The 7 Mistakes I Made In My Consulting Business, and How to Avoid Them
Looking back on my consulting business, I’d give it a C+.
I made pretty good money, but there was a lot I could have done better.
When I mentioned this on Twitter, it led to a discussion of people asking me how I came to the grade. I said that the biggest mistake I made was that I had built a job for myself, not a business. It would take a lot more that 140 characters to explain what I meant so here goes.
The Definition of a Business
A business is a repeatable process that:
Creates and delivers something of value…
That other people want or need…
At a price they’re willing to pay…
In a way that satisfies the customer’s needs and expectations…
So that the business brings in sufficient profit to make it worthwhile for the owners to continue operation.
— Josh Kaufman, The Personal MBA
The problem with this definition?
You can also apply it to a job.
- Delivers something of value? Check. Otherwise, your boss would stop paying you.
- Something other people want or need? Check. Businesses need to delegate work to employees to scale.
- At a price they are willing to pay? Check. Your price being your salary in this case.
- Satisfies customer needs and expectations? Check for as long as your boss is happy with your performance.
- Profitable and worthwhile? Check so long as you are delivering value to your boss, and you are happy to keep the job.
The Mistakes I Made
When I said “I created a job for myself, not a business.” What I meant was that I was far off the mark from what I see as a perfect business. Here are the things I wish I could go back and change.
- The business didn’t have a name. I was “Concordant Solutions” if you ask the IRS, but all my writing was on my personal domain. Most people saw it as bringing in “Glenn”, not hiring Concordant.
- The business didn’t have good positioning. A good business solves a particular problem for a particular audience. Towards the end I started to narrow down on client types. Yet, I never defined the problem I solved better than “web development.”
- The business didn’t have any well defined offerings. Every bit of pricing I did was ad-hoc and custom. I didn’t have any pricing information published. I couldn’t describe what I could offer to clients at what price.
- The business had too few clients. I would work on 4–6 large engagements throughout the year, and never more than two at once. That meant a lack of control over my financial well being. I was too dependent on to few people.
- The business didn’t have any assets of value. When I shut down my business, that was it. There was nothing to sell. There was no reward for the past four years of work. I didn’t build anything.
- The business lacked leverage. Moving away from hourly billing helped me break the direct tie between time worked and revenue generated, but I could have done a lot more. I wrote Dependable, but for peers, not clients. It wasn’t a part of the business I could leverage further.
- The business didn’t run without me. I put myself as the focal point of the business. I had to be responsible for delivering all the value to clients. I did have a virtual assistant, but they’re job was to reduce my administrative workload.
What Does an A+ Business Look Like?
- It has a recognizable brand that relates to the problem the company solves.
- It knows who it serves and how it serves them. It also has a unique competitive advantage.
- It sells fixed price offerings at various price points with clearly defined deliverables.
- It has a diverse client base so that adding or removing a client doesn’t seriously move the needle.
- It builds and owns one or more salable, scalable, valuable assets.
- It work delivers high value without a high time commitment.
- It works on optimizing, automating, and delegating the delivery of value.
How to avoid the same mistake I made
I’ve put together a 28-question heuristic based on some of my observations. Heuristics should be living and personal. Feel free to add or remove questions to better suit your ideals and goals.
Here’s a link to download it. Block off an hour in your schedule. Go somewhere quiet. Ask yourselves these questions. Make it a habit every quarter. That’s the kind of strategic thinking that will help you move your business forward. Then you can build something that suits you. Plus then you’ll get #18 right.