How Consultants Can Make Money in a Down Economy

Just because the market is in the toilet doesn’t mean that there aren’t opportunities for consultants to grow their businesses. In a strong economy many of us consultants make money despite ourselves. The consultants that are worth their salt are the ones that can weather a slowdown in economic conditions or even thrive.

There are two ways for consultants to make money in a down economy: First, they can identify a specific market segment that is bucking the trend. Second, they can alter their sales methods and value proposition to match what the market needs.

In the first case, it can be difficult to find that needle in the haystack and many of us simply stumble upon opportunity if we are lucky. An example from the last recession was companies operating in the mortgage industry. They were the only companies that were spending any money at all as they benefitted from the refinancing boom. As a result, mortgage lenders and credit reporting companies were flush with cash and were just about the only game in town. This time around that segment is obviously not throwing a lifeline.

Fact is that we should always make sure that our sales pitch matches what the market needs. It’s amazing just how many consultants only know how to sell on their background, track record or experience (i.e. their resume). This leaves most employers wondering what the consultant can do for them today. As consultants, we all need to sell to what is motivating purchasers of our services. Nobody cares what you did last year. Everyone is interested in what you can do for them now. This is especially important when dollars get tight.

So what is motivating businesses to purchase services now? It seems obvious to anyone whose head is not in the sand; the market is tanking, the government is becoming a major shareholder in some of our premier financial institutions, investment banks are now chasing deposits, oil prices are raging and the dollar just doesn’t buy what it did six months ago. What does this mean? It means that companies are digging in. On the surface it might seem like nobody is spending any money. Fact is that some companies can be highly motivated to spend dollars if it will mitigate risk or help them preserve their hard-earned market position as they try to weather the storm.

Almost any consultant can alter their current sales pitch and package their services to fit neatly into the motivating factors of the market today. For example, if you sell IT services you probably spend a lot of time extolling the benefits of your expertise or how companies can expand the bandwidth of their IT departments by hiring your firm. These are pitches for a growth market. You should start to think about how your services can be used to reduce risk for clients. Offer code reviews to improve software performance and help preserve market share. Sell on the reduced cost of doing business by helping clients keep their overhead lower. Help clients expand their reach with less expensive non-development projects such as implementing discussion boards to get closer to their customers so they can head off revenue leakage.

If you don’t think your expertise can be positioned as a risk reducer for clients then you should ask yourself if you can use your experience to help clients find a way to generate new revenue with the assets they already have. Most companies own tons of intellectual property but don’t know what to do with it. Can you get their content into a useful format on the web? This will help generate interest in their core products and depending on the nature of the content it might actually enable them to solicit subscription revenue.

Another approach would be to find a way to expand your current offerings to your existing client base. These are the companies that know and like you (assuming they pay their bills). Consultants should be looking for ways to gain deeper penetration into these firms. Is there some service you offered some clients that you have not sold into other clients yet? You know your clients’ businesses as well as they do. You should think about how you can improve operations, reduce costs or expand their reach and suggest these things as new proposals. At the very least this kind of proactive selling might let them know that you are thinking about them. Bringing value added ideas to the table for existing clients will keep you on their radar.

In the end, this is the time to get creative and think outside the box not a time for panic. Chances are all you have to do is repackage how you sell your services in order to thrive. Many companies find a way to thrive in tough economic conditions, why not yours?

Get Clients Before You Even Start Your Business

If you are a freelancer thinking about striking out on your own, having a few clients in the bag before you make that leap is a pretty smart step. This can be a particular challenge of course, as you most likely don’t have the time it takes to market yourself successfully while still gainfully employed. Not to worry, there are plenty of ways to do this nowadays. One of my favorite ways is to find an online marketplace where you can both market yourself and find suitable projects to bid on.

One site that I would like to suggest that you check out is Guru.com. In a nutshell, Guru.com is a site that brings freelancers and prospective employers together. Guru.com has been around in one form or another since 1998 and they definitely have the marketplace model down pat. In 2007, over 93,000 projects were awarded to freelancers on Guru.com, mostly in the U.S. At any given time there can be more than 5,000 projects posted on the site for freelancers to bid on.

Freelancers can scan thousands of projects posted by companies and then select those that they are most qualified for to bid on. Projects can be filtered using Guru.com’s search engine. The bidding process is all done on the site and notifications are sent to you via email. Freelancers and hiring companies generally communicate with each other via Guru’s “private DB” feature at the outset of an engagement. This is essentially a bulletin board where companies can post a message and the freelancers can respond in kind. This allows the selection and Q&A process to move forward in relative anonymity.

Once a project is awarded and work is underway Guru offers a number of ways for funds to exchange hands. The site includes functionality that helps freelancers create invoices and set up an escrow account. Companies then pay the invoice by transferring money into the escrow account (or paying by credit card) and freelancers simply request payment which then comes to them directly from Guru via check.

Additional features on the site include: a project tracker so freelancers can see the status of projects they have bid on; a watch list so they can track projects they are interested in; and a proposal template manager for bidding assistance, etc. The user dashboard is well organized and easy to use.

Freelancers can see all projects, but can only bid on projects that match their posted profile. This helps ensure that folks are only bidding on projects they are qualified for. In addition, you might be prevented from bidding on projects based on your subscription level. Although you do not have to pay to play on Guru.com, those freelancers that become “Guru Vendors” pay a small annual subscription fee and have access to more projects (companies can limit those who can bid on their projects to “serious” consultants only in this way).

The downside of Guru.com is that although there are some large projects available for bidding, for the most part companies are either small (it’s a good resource for startups too!) or the project budgets are limited. IT consultants in particular also have to compete with a large population of offshore freelancers and smaller companies (mostly in India) that use Guru.com to find projects from U.S. based companies.

