Is The Entrepreneurial Mindset Compatible With Managing a Boutique Consultancy?

About 40-50% of boutique consultancy owners I meet have a strong entrepreneurial profile.

Characteristics for them are their infinite search for new opportunities, high-risk acceptance, a relentless pursuit of innovation, and personal investment in almost every aspect of the business.

The drive to create something of their own, the ability to inspire others and form teams around a shared goal, and the grit it takes to overcome the tough odds that any new business faces are all entrepreneurial qualities that many boutique consultancy founders share.

These qualities are necessary for anyone deciding to leave the comfort zone of working for an established business and venture out independently. 

As much as these entrepreneurial qualities deserve recognition and praise, I’ve also noticed that they are often juxtaposed with the realities of running a successful boutique consulting business and the focus it requires. 

One of my clients – Tom Frame, co-founder of Etch Consulting – commented on a LinkedIn post about hyper-specialisation and project repetition - which are vital to the success of a boutique consulting business. Tom: “It is easier said than done and takes serious discipline that often is at odds with the raw state of entrepreneurism.”

I’ve come across this chasm between entrepreneurial spirit and the hyper-focus a boutique consulting business requires enough times that I wanted to address it more in-depth. This is what this article is about.

Why entrepreneurs might struggle in the boutique consultancy ecosystem

Certain characteristics of entrepreneurship are absolutely a must to run a boutique consultancy business. I can’t argue with that.

• The drive to venture out on their own is how most new businesses – boutique consultancies included – are founded in the first place. It takes courage, a healthy amount of ego and confidence, and a vision to leave the safety of a current job and create something from scratch.
  
  
• The grit and persistence that any new business will test the founders on are essential for the viability of the consulting business.
  
  
• The determination to grow a service and make it a viable offering is not to be taken for granted. It’s not easy, yet it is essential for establishing and growing a boutique consultancy.
  
  
• The ambition and aspirations are the drivers behind boutique consultancy businesses. Exploring the unexplored, wanting to achieve new professional heights, and building a team in the process – all of these characteristics do boutique consultancy owners an excellent service.

Yet, there is a flip side to this entrepreneurial coin.

Many qualities that create admirable and successful entrepreneurs can simultaneously limit a boutique consultancy's ability to grow sustainably and achieve the desirable performance levels.

• The ego: The same confidence propelling many entrepreneurs to venture independently can also significantly impact decision-making. Making assumptions and then determining a strategy based on these assumptions pose serious risks.
  
  
• Failing to say no: Taking on any incoming requests in the spirit of “Of course, we can handle this!” – another ego-driven behaviour that I personally fell victim to in the early days of my consulting career – dilutes the focus and expertise of a boutique consultancy business.
  
  
• The impatience: Ambition and aspirations sometimes go hand-in-hand with impatience and the temptation to take a shortcut. High-performing consultancies, on the other hand, are built on discipline and unwavering commitment to repetition.
  
  
• Opportunity seekers: The infinite drive for innovation and opportunity creation is something I’ve observed among all entrepreneur-owners. While many dread juggling a hundred different tasks and responsibilities, I’ve witnessed many entrepreneurs derive joy from not having a “boring routine”. Fast-paced environments, shaping new concepts or opportunities, and achieving new wins are fuel for many. Repetition of similar projects, on the other hand, is inherently the opposite of this type of variety.

Reconciling the spirit of entrepreneurship with the demands of building a high-performance boutique consultancy  

There are three main areas where I see this tension between the entrepreneurial spirit and the demands of creating a high-performance consultancy. While not easy, I believe it’s possible to channel entrepreneurial qualities in a way that would reconcile the inherent chasm.

#1. Developing a signature methodology through repetition

A signature methodology is a unique and proprietary approach developed by a consultancy to solve specific problems or address particular challenges their clients face. This methodology encapsulates the consultancy's expertise, processes, and best practices distilled into a structured framework.

A signature methodology allows boutique consultancies to compete against the Big 4s of the world. It is what sets these consultancies apart from competitors. 

However, a signature methodology is only robust when it delivers outstanding results. To develop a methodology like this, a boutique consultancy has to commit to repetition – in the types of clients it works with, the types of projects it takes on, and the kinds of pain points it tries to address.

This repetition pays off in many ways:

• It reduces costs as processes get automated and optimised over time
• It allows boutique consultancies to increase their prices as their methodology and outcomes improve over time
• Increased revenue and reduced costs lead to higher profits
• It continuously deepens expertise in a narrow field, making that expertise increasingly valuable
• It makes internal processes – e.g., hiring and training employees, proposal writing and pitching, client onboarding and project delivery, account management and development – to name a few - more streamlined and efficient.

While the entrepreneurial nature of some boutique consultancy owners may be entirely at odds with the notion of repetition – day in and day out – I would argue that it means that the actual benefits of repetition just haven’t been uncovered yet.

Repetition and variety are not necessarily the opposites. Repetition offers immense growth opportunities. However, repetition facilitates narrowly focused growth instead of trying to grow in a broad way by adding new disconnected services and expanding the target audience.

Deep focus and expertise development can help to uncover a profound spectrum of problems and patterns and enable:

• the continuous enhancement and precision tuning of the delivery of existing services (methodology, processes,...);
• the creation of, e.g. vertically integrated services that build seamlessly on existing offerings (see my article about vertical service integration);
• the development of adjacent (new) services that are well-aligned with the overarching expertise and positioning of the consultancy;
• the adaptation and refinement of existing services to maintain cutting-edge relevance as new technologies (e.g. AI) or frameworks emerge.

