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

In last week’s letter, I mentioned Josh Kaufman’s definition of business. I cut off a bit to keep it short, but it’s worth look at the whole thing:

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.

  1. 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.
  2. 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.”
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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?

  1. It has a recognizable brand that relates to the problem the company solves.
  2. It knows who it serves and how it serves them. It also has a unique competitive advantage.
  3. It sells fixed price offerings at various price points with clearly defined deliverables.
  4. It has a diverse client base so that adding or removing a client doesn’t seriously move the needle.
  5. It builds and owns one or more salable, scalable, valuable assets.
  6. It work delivers high value without a high time commitment.
  7. 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.

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