isn't smart. It might seem smart, but it isn't. You are cheap because you under-quoted, meaning your products, services or sales people can't compete; or you are cheap because you are greedy.
And those who can leave you - will leave you. But they won't leave their clients, our clients know it's all about talent. Thats what they pay for anyway, remember?
December 25, 2008
Where to spend?
Most of us have some cash reserves, no matter how small, at the end of the year. What are you going to do with that? The way I see it you have three options.
1) You can spend it on improving your abilities and knowledge in some way
2) You can reinvest it into your freelance career or consulting business
3) Or you can invest it in another company or financial security somehow. (Maybe even real estate)
The choice is clear and the decision is pretty straightforward. Where will you get the best return on capital? Think like a client, they won't spend money with you unless it provides the best returns for what they are trying to do.
Why should you be any different?
Option 1 is really about enablers and abilities. This is very wise to consider if you are lacking in skills that can earn you more revenue. Sales training for example, with a reputable vendor, can provide you with a powerful skill set that will return you many times the investment.
But the skills need to be something that will add to your bottom line, or that will allow you to expand your offerings into other commercial areas somehow.
Option 2 is where I like to invest. What can I put cash into today that I can leverage to sell more consulting and generate greater revenue. These are assets, not enablers. Enablers will, when combined with assets, hlp you to generate more wealth.
Assets, well marketed, will generate revenues with little additional efforts.
Software, SaaS products, training course development, Intellectual Property, and online communities are all forms of assets. All examples of how you can leverage todays cash to produce tomorrows revenues.
Option 3 is only useful if you can earn more outside of your business or career. And if you find yourself, after careful consideration, investing far more externally than internally - then maybe its time to reconsider your business model.
1) You can spend it on improving your abilities and knowledge in some way
2) You can reinvest it into your freelance career or consulting business
3) Or you can invest it in another company or financial security somehow. (Maybe even real estate)
The choice is clear and the decision is pretty straightforward. Where will you get the best return on capital? Think like a client, they won't spend money with you unless it provides the best returns for what they are trying to do.
Why should you be any different?
Option 1 is really about enablers and abilities. This is very wise to consider if you are lacking in skills that can earn you more revenue. Sales training for example, with a reputable vendor, can provide you with a powerful skill set that will return you many times the investment.
But the skills need to be something that will add to your bottom line, or that will allow you to expand your offerings into other commercial areas somehow.
Option 2 is where I like to invest. What can I put cash into today that I can leverage to sell more consulting and generate greater revenue. These are assets, not enablers. Enablers will, when combined with assets, hlp you to generate more wealth.
Assets, well marketed, will generate revenues with little additional efforts.
Software, SaaS products, training course development, Intellectual Property, and online communities are all forms of assets. All examples of how you can leverage todays cash to produce tomorrows revenues.
Option 3 is only useful if you can earn more outside of your business or career. And if you find yourself, after careful consideration, investing far more externally than internally - then maybe its time to reconsider your business model.
Churn, churn churn...
A recent post on some of the trends in markets where consultants work shows a very clear picture.
Near to mid term success is dependent not on one-size fits all behemoths, but on niche, smaller, value producing jobs. As client spending continues to dry up this could mean the difference between sustaining your workforce or slipping into an uncompetitive position.
The jobs vs project concept means more leads, more quotes, flexible and efficient delivery and growing the trail of reference-able works.
A company who can continue to sell, will continue to generate cash-flow. And continued cash flow means survival, and maybe the opportunity to grow in hard times.
Sell, sell, sell - churn, churn, churn...
Near to mid term success is dependent not on one-size fits all behemoths, but on niche, smaller, value producing jobs. As client spending continues to dry up this could mean the difference between sustaining your workforce or slipping into an uncompetitive position.
The jobs vs project concept means more leads, more quotes, flexible and efficient delivery and growing the trail of reference-able works.
A company who can continue to sell, will continue to generate cash-flow. And continued cash flow means survival, and maybe the opportunity to grow in hard times.
