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Top Changes and Challenges for Independent Consultants

Apr 06, 2022

Consultant leading white board brainstorm

Consulting depends on changes and challenges. Helping clients handle their challenges builds your consulting business. Challenges and changes within your own business can be more difficult.

Consultants help clients thrive through changes and challenges. Now the world faces so many changes and challenges that consultants themselves must quickly change and adapt if they are to survive and thrive.
-Ron Person

This is the first in a three-part blog series that looks at,

Changes and challenges facing the world and consultants
Opportunities for consultants
Leveraging changes for greater consulting opportunities

This first blog on Changes and Challenges is divided into three main sections,

Ongoing Challenges for Independent and Boutique Consulting Businesses
Ongoing Challenges for Mid-Sized and Large Consultancies
New Challenges in 2022 and Beyond for Independent Consultants

A World in Change

Changing to our consulting models and methods can be harder than working on a client’s challenges. For our own challenges we have to take an objective perspective and be agile and adaptive in our thinking and execution.

After two years of COVID pandemic, 2022 presents us with global challenges unlike any mix in our lifetimes. We are now engulfed in,

Global Climate Change
Resurgent outbreaks of COVID
War in Eastern Europe
Global inflation (and/or will it be recession?)
Restructuring of global supply chains
Digital Transformation across all industries
“Virtualization” of business communication
Corporations restructuring for the freelance economy
Greatest number of new US business startups in history

Any one of these presents challenges to clients and opportunities to independent consultants. We can use these challenges to help our clients, to build our consulting businesses, and to build a better world.

Before looking at the swirl of global challenges facing us, take a moment to consider the challenges new and experienced consultants have always faced. They will continue to exist.

Ongoing Challenges for Independent and Boutique Consulting Businesses

Finding the Right Niche

Finding the right niche is the bedrock of successful consulting. Over my 30+ years consulting I’ve seen many new consultants starve as they kept proclaiming they could do anything and as they continued marketing to everyone.

While old niches remain solid, the impact from COVID, Global Climate Change, rebuilding supply chains, and more are creating new rapidly growing niches. COVID had immediate and drastic impact on travel, retail businesses, healthcare, eldercare, and more. Sustainability consulting to combat Global Climate Change is rapidly growing with even large multinational consulting firms opening sustainability divisions.

When you pick your niche, use LEAN methods to test and validate the niche prior to sinking years and money into it. We teach these methods in the first two modules of our Consulting Mastery Series^tm course on starting a consulting business, How to Find Your Perfect Niche and How to Find Your Ideal Client.

Creating Authority in Your Niche

Client’s usually hire the best authority they can within their budget. That means you must have solid experience and have provable authority. In the digital age over 70% of new B2B business interactions begin by confirming authority with a search on LinkedIn, your website, books published, online case studies and whitepapers.

With the right guidance, you can use your experience and expertise to build a digital foundation for your B2B authority. To learn more about building the foundation of your authority look at the content in the Ultimate Guide section, Promoting Consulting Services.

Starving: Feast-or-Famine or Rollercoaster-Income

The BIGGEST and most consistent challenge facing consultants is the feast-or-famine or rollercoaster-income effect - first there’s too much work and no time for marketing, then there’s no client work and all marketing. I’ve known some consultants who are still on this roller-coaster after 20 years of consulting.

Jet pilots have a saying, “Stay ahead of the power curve.” If you get behind the power curve your engines can barely keep the plane in the air, so there is not enough extra power, altitude, or airspeed to accelerate or maneuver. Eventually you will crash or get shot down.

If a pilot keeps their jet ahead of the power curve, the plane has the altitude, airspeed, and power to accelerate out of tough spots, maneuver into new positions, and take down their adversary.

The "Good Old Boy network" is behind the power curve. Now it is far easier and more reliable for prospects to search the internet for a consulting firm with experience and authority in their niche.

Consulting success in the next few years will largely be determined by digital marketing and niche focus.

The “High Growth Study 2021 for All Professional Service”, from Hinge Research Institute, found that business lead generation from digital promotion increased by 18% in one year. Digital sources now produce 40% of leads.