It is difficult if not impossible to make a living on Guru.com projects and they are certainly not the only marketplace out there for freelancers, but it does represent a nice sales channel for freelancers and a good safe starting place for the newly self-employed so you can see what is out there in the market while getting some valuable experience selling yourself.

Flushing Out Your New Business Concept

Building a company can be a daunting challenge. There can be this lull at the beginning after you finally decide that you are going to do it. You start planning; thinking really. You start thinking about all of the things that need to be done and then you suddenly realize that you are woefully under-equipped. You’ve haven’t sold anything since those Girl Scout cookies in the 5th grade. You don’t know a P&L from the S&P and you may not have ever been the boss before. Now you have to find a way to get everything that needs doing done while simultaneously learning how to do all the things you’ve never had to do before. And let’s not forget that you just inherited all the trouble that you used to give your employer!

To say the least, first time entrepreneurs can get crushed under the weight of their own task list, if not physically then emotionally. The early part of the start up phase is challenging for sure. There are still so many loose ends and so many things that remain undecided simply because you have not gotten to them yet. The list of things to get done can seem endless.

One approach would be to ignore the problem and simply get started. Throw caution to the wind and account for business challenges as they arise. Another approach might be to sit down and methodically write a thorough business plan. The first approach is simply foolish and creates risks and obstacles that are just not necessary. The second approach may not be the best thing to do either even though it seems more reasonable. While I would certainly recommend that you create a business plan at some point; most business plans are written for an external audience, such as potential funders. So although the process of gathering the required information for the plan can certainly be educational and is certainly helpful, it can be premature. Even so, many people are in such a hurry to get their venture off the ground that they neglect to fully flush out their business concept.

Even if you have a clear understanding of what you are selling, you might find it useful to create a concept document to help you flush out the execution part of your business. This might include: describing how and to whom you will market your product; how you will handle customer service; what tools you will use for order management and managing customer relationships; how you will generate leads, etc.

A good concept document touches on all aspects of business operations but does not necessarily drill down too deeply. The intent is to make sure that you have thought about all facets of your business venture. It might also be useful to think of this as the rough draft of your business plan for when the time comes.

Your concept document should include at least the following items in its table of contents:

1. A summary of your business concept written in a way that someone with no understanding of you or your business would still be able to understand what you are offering.
2. Objectives of the business and an outline of your success criteria. Be specific. Saying that you want to make “a lot of money” does not give you a realistic target to work towards and will cause your business to lack focus.
3. A description of your market and why they would buy your product/service (i.e. your value proposition). If you do not have a clear understanding of why someone would buy your product or hire you then how can you expect to sell your product or service successfully? Again, be specific.
4. Outline your pricing model. Make sure that you understand what your product or your expertise is worth to your potential customers.
5. A list of action items (things you will be working on next). This is just practical.
6. A development calendar. You have a ton to get done. If you do not find a way to organize your workload and get it on a calendar then you will most likely feel like you are always struggling to get things done. Set reasonable expectations for yourself. Only assume that you will be 50% effective on any given work day. The rest of your time will be filled up making calls, taking calls, answering emails and running errands. It’s all productive time.
7. A description of your future opportunities. This might include an exit strategy or partnerships you will be seeking. It could be an outline of how you will expand your product or service offering over time, etc. This forms the basis of your company’s roadmap and sets direction.
8. Outline your risks. Make sure that you are honest with yourself about all the things that could go wrong. Write them down to make them real. If you do not pay attention to these things then you are not adequately managing your risk and the likelihood that you fail at some level increases dramatically.

And don’t forget to have fun. If you make yourself miserable in your own business then you might as well just get a job. This way you can still be miserable but at least you don’t have to take on the financial and emotional risk personally.

Taking That First Step In A New Business

Deciding to start a business is a big step. It can be life altering.

Some of us start a new venture because we are tired of working for others and want to create our own destiny. Some of us start our businesses out of pure necessity. Either way, one of the biggest challenges to starting a new business is taking that first step.

What should that first step be anyway? Should we run off and incorporate? Write a business plan? Or should we jump in and just start selling? Well, depending on your circumstances and the nature of your business, technically there is no wrong answer. Nonetheless, if we can take just a little time and produce a brainstorm map we might find that the work surrounding the business’ launch is easier – well at least more under control. The absence of some sort of tool for organizing your thoughts (and your work) can make the start-up process seem overwhelming.

A brainstorm map is nothing more than a chart that links the various “units of work” (or things that we have to get done) to logical topics or categories. They are not particularly fancy or difficult to produce, but they can go a long way towards helping the new entrepreneur organize his or her thoughts.

So how do we take this first step? Since we are starting a business it makes sense that we organize our thoughts along the lines of how the business will ultimately be structured. Even if you will be the only employee in the venture, you can break categories of work down into traditional functional verticals, such as: sales, operations, technology, product management, administration, legal, etc.

Once all of your functional verticals have been listed, you simply begin to think about all the things you want to accomplish in your business. These things are then organized along the categorical lines that you have already created.

In this way the brainstorm map can be described as a graphical depiction of all of the things that must be accomplished for your business to get off the ground. If you are really ambitious you can even drill down deeper and create a map for each functional vertical as well.

Once the brainstorm map is complete it can guide your activities until you get organized. I like to let the map serve as an inventory of sorts, kind of like a “to do” list. Ultimately, the map gets converted into a development calendar that can be linked directly to specific corporate objectives, such as the launch date for a new product.

A brainstorm map is a useful tool for getting organized and can go a long way towards helping the new entrepreneur take that first step.