I keep sharing my experiences with focus, repetition and pattern detection with my clients, here's what I usually say: "There is a lot of variety that stems from repetition. However it is different from the type of variety that entrepreneurs typically are searching for."

Recommended reading: Why Repetition Is the Path to Becoming a High-Performance Consultancy

#2. Giving new services time to mature

In my experience, it takes around two years to mature a new service (achieving 40-50% of project margin). To reach its potential, a new service must be tested, validated, refined, and validated again.

Sometimes, aligning it with the target audience's needs takes multiple refinement rounds. Deploying the service is the next step – creating marketing messages and business development frameworks around it, building a library of thought leadership content, perfecting the inbound lead capture system, etc.

I’ve seen boutique consultancy owners struggle with giving a new service enough time and refinement. Many either scrap it altogether or launch it at full scale without proper validation, which results in a painful drain of resources and margin erosion.

I strongly encourage boutique consultancy owners in this position to tap into their grit. Developing a new service is like launching a new business on a smaller scale. It requires studying the target audience, identifying service gaps, determining the best value proposition to address pain points, and building marketing and business development campaigns.

Recommended reading: Do You Need New Consulting Services to Grow Revenue?

#3. Learning to say no to distractions and prioritising accordingly

As mentioned, most entrepreneurs strive for variety and constantly search for new opportunities. It’s the fuel that propels them. The excitement of every day being different, never quite knowing what to expect from every interaction – these are characteristics of entrepreneurial life that some boutique consultancy owners may not want to part with.

This love for variety and new opportunities – combined with a high degree of self-confidence and/or ego – can manifest in a couple of destructive ways:

• Taking on any project because of the ego-driven mentality that says there is nothing the consultancy can’t handle: This FOMO-based attitude results in a diluted value proposition and drastically lowers the ROI of marketing and business development efforts. When there is no solid portfolio of social proof to demonstrate excellence in a niche offering, marketing messages fail to find the right audience and build trust at scale.
  
  
• Failing to prioritise and weaken foundational elements: There are certain pillars within a consultancy business that consultancy owners need to get right. Here, I’m talking about value propositions. I’m talking about the reputational footprint. I’m referring to creating well-defined boundaries for the types of problems and audiences a consultancy caters to. Everything else is built on these pillars. And if the foundation is weak, the business is at a significant risk of failure in the long run.

That’s why I urge consultancy owners to think long and hard about what to prioritise and put most of the effort into. While that reduces the daily variety, it’s critical to ensuring long-term viability and success.

And here’s the thing about short-term variety: more often than not, it leads to the feeling of burnout. Entrepreneurs are not exempt from that. It is one thing to power through unreasonable schedules for a year, for two, for five. It’s a different story when the hamster wheel appears to be never-ending. 

Recommended reading: How Boutique Consultancy Owners Can Reclaim Their Quality of Life

Furthermore, an unchecked ego leads to making assumptions yet failing to test them. 

In running a consulting firm, such refusal to test assumptions can lead to more dire consequences: a failed service launch, misallocation of resources, inefficient processes, overworked staff, unhappy clients, and, ultimately, the failure of the entire business.

Now, a healthy amount of ego is good. It’s often a prerequisite to finding a business. In interactions with prospects, boutique consultancy owners should be able to exude a certain amount of confidence to facilitate building trust.

However, I’ve encountered many entrepreneurs who fail to control their egos. I used to be one of them. In my early consulting years, I used to call the office with the message: you won’t believe what I just sold. The answer of the team: “damn, did you do that again?” I was proud to sell projects we had never done before. My ego wanted to crush every new opportunity that came my way.

My ego caused me to overestimate my expertise and underestimate the impact ‘selling-without-experience’ had on the team.

What is the downside of an ego-driven approach and operating on untested assumptions? There are many, including:

• Positioning erosion
• Toxicity in the company’s culture
• Service dilution
• Failed service launches
• Unhappy clients
• Lack of social proof
• Lack of reputational footprint
• Lack of referrals
• Lack of trust by prospective clients

My advice to consultancy owners with whom this resonates is to:

• Channelling all that ego into striving to be the best in a narrow set of services
• Balancing being bold and innovative with doing the due diligence of testing and validating
• Being diligent about collecting and analysing data
• Searching for opportunities that the data reveals within the narrow scope of the business focus
• Building a boutique consultancy that can win bids for projects against massive multinational consultancies.

Winning in the deep instead of bleeding in the broad. 

Recommended reading: How a Consultancy Can Get Crushed by the Ego of Its Owners

In conclusion: Can entrepreneurs run a boutique consultancy?

Of course, they can. But...

The journey from entrepreneurship to building a successful boutique consultancy is both challenging and rewarding, demanding a delicate balance between the pioneering spirit of the entrepreneur and the disciplined focus required for boutique consultancy growth. 

While entrepreneurial traits like boldness, creativity, and risk-taking are invaluable in getting a business off the ground, they can also create significant risks when not tempered by a structured approach to growth and service delivery.

To bridge this chasm, consultancy owners must embrace the power of repetition to develop signature methodologies & processes, be patient with maturing a service, learn to say no to distractions and keep egos in check. 

By grounding their entrepreneurial drive in the principles of specialisation and consistent execution, boutique consultancies can achieve high performance and sustained success. 

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