In addition, the “High Growth Study” showed leads from digital sources are more profitable. 45% of high profit (>25%) leads came from digital sources. 36.2% of consulting firms surveyed use some form of digital lead generation. Networking on social media was the largest form at 41.5% followed by email marketing campaigns at 34.4%.

Multiple modules in our course guide independent consultants through the step-by-step processes to build automated marketing machines that generate a steady flow of leads with only a few hours work per week.

The third course module, Promoting Consulting Services, describes what you need for a promotional foundation. Later course modules take our consultants step-by-step through building a semi-automated promotion system. Build it once, spend a couple of hours a week, and it generates a list of qualified leads.

The course instructor, Ron Person, has consulted to and taught digital marketing to Fortune 1000 and Global 1000 companies such as ExxonMobil, Microsoft, International Harvester, MaryKay, and more.

The rate of quality client acquisition from face-to-face networking cannot compete with good digital marketing and promotion. Since 2021 B2B marketing has moved at a rapid pace into social media and web/digital marketing.
-Ron Person

Underpricing Yourself

Most consultants start by underpricing their services. New consultants try to win business by lowering price. This earns them poor clients, low or non-existent margins, and a ruined brand. After two years they quit and go back to a corporate cubicle.

Learn how to price yourself competitively using multiple pricing methods, then choose a fee that fits your situation. We teach how to calculate fees in the Calculating and Setting Consulting Fees stage of the Consulting Mastery Series^tm.

Some tips and examples are in these blogs,

Calculating Consulting Fees

Calculating Project Based Consulting Fees

21 Types of Consultants and What They Earn

Ongoing Challenges for Mid-Sized and Large Consultancies

Maintaining Skills and Agile Learning

You must maintain leading-edge skills and develop agile learning. Digital Transformation is changing every industry and specialty.

Business and technology are changing at an accelerating rate, and the Great Resignation is producing more highly skilled freelancers who compete with consultants. This is putting the squeeze on consultants who are used to dominating a narrow niche.

You cannot sit back and depend upon skills and technology that are even a few years old.

The solution is continuous learning and maintaining a stable of consulting peers with adjacent and complimentary skills. Leading-edge skills and a Rapid Action Team (RAT) for special projects will keep your schedule and wallet full.

Solo, independent, and boutique consulting firms can use a T-Skills model to expand within existing clients and build a network of peers with complementary skills.

Many universities teach online courses in the latest skills and technology at no cost. (For certification or accreditation there is a fee.) Learn more about these courses in the blog,

Get Clients by Building New Consulting Skills

New Consulting Business Models

The old consulting model depends on expanding the work scope in a client and then filling those seats with junior consultants billed at high rates. This is the “Butts-in-Seats” consulting business model.

“Butts-in-Seats” is a business model that aggravates clients as they see fees rise and scope expand.
It will fall quickly in the New Economy as consultants move toward productized services.

In my first 17 years of consulting I was called numerous times to fix the financial worksheets and data analytics mashed together by junior consultants from the top three consulting and accounting firms. While it was easy money for me, the client frustration and aggravation was obvious. In the New Economy clients will not put up with the old model.

The “Butts in Seat” model is rapidly disappearing. The Great Resignation has created too many freelancers. And clients are finding the combination of online step-by-step instructions combined with freelance talent an acceptable solution.

Consultants must move to a new business model. This new business model has two parts,

Virtual Consulting
Productization

Virtual consulting allows consultants to work with and deliver results to clients anywhere in the world. Instead of leaving my family to do a three-month consulting job in Perth, Australia or Copenhagen, Denmark I can stay home, and do video conferencing and strategic facilitation from northern California. My market audience has expanded to cover 2/3 of the world. (It is far more fun to travel to those places on vacation with my family.)

Productization fits perfectly with virtual consulting. Putting your niche knowledge into products not only builds your brand but widens your price and client range. You can deliver your knowledge world-wide at multiple price-value levels. You can create a low-price solution to give Do It Yourself (DIY) prospects general guidance, then you can upsell a small set of those prospects into a more robust Done with You (DWY) or Done for You (DFY) model, using your experience and expertise.

