Consultants

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

 

 

The Value of Acquiring and Retaining a Business Consultant

"The reality and value of a GOOD business consultant is that they don’t get caught up in the “Forest for the Trees” mindset."

Ron O'Herron - Pikes Peak SBDC Consultant Tweet

A business professor once stated to his class that the definition of a consultant was “a person who rides down from the top of the hill after the battle is over and shoots all the wounded.”

Another definition that has circulated in the business community is, “A person who borrows your watch to tell you what time it is and then charges you for it.”

Although opinions and mindsets will vary, the truth and fact of the matter is that a good business consultant can and will add significant value to the overall operation and growth of a business!

A strange but true story and example of a value-added Business Consultant relates to a serious problem that existed at a nuclear power plant. Their trouble was detected in one of the reactor transmission lines, which was becoming very costly and creating a possible safety issue.  A consultant was called in and after studying the problem for several days and meeting with numerous operations engineers, he provided a solution. On a diagram of the reactor and transmission lines in question, he drew a symbol for a strategically located special type of monitoring/relief valve.  The device was obtained and installed as suggested by the consultant. Immediately the problem went away, cost savings were realized, and the safety threat was eliminated. Upon receiving the consultant’s $75,000 invoice for work performed, the Chief Engineer was shocked and questioned the consultant. The explanation was quick, factual and simple…$25,000 was for the specialty valve and the balance was for knowing where to locate it!

The reality and value of a GOOD Business Consultant is that they don’t get caught up in the “Forest for the Trees” mindset…they don’t bring any industry specific “paradigms” to the table.  What they do bring, however, is an ability to listen, ask questions, think outside the box, analyze and provide value-added solutions to the desired growth direction of a business, its owners, and its employees.

The Business Consulting World has an array of consultants and consulting firms.  Some are generalists, while others specialize in a given field.  The vast majority of these consultants aspire to a “one-stop shopping” process, in that the process and methodology that they use, will work for any business. However, once again, the reality is that every business has its own personality…the personality of its owners, managers, employees, products and services offered, market or industry and equally important, their customers and clients.  Without a good understanding of all these operational areas and how they affect the business, a consultant’s suggestions and advice is “wishful thinking” at best!

So with all that said, making the decision “to use or not to use” a business consultant rests on the shoulders of the owner of the business.  A GOOD Business Consultant has “been there and done that” and their methodology and number one objective is helping you and your employees grow the business and be successful, by analyzing the past, dealing with the present and planning for the future!

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!


 

 

 

 

 

The Hidden Value of Crowdfunding

By Steve Imke, SBDC Consultant and Small Business Specialist

Traditionally, entrepreneurs had 2 options to raise funds to start their business. They could either get a loan or give away ownership to investors. Because of the risk involved in the early stages of a small business, founders had to give up large blocks of equity to entice an early stage equity investor. On the other hand, having to make interest and principle payments for debt financing can, at best, slow growth or even cripple a company during it’s fragile early stages. Enter crowd funding, a viable option to preserve equity and eliminate the need for debt.

In a real estate deal a few years ago, a builder I know needed to raise capital to build a new residential tower in downtown Denver. With a mock-up of the finished building, some computer generated images, and some floor plan layouts, he pre-sold many of the units at a discount to come up with the seed money he needed to get the project off the ground. Crowd funding shares many similarities to the strategy used by the builder to raise capital and validate the concept.

In many cases, a product based crowd sourcing campaign allows people to pre-order the product before anyone else. This campaign accomplishes several vital steps for a company still in its early stages.

1. It provides the company with the capital it needs to build the first wave of products without either giving away equity, or pay back principle, or pay the lender interest. These benefits occur when equity is most under valued and capital preservation is most needed.

2. It validates the hypothesis that consumers are willing to exchange cash for the product. Proving the value of the product is a major tenet of the business model canvas and for business that employ the lean start-up methodology.

3. It can raise to the surface demand for new and innovative products that might be hidden without a large number of investors actually seeing the product.

4. It attracts early adopters who become social activists, evangelizing the product to their networks and raising product awareness.

5. Tiered raises create excitement. Excitement can create a valuable feedback loop to further product improvement by exposing the product to early adopters, the people who are most likely to provide feedback.

6. It provides funding for a particular product and not the company. It is like a direct investment in a single oil well rather than buying the diversified portfolio of an oil company, such as Exxon.

In addition to pre-order campaigns, some crowd funding campaigns allow for micro ownership of an early stage company. This creates a whole new class of investors who can buy into companies before they become large and go public.

Before crowd funding, only accredited investors (investors with more than a million dollars in net-worth or investors that earn over two hundred thousand per year in wages) could get involved with ground floor investments. Prior to crowd funding, companies who tried to raise money from unaccredited investors would run afoul with the Securities and Exchange Commission (SEC). Crowd sourcing allows small investment levels that bypasses SEC oversight, opening the opportunity for micro investors wanting to buy into early stage companies.

These micro investors hope these businesses will grow substantially. They hope that these businesses will then give them a significant return on their investment when the company experiences a exit event such as being acquired or going public. Before crowd funding, even accredited investors would have to either invest large sums of money in only a few companies, which is very risky since there is limited diversity in invested capital, or find a venture capital fund to invest in and lose ultimate control over the specific investment allocations in new companies. With crowd funding, a small time investor with only a few thousands dollars can invest in dozens of hand picked companies and achieve investment diversification, a domain only previously available to venture capital principle investors.

Setting up a crowd funding campaign generally requires a good video demonstration of a sexy new product. Need a little help getting your idea from conception to a point where you are ready to begin a crowd sourcing campaign? No problem! Companies, such as Quirky can help get you there in exchange for micro equity stakes.

However, the funding of your venture may be the easy part. The real work comes when the new company or product gets funded. Now the owners must produce the product. To do that, they must now manage a long supply chain and learn to run a real business.

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



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