Business Management

How to Monetize Your Knowledge With a Consulting Business (Pt 2)

By Steven Imke |  SBDC Consultant 

“The goal of the pitch is not getting a commitment to hire you, but to make the engagement more personal…”

Steven Imke |  SBDC Consultant

Previously, we discussed how to properly target, prospect, and qualify consulting engagement leads as a way to monetize your knowledge as a consulting business. In this post, we cover the pitch meeting and how to write a winning proposal.

Pitch Meeting

Once you have a qualified lead with a problem that your consulting business can solve, it is time to pitch them.

At this point, hopefully, the prospect has some basic idea of who you are, having responded in some way to your prospecting, and you have a basic understanding of the prospect based on your qualifying the lead. The goal of the pitch is not getting a commitment to hire you, but to make the engagement more personal and to clarify the points that need to go into your written proposal.

Rather than use your first meeting to just share why the prospect should hire your consulting business, consultants would be better served to use the pitch meeting to ask questions to get the prospect engaged in the process, and to show them that you understand and care about them.

“Nobody cares how much you know until they know how much you care.”

Theodore Roosevelt

Based upon what you learned when you developed your empathy map about your ideal customer and what information you gathered on the specific prospect you gathered in the qualifying stage, you should design a series of questions to probe a little deeper to discover the pain and gain points that you can use in your proposal that will resonate with them. During your pitch, you want to demonstrate that you understand what is important to them, and show them that you care about them and their success.

Remember, if your customer works for a larger corporation, their decision to hire your consulting business is likely guided by how it will reflect on them personally. I always made it very clear to my clients that it was my job to make them look good to their boss. I told my customers that I expected them to personally take all the credit for any successes.

On the flip side, it is often better for the prospect to make no decision than to make a bad decision, so you will want to show them how you can take a majority the risk out of making a bad decision in your pitch, such as offering a money-back guarantee to assuage any fear they may have with making a bad decision.

Before you conclude your pitch, be sure to include a question or two so you can see what success looks like for the prospect. For example, you might ask:

  • What is your desired outcome for this engagement?
  • Can you give me an example of a project you were really happy with and why?
  • How does this effort complement your overall business goals?
  • If we followed up one year from now, what would need to happen for you to be happy with this engagement?
  • What would you need to experience for you to refer me to a good friend or colleague?

During the pitch meeting, be sure to take notes as the prospect responds to your questions to show them that you are actively listening. It is also good advice to periodically check your understanding by paraphrasing or repeating what they said.

Remember that this first meeting with your qualified lead should be less about giving them a laundry list of what you can do, and be more about verifying all the information you have collected with your profile scrape, and collecting new information so you can customize your proposal/response based upon their specific needs.

According to Tim Rice, a Digital Marketer for Entrepreneur, too many consultants vomit up their pitch when they get in front of a qualified prospect for the first time. Having a prepared presentation for the pitch meeting and launching into it without getting the prospect engaged in the process or learning more about their goals says “Your needs are not special and I’m only pretending to care about you… Here is my boilerplate pitch”.

Your goal is to get enough information that you can use to develop a proposal and to make sure that you have answered all any questions both expressed and unexpressed that the prospect will need to move forward. You also want to understand their budget and provide a ballpark price for your engagement to make sure you are on the same page.

In an ideal situation, you can take what you learned from the pitch and sit down after the meeting when the pressure is off to develop a customized proposal document. However, sometimes you only get one meeting with the prospect, such as when they are interviewing several consultants for a specific task and plan to make a decision after all the interviews are completed. In these situations, you have to fly by the seat of your pants, and deliver your proposal or response at the pitch meeting based on what you have gathered during the qualifying phase, and what you learned from your opening questions.

By the end of the pitch meeting, you should have asked and answered enough questions to have a pretty good idea if this engagement is a good fit for both your consulting business and the prospect. Assuming that you can deliver on the prospect’s requirements, be sure to close by asking for the engagement. It is better to be assumptive in the closing, such as saying “Would you like to move forward?” than to leave it hanging by saying something like “Get back to me if you have any questions”.

If the prospect indicates that they will move forward, tell them that you will draft a proposal. Be sure that you understand the prospect’s payment terms. If you assume that they will pay net 30 and they pay net 60, this could create a cash flow problem for you. Finally, ask if they have a preferred format for a proposal before you try to craft your own version that they may then ask you to redo.

