To Succeed As A Consultancy, Get Rid Of The Scarcity Mindset
Business Development in Consulting, Consultancy's Profitability
I recently worked with a consultancy that couldn’t figure out what they were doing wrong. They could handle pretty much any client request in the book, no matter the industry. They had a very high utilization maximization – no benchwarmers on the team.
And with every new project successfully completed, they were able to add a new expertise to their roster that they could sell to the next client, making them more competitive. On paper, they felt like they were doing great.
Yet they found themselves struggling, hitting the so called ‘the project wall’: doing all sorts of small projects at low rates and with a huge business development pressure. Having to sell such small projects again and again, made them very vulnerable to big ups and downs without reliable revenue development.
Recommended reading: Getting Over 'The Project Wall' To Grow A Consultancy Firm
They hired me to audit their business development approach. As soon as I started auditing, I noticed several potential issues. But most of all, their inconsistent pipeline made them feel they had to say yes to every new small opportunity – even if it wasn’t a great fit. And worst of all, they were insecure about their true reputation because they couldn’t figure out their ideal target audience. They had a lot of internal debate on this, a tough situation for everybody in the leadership team.
Without going into all the details of the audit, I’d like to talk about the subject of focus in this article. Yes, the lacking focus of this consulting firm. Jumping around from (small) project to project, with an almost impossible variety to deal with.
Somehow, they knew the truth. But still, it was hard for them to hear what I shared with them: their fear of missing revenue was causing them to actually lose business in the long run. In their desire to win every potential client, they were setting themselves up to fail.
What this firm needed to do instead was drop the scarcity mindset and embrace narrowing its focus.
Don’t be an a la carte consultancy - control the conversation with clients
The consultancy I was working with had a terrible habit of asking the client what they needed and then making that happen no matter what. Part of the reason behind that was the revenue pressure I mentioned earlier – they were terrified of turning a single client away. But another issue was that there was a lot of ego present in these conversations. When a prospect or a client asked, “Can you really do this for me?” a partner of the consultancy would jump in to say, “Yes, absolutely we can.”
That ego was a mask for the low confidence the consultancy leaders actually felt. If you don’t have a clear view of your own positioning (aka a clear definition of the target audience with a prototypical problem your consultancy can solve), it’s a lot easier to let the client decide what they need. That way there’s no risk of losing business.
Recommended reading: 14 Symptoms of a Poorly Positioned Consultancy
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However, as a consultancy, you should be the expert voice in the room. Don’t allow yourself to be led by the client – you’re here to tell them what to do, not the other way around.
If you’re still letting clients steer the conversation, you’re selling yourself short. They’ve hired you because, ostensibly, you’re the best at what you do. By allowing clients to tell you what they need, you get stuck only offering low-revenue services. You want to provide high-priced expertise. You can’t do that if you’re providing any and all services for your clients.
An a la carte consultancy is a one-way ticket to low and inconsistent revenue. But it’s also a trap in other ways. By offering up every service to clients, you struggle to develop deep authority in a field. You become a jack of all trades, master of none.
Every project you perform is nothing but customized work, whatever the client thinks they need from you. There is no repeatability of project types. On every new project, your team members might be working on something totally different from last time. It’s a very inefficient way to work.
While this scattershot approach will broaden your expertise, it won’t deepen it. Broad expertise is cheap. Deep expertise is where you can charge what your consultancy is truly worth.
Your scarcity mindset is warping your perspective
The reason so many consultancies struggle to own their lane is thanks to that scarcity mindset. They’re afraid to lose out on potential business, so they commit to doing whatever it takes to gain that new client and keep them happy. But it’s not only perfectly OK, it’s actually necessary to say no to bad opportunities if you want to grow your consultancy.
I’ll get it out of the way: in the short term, saying no to some of your opportunities will mean you miss out on revenue. When you truly are ready to make the shift, you’ll look at your pipeline and see lots of opportunities that aren’t actually a great fit for your niche. You will have to lose potential business.
But by only saying yes to opportunities that really fit in your lane, you’ll gain the chance to deepen your authority level with every client you work with. And the more of an authority you are, the more clients you’ll attract in the future.
Too many consultancies see ill-suited opportunities as a chance to increase revenue for their consultancy. Instead, start viewing them as what they truly are: a cost on your future growth potential. Every time you say no to something that’s not in your true field of expertise, you gain an opportunity to strengthen your authority in that field, which leads to more clients and higher revenue down the line.
Enter the glorious loop of consultancy heaven
Here’s the loop many consultancies find themselves stuck in: You don’t have the necessary confidence to own your niche, so you try to do everything for a client. The problem with trying to do everything is that you’re then competing with every other consultancy out there. You’re never going to beat everyone else on expertise because you’re spread too thin. So instead you have to offer competitive pricing. Your competitive pricing makes your revenue drop precipitously. Now to make your targets, you need to say yes to every potential opportunity even if it’s not a great fit for your expertise. And we’re back at the beginning.
Recommended reading: There Are Two Ways Of Doing Consulting, One Is Toxic
It’s a race to the bottom. And it’s too easy for your consultancy to get stuck in this downward spiral, what I call the consulting vicious loop to hell. What you should aim for instead is getting into the glorious loop to heaven.
Imagine this: Every opportunity you say yes to is something you’re an expert at. Every project deepens your expertise. The deeper your expertise, the better your positioning as a consultancy. The better your positioning, the more you’re able to charge for that expertise. The more you charge, the more exclusive you can be with opportunities that truly fit your expertise, which further deepens your experience. That positive loop is how you become the most visible authority in your field.
To ensure you’re only saying yes to the right opportunities, you need to nip your loop at the source. Find the necessary conviction in your niche and commit to saying no to projects that don’t fit that niche. Don’t be afraid to miss out on business. Instead, discover the confidence to wait for your ideal client, trusting that they’re out there and your consultancy is uniquely qualified to help them. Let go of the scarcity mindset and embrace your focus.
It will be hard because your consultancy is used to saying yes to every potential revenue opportunity. But it’s a necessary exercise to deepen your authority and become more visible in your field.
That’s the only way to truly succeed as a consultancy.
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Hello, I’m Luk Smeyers, and I’m guiding consulting firms through the journey of growing their business by helping them transform into go-to experts in their market. I have been in consulting businesses for almost 20 years, in very different roles: as European CHRO in a global consultancy, as a startup founder in an analytics consultancy, and as a leader in a 'Big 4' consultancy, post-acquisition of the startup. I had the privilege of achieving global visibility as a consultant and I never had to sell, persuade, or negotiate as a result. I have now bundled all those experiences, expertise, know-how, research, reading, successes, struggles, and failures from managing and growing that visibility in the past years.