January 2006

Question

How can I ensure that I will be successful as a small business owner?

Answer

The good news is that you see yourself as a business owner—not simply a consultant. You are right. You own a business and you must act like a business owner, or you will be out of business—no matter how good of a consultant you are. Observe the following to be a successful business owner.

Commit to consulting. Do what you love. Owning your own business isn’t a hobby. It’s a lifestyle. Sticking with it takes a strong commitment. Most successful consultants work long hours–sometimes it may seem like 24/7; they skip vacations. Starting your own business is risky; running it is challenging. If you really love it, it is worth it. If you don’t, you will most likely fail. It takes commitment.

Understand the value of your services and price accordingly. The biggest mistake made by new consultants is that they under-price their services. The purpose of your business is to make money. Make sure you price your services high enough so that you make money, stay in business, and as a result can continue to help your clients. Too many consultants under-price their products because they are hungry for the work or timid because of lack of experience. The result is they don’t make the profit necessary to pay their taxes and have cash for continued improvement in the company. Have confidence in your ability to deliver value. Don’t be shy about charging for that value.

Strengths—know what yours are and build on them. Don’t try to do it all yourself. Be honest with yourself about what you’re not good at and hire it out. This frees up your time for the things you excel at and love doing. Isn’t that why you went into business for yourself in the first place?

Team—build a strong one. Small business owners can’t do it all themselves, even thought they want to sometimes. Build a team of smart professionals who know more than you do about their areas of expertise. Your team should have an attorney, accountant, banker, and insurance person. Choose wisely. You must be able to trust the advice they give you. Don’t hire cheap! Hire the best people you can afford, give them a goal and get out of their way.

Observe others to perfect your people skills. Your potential customers want to do business with someone they like. Charisma and people skills are so important. People want to do business with those that excite and invoke confidence. As a consultant, you do not have a tangible product that delights your customer. You have you. Your success is directly related to your ability to build and maintain relationships. Clients hire personality over expertise everyday.

Measure and monitor every aspect of your business. The most successful business owners I know have a one page numeric “snapshot” of their business—sales, receivables, payables, trends, profit averages—something that fits on one page. Monitor against your business plan to know when things need tweaking. I monitor using 1. A trended profit and loss by month; 2. An actual vs. budgeted P&L for the current month and year-to-date; 3. A forecasted cash flow and profit analysis; and 4. Trended balance sheets. Know your numbers.

Expect to succeed. Why just hope your business will succeed? Decide that it will. Those who succeed know they will succeed. When things are going wrong it takes drive from within to push forward, no matter the consequence. Those who expect to succeed believe they can make it happen. Without inner strength few would be able to stomach the roller coaster ride of starting a business. Many people want to start small businesses. A much smaller percentage actually do—and from that percentage, the ones that make it to the next step do so because they expect success. They know they can do it—and that is the difference.

Recognize the importance of your clients. Cater to your customers. Your services improve people’s lives. Period. No amount of venture capital can help a business if it doesn’t at least do that. Successful business owners make every effort to understand why customers do or don’t come back. It is a natural part of their culture that goes beyond an annual survey. They put themselves in their client’s shoes. The ability to empathize with the customer helps them understand the real value in what they do. 

This advice spells CUSTOMER—the center of every successful business. Without customers you will quickly be out of business.

Question

I have been in the consulting field for a couple of years, but I am still baffled by how to learn more about potential clients. You say in your books and in your presentations, “Learn as much as you can before you meet them.” What are some ways for me to learn about potential clients before a sales call?

Answer

You can begin by calling the company and ask for any information about the company. Ask to have an annual plan sent to you. Next Google the company’s name and read as much as you can find. If the company is a local company, pay a visit to your local library to search local newspapers, magazines, and other resources your librarian can suggest. Don’t forget about your network. Who do you know that could tell you something about the company? Finally, take a look at the company website. Although it is a marketing tool, you will learn about the positive aspects the company wants you to know.

Question

I have heard a lot about a client centered approach to consulting. What is that and how is that approach different from how the average consultant relates to clients?

Answer

Keith Merron has recently written Consulting Mastery, published by Berrett-Koehler. He describes the tenets of a client-centered approach that is focused on the following:

• The client is ultimately responsible for the consulting outcomes. Ownership is key to success.
• The client’s needs are paramount in the mind of the consultant. All efforts are designed to be in service to the goal.
• Every client is a unique client and all services need to be customized to meet that client’s unique needs.
• Client learning is at the core of all consulting activity.
• The client is capable of solving its own problems and transforming itself.

Most consultants are hired to solve problems that the client just wants to go away. Therefore, consultants play the “savior” game, and the clients play the “avoidance” game. This frees the client from taking full responsibility and doing the hard work necessary to reach a new level of effectiveness. For more information check out Keith’s new book.