Alan Weiss in his book Million Dollar Consulting Proposals provides a Consulting Engagement Checklist that outlines everything you should take away from your pitch meeting so that you have all the information you will need to prepare a proposal.

Consulting Business Proposal

By the time you send the client a proposal, you should understand all of the prospect’s requirements, as well as their payment terms. Moreover, you should have had some pricing discussions so there should be no surprises when they see your consulting company’s proposal. You do not want to waste a bunch of time writing a proposal to not win it.

In your proposal document, don’t over-promise what you will do just to win the engagement. The prospect will likely place a lot of emphasis on the words and commitments you place in your proposal. I have seen time and time again that a consultant will promise the moon in their proposal, then a month or two down the road, the customer begins to question if the consultant oversold themselves. Overselling to get the engagement always backfires and creates bad blood, which results in bad word of mouth within the community.

Be sure that you outline how you will communicate in your proposal document. I recently introduced a fee-based advisor to one of my clients, who submitted a fixed-price proposal that was accepted by the client. There was no mention of the way communication would be handled in his proposal. My client was assuming that the fee-based advisor would attend all her team meetings, creating quite a time suck for him that was not anticipated in the original proposal he submitted.

In your proposal’s narrative, focus on the outcomes that your engagement will deliver instead of the process. “My SEO audit of your site will help increase your rankings in Google” is better than “I will do an audit and provide you with a list of recommendations”. Customers care about outcomes, not your process.

If you have to do some work up front, don’t be shy and ask for a deposit.

Don’t deliver a 40-page proposal full of legalese. While your lawyer would prefer that your proposal cover every possible contingency in writing, such a lengthy proposal will tend to focus on all the things that can go wrong and be too intimidating for many prospects to sign. I have seen too many good freelance consultants lose out on a gig because their lawyer provided them a document full of legalese and escape clauses that made the prospect too nervous about the engagement to sign it. Instead, keep your proposal short. The best proposals are about three pages long. Alan Weiss, in his book Million Dollar Consulting Proposal, provides a Consulting Proposal Template that includes the following key topics:

  • Situational Appraisal
  • Objectives
  • Metrics
  • Value created
  • Scope of work
  • Timing
  • Joint accountabilities
  • Terms and conditions
  • Acceptance and signatures (which you will have already signed)

Finally, you need to make it easy for the other party to accept your proposal. Consider uploading an electronic version of your proposal to your Dropbox or Google Drive and using an e-signature tool, like the free version of HelloSign, to allow your customers to e-sign your proposals. Be sure to already have your signature on the uploaded document, so all it needs is the prospect’s signature to go into effect.

Send the prospect an email that says the proposal is complete and awaiting their signature. If you use a Gmail account, it is also helpful is to employ an email tracking tool, like the free version of Mailtrack, or a similar product to know if and when your proposal was opened by your prospect.

This blog, and more, can be found on Steve’s consulting blog page, SteveBizBlog.com

 

 

How to Monetize Your Knowledge With a Consulting Business (Pt 1)

By Steven Imke |  SBDC Consultant 

“Having a consulting business is all about being able to monetize your knowledge.”

Steven Imke |  SBDC Consultant Tweet

Having a consulting business is all about being able to monetize your knowledge. Most consulting businesses have a very narrow, but deep knowledge of a particular subject such as cybersecurity, human resource management, the law, etc. While some consulting businesses have more than one employee, a large number are simply composed of one freelance consultant wanting to monetize their knowledge. While some consultants work with individual consumers, such as being a wedding consultant, the majority of consultants engage with other businesses and share their knowledge in exchange for a paycheck.

This post is part of a two-part series on how to monetize your knowledge as a freelance consultant. In this post, we will focus on lead generation, while the next post will look at how to pitch and write winning proposals for qualified prospects.

Targeting

The first step in starting a consulting business is to have a clear understanding of what the ideal customer looks like. According to Tim Rice, a Digital Marketer for Entrepreneur, he recommends developing an Empathy map to discover the ideal customer’s worldviews. Typically, empathy maps are a tool used by User Experience (UX) designers, but it works equally well for many businesses trying to know more about their target audience.

An empathy map uses a series of questions to try to get a handle on what is going on inside the ideal customer’s head, so that any collateral material, such as the web page for the consulting business and social media engagements demonstrates that they care and understand the customer’s situation.