Productization can start with products as easy as Kindle books or one-off webinars. They can also be as deep and detailed as our nine-week course on consulting with 1:1 coaching or as complex as a custom Software As A Service (SaaS) system. I know multiple consultants who have created short online courses that funnel clients into their executive coaching programs.

Productization and virtual consulting create huge opportunities for independent consultants and professionals. At the top of the hill by our house, next to a 5,000 acre park, is a gorgeous house with views that stretch 18 miles across the Sonoma Valley. It’s owned by two nurses who wrote a series of books on their specialized niche.

The possibilities are huge if you pick the right niche, promote digitally to a world market, and leverage productization and virtual consulting. We cover these new consulting business models and how to get started in the Scaling Your Consulting Business: Productizing and Globalizing stage of the
Consulting Mastery Series^tm.

New Challenges in 2022 and Beyond for Independent Consultants

The massive upheavals in economies, technologies, and cultures have created new consulting challenges.

Decreasing Profitability

Multiple surveys in the last two years show one of the biggest issues facing consultants is that clients are demanding greater value at the same cost. That is driving down the high profit margins most consultants are used to.

Obvious methods of fighting smaller margins are cost control and monitoring project overruns. A less obvious method, is to change the consulting business model. Old consulting models rewarded the number of inexperienced consultants pushed into a project. That no longer works.

The old Butts-in-Seats model is not only unethical it can be unavailable for solo consultants or boutique consultancies. A better way to manage the push to lower costs is a consulting model based on productization and virtual delivery.

Unpredictable Business Market

Across multiple studies in 2021 and early 2022 the consensus for consulting and professional services was an unpredictable business climate.

Some of the areas of concern are,

Managing remote workforce
Changing workforce and workforce resignations
Artificial intelligence
Increased regulations
Increased lead generation through digital marketing and promotion

Changing Budget Behavior

Consultancy.uk reports clients are pushing back against previously standard consulting practices such as billable hours and instead are demanding fixed fee projects with cost transparency. As more economies face price squeezes, that squeeze will hit corporate budgets for consulting.

The Gig Economy and Great Resignation are affecting consulting projects. Clients are hiring freelance workers and managing their own projects.

Another change is the ease of finding solutions or processes online. With minimal searching a client can find best practices that used to be consultanting "secrets."

Freelancers and New Corporate Employment Models

2021 saw the rise of the Great Resignation. The U.S. Bureau of Labor Statistics found that 4 million Americans quit their jobs in July 2021. The Freelance Forward: 2021 report from Upwork states that 59 million Americans were doing freelance work in the previous year.
36% of the entire U.S. workforce was freelancing in 2021.

Do not try to dismiss the shift to freelancing as just low-skilled gig workers. The number of fulltime freelance workers rose from 33.8% to 35.0% from 2020 to 2021. And, freelancing is impacting high-skill consulting, 51% of post-grad workers were freelancing.

Shortages of Top Talent with Leading Edge Skills

In research published by Statista, “Leading Business Challenges Worldwide” in 2020, January 11, 2022, the first and third greatest challenge consultancies face was the need for new skills and a shortage of talent.

The rate of change is accelerating. We are in a race to keep up with change from,

Digital transformation
Remote work
Artificial intelligence
New workforce models using freelancing

As consultants we have always enjoyed the value we contribute from our special skills. However, skills and business/technology processes are changing so rapidly that what is learned in school or last year on the job is quickly out-of-date. What we need is just-in-time, continuous learning.

Leading edge skills and talent acquisition are top priorities for the future. The independent consultant who wants to remain successful must have a strategy for maintaining leading edge skills.

Looking at the Opportunities Ahead

With this many changes and challenges ahead we could hang our heads or we could look for opportunities to help rebuild to create thriving economies with business models that are sustainable, inclusive, and purpose-profit driven.

In the next two blogs I'll take a look at the huge number of opportunities ahead and how as independent consultants and professionals we can take advantage of them.

Millions of Opportunities for Consultants