Why the Consulting Business Model Is Broken and What You Can Do About It
When starting a freelancing or consulting business you don’t have to develop a product or invest significant amounts of money upfront, so you can start selling your time for money immediately. This makes it one of the easiest types of businesses to start … but also one of the most difficult to scale.
The nature of a service based business often means there is an over-reliance on you as the business owner and it can be difficult to build a team and create systems, especially when you are offering a custom solution to each of your customers.
As the owner of an accounting consulting firm, I realised to achieve my lifestyle goals I needed to move away from selling customised accounting services and bundle it up as a product.
My challenge was that accounting is generally viewed as a service rather than a product. I overcame that challenge by following these 4 steps to create a ‘productised ‘service’ instead:
1. Simple service delivery
I removed 90% of my accounting services to focus on bookkeeping.
Bookkeeping is much less complex than the accounting work I had been doing, so it was easier to create internal systems and build a team.
I was concerned that reducing the scope of services offered would reduce total sales, however one of the advantages of the more simple bookkeeping work was that it didn’t require face to face meetings and could be done remotely. This meant that I could offer bookkeeping to businesses all around Australia (and potentially the world), rather than being tied to my local area.
2.Focusing on a niche
By focusing on a niche you can create a compelling offer that talks directly to your market.
For example, a business selling websites for restaurants (niche) rather than a business selling websites for small businesses (general). As a restaurant owner you would most likely pick the business who specialises in building websites for restaurants because you believe they have more expertise in your area.
I selected my niche of ‘bookkeeping for online businesses’ by reviewing my customer base and deciding who were my best clients. I define best clients ‘as those who we enjoy working with and who value what we do … and of course are profitable’.
3.Fixed fee pricing
To remove the need for a long drawn out quoting process I created 3 fixed fee pricing tiers with set inclusion which were publicly available on our website.
When I was consulting, my focus was on solving a broad range of issues for clients by creating custom solutions. With a productised service my focus shifted to creating packages that met the needs of my ‘ideal client’ and then marketing those packages.
Bookkeeping is well suited to a subscription style payment plan as it is delivered on a regular basis. This helped with achieving my goal of consistent cash-flow.
4.Internal systems and a team
By simplifying our product offering to 3 bookkeeping packages, in less than 12 months we were able to build systems and a team so that I’m out of the product delivery side of the business.
I love checklists and documented procedures! Every task that is repeated has a checklist and a detailed instructions with screenshots. In some cases we also create small screen recording videos.
A few of our favorite tools to manage the team are:
- Trello – project management software
- Slack – for team chat
- Helpscout – to manage customer support emails
My productised bookkeeping business has only been running for 12 months, so it is still early days. But I can say that in that time we’ve systemised the business to the point that our 6 bookkeepers and 1 bookkeeping manager run the bookkeeping side of the business while my business partner focuses on sales and I focus on marketing.
Our focus for the next 12 months is on systemising our sales and marketing processes and building ourselves out of the business.
So think about whether there are elements of your service business that can be ‘productised’… and go for it!
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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