 

Empathy Map

What do they say? – “I’m behind in my revenue projections”
What do they think? – “I know I could get more traction. I’m spinning my wheels when it comes to social media marketing.”
What do they do? – “I work from home and use offshore resources to do labor arbitrage. I listen to podcasts while driving, and I’m a big fitness junkie”.
What do they feel? – “I see their friends with jobs getting promotions and paid Healthcare.”

For more information on how to create an empathy map, Nick Babich has written an article titled 10 Tips to Develop Better Empathy Maps that shares how to create an empathy map in more detail.

Prospecting

With a better handle on who your ideal customer is and after making sure that all of your customer-facing content reflects that you understand their issues, it is time to start prospecting. Prospecting can come in the form of both active and passive prospecting

Active Prospecting

Many consultants resort to active prospecting. Active prospecting is about the push influencing style of persuading, and asserting to engage with prospects. The consulting business uses social media, emails, cold calls and speaking at events to pitch their service.

Most of the time, the recipient of active prospecting is not yet ready to buy and the consultant’s message falls on deaf ears. Active prospecting uses the spray and pray approach to marketing. Therefore, active prospecting can be a huge time suck, and make the consulting business appear sleazy and sales-y. If you choose to engage in active prospecting, make sure you automate the process, as the success rate is pretty low.

Passive Prospecting

Passive prospecting uses a pull influencing style of bridging and attracting to engage with prospects. Passive prospecting often involves the use of a lead magnet- which is a free offering- to incentivize a prospect to provide you with their email address in exchange for a free offer. Passive prospecting using a lead magnet has the added benefit of establishing you as the expert based on the depth and quality of the content you provided in the lead magnet and creating reciprocity since the prospect got some value from you at no cost.

Since most consulting businesses are all about working with other businesses to sell their expertise, LinkedIn is an obvious and natural platform to prospect for leads. An effective use of LinkedIn for prospecting is to write a LinkedIn post that starts with a question such as “Does your consulting business need more business?”, and then provide a relatively quick answer to the question to act as more of a teaser in the post’s text itself.

Since LinkedIn wants users to remain on the platform, if you include a link in your main post that takes the user off the LinkedIn platform- for example to your blog for more detailed information- LinkedIn will not like it and will give your post less reach. However, there is a work around that will not alert LinkedIn that your content has links intended to take the user off their platform.

When you write your LinkedIn post, you will want to include your links in a post’s comments instead of in the actual post itself. In the post, you will want to make a statement to the effect that you have more information or a link to a free tool that you will include in the first comment. For example, you might say at the end of your post like “For a more detailed answer to these questions. we have included a link to a more in-depth article in the post’s first comment”.

By including a statement that you are including more content or something for free in the first comment, you are creating a place to add your lead magnet, and a reason for the user to read your comment to access the additional content you provided. Moreover, LinkedIn will not penalize your posts reach for a link that takes the user off-platform since the links were included in the comment and not in the post.

In the first comment you should provide:

  • Any link you offered to provide them for additional information.
  • A statement such as “If you have a question. reach out to me on Twitter at…” It is best to ask them to ask a question on Twitter than to send you an email. With Twitter, they will keep the question short by forcing them to ask the question based on Twitter’s 280-character limit. Moreover, their questions will not fill up your email inbox with people looking for free advice.
  • A link to something for FREE to act as a lead magnet to get their email address.
  • Provide a link on how to get in touch with you if they want to contact you for a consulting gig.
  • A pointer to your website so the user can do more research on you.
  • A comment asking them to freely share your information with anyone else that might be interested. If you don’t ask, they will most likely not share your information, so ask for it.

For any consulting business today, video is a powerful medium to share your knowledge. Loom offers a free way to capture video and share it as a link. You can create a mini webinar that displays your desktop with your talking head in the corner, capture only your screen, or just you talking to your audience. You can then publish or download the video, and post it or include it in an email.

Related Article: How to Create Effective B2B Marketing Videos

To improve your ability to understand what does and doesn’t resonate with your audience,, you should make all of your links using bitly. You can set up a free account on bitly and then use bitly to shorten any URL. Then you can use the bitly dashboard to see how your links perform.

Qualifying

Once your prospecting has produced a lead, it is time to qualify the lead. The first step in qualifying a lead is to make sure they can make a decision. The last thing you want to do as a consulting business is to waste your time pitching to someone that is only a tire kicker or does not have the authority to make a decision.