Sell, sell, sell - churn, churn, churn...
Monetizing the Blog
I really enjoy writing this blog, and I really enjoy writing. As I have said here many times in the past, I want to try to do this full time.
So, after a lot of thought and discussion with my wife (who is the blogs silent author by the way) I have decided to try to monetize Consulting Pulse. This took a lot of thought, but we have always said that if you want to be authentic, then you should do what you love.
And I love writing this blog! So that settles it.
In the interest of full disclosure these are the ways that we intend to try to monetize the blog. And in the interest of our communal knowledge, I will report back to you how it is going.
Adsense
Discreet Google ads at certain points on the blog. I don't ever want this to be just a page of ads, so they will be few and far between. If they interest you I hope you will check them out, if not then thats okay.
Display Ads
We are currently looking for a platform to put display advertising on our blog. I will let you know what we find. The idea, generally, is to allow companies who have products that might interest our readers. The pricing will be fair, and the locations will be at the top of the columns on the right.
Sponsored Reviews
We have enlisted in the sponsored reviews program. We will never accept a review for a product that we ourselves would not consider! And all reviews will be objective and open. It would be a waste of time for us to run negative reviews, so we won't be doing that.
Job Ads
We have a very targeted audience. Consultants, marketers, sales for professional services and software, and technology companies. If you are looking for specialists in these fields then we hope to be able to accommodate you for a fair price that is less than you would find on the mega-boards.
We are still looking at platforms now, but we hope to have one soon that will be international. We also want to be able to offer a good package to our regular readers so they can get a boost in their recruitment objectives.
Books
I love reading. And since getting into audio books I "read" 3 - 4 books a week. So We have launched our own consultants bookstore, and we will be running regular reviews of books that I have recently read. Let me know if there are any that you would recommend!
If you are considering buying a book on consulting or consulting related themes, then I hope you will consider our bookstore .
Full Disclosure
I love this blog, and I really love writing for our growing community. Any activities to monetize this effort will add to the value we deliver, it will not take away from it in any way.
If it does, then let me know.
So, after a lot of thought and discussion with my wife (who is the blogs silent author by the way) I have decided to try to monetize Consulting Pulse. This took a lot of thought, but we have always said that if you want to be authentic, then you should do what you love.
And I love writing this blog! So that settles it.
In the interest of full disclosure these are the ways that we intend to try to monetize the blog. And in the interest of our communal knowledge, I will report back to you how it is going.
Adsense
Discreet Google ads at certain points on the blog. I don't ever want this to be just a page of ads, so they will be few and far between. If they interest you I hope you will check them out, if not then thats okay.
Display Ads
We are currently looking for a platform to put display advertising on our blog. I will let you know what we find. The idea, generally, is to allow companies who have products that might interest our readers. The pricing will be fair, and the locations will be at the top of the columns on the right.
Sponsored Reviews
We have enlisted in the sponsored reviews program. We will never accept a review for a product that we ourselves would not consider! And all reviews will be objective and open. It would be a waste of time for us to run negative reviews, so we won't be doing that.
This also seemed like a good way for us to get to know about new products and services in the marketplace.
Job Ads
We have a very targeted audience. Consultants, marketers, sales for professional services and software, and technology companies. If you are looking for specialists in these fields then we hope to be able to accommodate you for a fair price that is less than you would find on the mega-boards.
We are still looking at platforms now, but we hope to have one soon that will be international. We also want to be able to offer a good package to our regular readers so they can get a boost in their recruitment objectives.
Books
I love reading. And since getting into audio books I "read" 3 - 4 books a week. So We have launched our own consultants bookstore, and we will be running regular reviews of books that I have recently read. Let me know if there are any that you would recommend!
If you are considering buying a book on consulting or consulting related themes, then I hope you will consider our bookstore .
Full Disclosure
I love this blog, and I really love writing for our growing community. Any activities to monetize this effort will add to the value we deliver, it will not take away from it in any way.
If it does, then let me know.
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