You would be surprised about how much you can learn about a person before you meet with them. When it comes to qualifying a lead, I recommend you look at the prospect’s webpage and attempt to find them on social media. Since prospects also buy from someone that they Know, Like and Trust, you should learn to use a tool like the Lifestyle database in Reference USA to find common interests prior to moving to the pitch stage.

Next post, we will discuss the pitch meeting and how to draft a proposal

This blog, and more, can be found on Steve’s consulting blog page, SteveBizBlog.com

 

 

Do I Need Business Insurance?

By Heather McBroom |  Founder of Precision Services

"You work incredibly hard to build a company, why put all that work at risk?"

Heather McBroom | Founder of Precision Services Tweet

Even though most types of insurance for your business are not required by law, it is CRUCIAL for small businesses to carry proper insurance, regardless of what kind of business you own.  The 3 main types of business insurance are General Liability, Professional Liability, and Product Liability.  The way your company is structured, LLC, Sole Proprietor, etc, plays a big part in how important it is for you to carry business insurance.  

Insurance protects your business from disasters or a potential mishap where the financial consequences could force you to close your doors.  This could include an unexpected loss due to fire, wind damage, vandalism, and hail – just to name a few.  It also could cover the business income loss while your company must remain closed during a covered claim. 

We also live in a litigious society.  In the event your company gets sued, your insurance policy covers defense costs that could often exceed thousands of dollars, even for bogus claims, before the Judge makes a decision on your case. 

Need more reasons to consider carrying business insurance?  How about peace of mind?  Rather than worrying how you are going to handle situations that may arise, you are able to concentrate on what truly matters – running your business.  Second, business insurance also makes you look credible.  Carrying business insurance shows your prospective clients and customers that you are a safe bet and have the proper protection in place if something goes wrong.  Third, it also protects your business assets.  You work incredibly hard to build a company, why put all that work at risk? 

You also may have contracts may require it.  When it comes to doing business with other companies or leasing a space for your business, it is often required that you secure the proper insurance coverages to transfer any risk for claims that arise from your negligence. 

Just as important is making sure you are carrying the CORRECT type of insurance coverage needed for your company’s individual risks.  There are multiple lines of insurance that may be needed such as General Liability, Professional Liability, Cyber Liability, Inland Marine coverage, Workers Compensation, and Commercial Auto Liability to name a few.  In addition, policies these days are limited to business description so making sure your policy has the CORRECT classification listed on the policy to cover ALL types of work your business in doing is vital.  Navigating through your policy’s EXCLUSIONS and ENDORSEMENTS to see what is specifically NOT COVERED on your policy is important also. 

How do you choose the proper insurance company and agent to insure your business?  Start by dealing with an independent agent who has access to several different insurance carriers.  Make sure your agent specializes in Commercial Insurance to ensure they know how to properly assess your company’s risk and can provide the proper insurance solutions that you need.  Commercial insurance can be complicated, so someone who specializes in this type of insurance is crucial.

Keep in mind as your business grows, your coverage needs may change.  That is why it is vital to have an insurance agent who maintains constant communication with you, comes to your location to assess your operations and risks appropriately, and explains your coverages to you in terms you understand.  We offer free policy review and no obligation quotes with over 30 of today’s top-rated insurance carriers. 

Tips for Securing a Business Loan

By Jackie Gonzalez |  SBDC Consultant + Business Banker, ABC Bank

"CASH FLOW not REVENUE is KING! In commercial lending the focus is on the cash available to service the debt (cash flow)."

Jackie Gonzalez |  SBDC Consultant + Business Banker, ABC Bank Tweet

Commercial bank lending is based on risk.  The higher the risk the business poses to the lender, the harder it will be to borrow.  The following tips are designed to help you present your best case to a commercial lender and increase the chances of getting the loan your business needs. 

1.     Evaluate the business – In commercial lending there are specific criteria by which your lender will evaluate your business and intangibles that may apply.  View your business through the Lender’s eyes. Know your credit score, is your business profitable, are your customers paying on time,  do you have a good reputation in the community?  Google your business, see what others are saying about you.  This will be one of the first things your lender will do when they start working on your loan request. 

2.      Repair any deficiencies you can —  Knowing what the lender expects and knowing where your business might be lacking will help you repair these deficiencies before applying for a business loan. Explain any seasonality in your business, improve your receivables management, and ensure there are no mistakes on your business and personal credit report.

3.     Make sure financial statements are in order – Make sure your financial statements are complete, correct, and in order.  Include a balance sheet and income statement.  Consider having your accountant review your financial statement to anticipate any issues a lender may raise. Understand what your financial statements say about your company.  No one expects you to be an accountant, but you should be able to explain any significant fluctuations in revenues and expenses.  

4.     Be prepared to specify how much you want to borrow and what you will use the proceeds for – Will the loan be used to purchase new equipment or capital expenditures?  Expansion or hiring? Increase in inventory? Expansion into a new facility?  The lender is required by regulation to ensure that loan proceeds are being used for legal purposes, that’s why they are so nosey! 

5.     Develop a concise business plan – Develop a plan that clearly illustrates where your business is now and how a new loan will benefit your business.  Discuss strategy, goals, and tactics.  Provide background on management, both owners and non-owners, if applicable.  Discuss your competition, marketing plans, regulatory barriers, and cash flow projections. 

6.     Be prepared to put your own money in and to personally guarantee the loan – Lenders want to share the risk, not own it entirely.  If you are expanding into a new facility, purchasing equipment, or starting a new business, you will need to have some of your own cash into the project.  If you are not willing to invest in your business, why should the bank?  Anyone who owns 20% or more of the business will be required to personally guarantee the loan.  Make sure all owners/partners are prepared before applying for a loan.

7.     CASH FLOW not REVENUE is KING! – A business owner often looks at revenue when discussing how much the business is “making”.  In commercial lending the focus is on the cash available to service the debt (cash flow).  For instance if your business has $1MM in revenue but is paying out $950,000 in costs and expenses the cash flow is $50,000 not $1MM……………..BIG difference! 

8.     Speaking of…do not try to “hide” your businesses success at tax time – Business owners can often encourage their tax prepares to include as many deductions as possible to reduce their tax liability, but that can come back to haunt a business owner.  As a business owner you should discuss with your accountant the implication of the way you file your tax returns.  It may save you a few bucks in taxes but also may prevent you from obtaining a loan in the future.

 

There are more lenders than ever before willing to lend to small businesses and many lenders can be found with a simple online search, but do your research.  Some lenders (such as online or peer to peer) may be a quick easy fix but can also cost substantially more than working with a lender in your market. 

3 Risk Levels to Becoming a Business Owner

"Starting a business from scratch is by far the riskiest way to become a business owner."

Steve Imke - Pikes Peak SBDC Consultant Tweet

Most of the clients I see want to start their business from scratch, but there are 2 other options to becoming a business owner. The first option is to buy an existing business and the second is to buy a franchise. Clients often tell me that these two options simply cost too much. They argue that they are choosing to start from scratch because it is the cheaper path.

At that point in the conversation, I often remind them that starting a business from scratch is by far the riskiest way to become a business owner. In fact, statistics from the US Department of Commerce say that 65% to 90% of start-up business are likely to fail within the first five years. In other words, only 10% to 35% will have a chance of success. The principle reason for this high failure rate is that most businesses take on too many fixed expenses early on. On top of that, their revenue ramps up slower than planned and the business simply runs out of money before breaking even and turning a profit.

One client who had previously been a pilot in the US Air Force summed it up when he said,

“I guess they had too much payload and not enough runway.”

Entrepreneurs that buy an existing business have a 90% to 95% chance of still being in business after 5 years. The principle reason for this higher success rate is that when you buy an existing business, you already have revenue from customers and have a predictable level of expenses. You know these expenses are less than the amount of revenue, which leaves the business some profit and cash flow to work with. Moreover, existing businesses often have employees that already know their jobs, are well trained, and the business has proven processes to capture customer value.

Entrepreneurs that buy into a franchise concept have a 90% chance of still being in business after 5 years. Although franchises need new customers to generate revenue, the entrepreneur is often buying brand awareness and a proven system. Moreover, most new franchises are able to reduce the cost of goods sold by taking advantage of the economies of scale established by the franchiser since they have franchise-wide buying power.

When you buy a franchise or another person’s business, you also have access to someone who knows both the business and financial model as well as someone who has a vested interest in your success. Obviously this is not the case with start-ups. Let’s not forget that the primary goal of business ownership is to make money for the owner.

Existing businesses make money on day one. A successful franchise will earn the owner income not too long after starting up. However, a start-up, even one that survives, may take months or years to begin to pay the owner a salary for working in the business.

When it comes to business ownership, have you considered buying vs. starting from scratch?

For more articles like this, visit Steve's Blog here!


 

 

 

 

 

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