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Grow or Stay Small as a Consultancy

Grow or Stay Small as a Consultancy

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How do you decide if you want a lifestyle consulting business or to scale and build a consultancy that is local, regional, or national. There's no answer but this presentation might help you think about the topic and evaluate your short/medium/long term plans/

How do you decide if you want a lifestyle consulting business or to scale and build a consultancy that is local, regional, or national. There's no answer but this presentation might help you think about the topic and evaluate your short/medium/long term plans/

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Grow or Stay Small as a Consultancy

  1. 1. Go Big or Stay Home: To Grow and Scale or Be a Lifestyle Consulting Firm? Janis Machala, Managing Partner Paladin Partners janism@paladinpartners.com 425-260-5354
  2. 2. Paladin Partners Overview •Founded in 1995 as a sole proprietorship •An “accidental” management consultancy •Firm offerings: •Strategic business consulting •Market development •Executive team/entrepreneur coaching and mentoring •Executive (CxO) search (1998) •Financing strategy/capital formation (2003) •Sales/Business development acceleration (2006) •All firm consultants have operating experience •We specialize in growth companies •Majority of clients are technology focused (65%) •Have tried various models of firm structure •Equal partners •Managing partner with unequal partners •Partnerships with other firms •Sole partner with “partners in the name” •Use of consultants versus employees
  3. 3. Why Grow a Consultancy? • Commraderie • Wealth creation goal • Larger more complex work requires more people • Leverage model is feasible (e.g., law or cpa firm) • Quality control • You enjoy selling the work more than doing it • You enjoy managing and mentoring people • Strong desire for national or regional firm • Growth comes organically and requires resources • Window of opportunity for your specialty
  4. 4. Why Not Grow a Firm? • It’s a LOT of work and a LOT of headaches • Less flexible for the lifestyle you may desire • May require outside capital or partner “buy-in” • May require partners to achieve growth and you’re not comfortable with having partners • You’re consulting as an interim to a full-time job • Consulting is a “try before we both commit” plan • Scale isn’t achievable, what you do is unique • Talent isn’t available to support growth • Headaches of a firm don’t outweigh the benefits • Too risky for your significant other
  5. 5. Growth Challenges • Everyone wants to join you but rarely can they sell new work or drive incremental revenue • Added people=responsibility and psychic energy • Quality control and work product consistency • Systems and processes are now needed • Administrative burdens increase dramatically (invoicing, cash flow, taxes, legal, accounting, scheduling, communication overhead, etc.) • You start spending more time on the firm instead of the work • You get to spend a lot less time with clients • Be prepared to lose money for 12-24 months
  6. 6. What’s the Best Model for Growth? • Added partners with complementary skills • Added partners with matching skills • A COO to handle non-client workload • Dedicated business development and marketing • Added employees with salary expectations • Contractors to use as needed • Partnership with other firms/known entities
  7. 7. How Fast to Grow? • How much capital do you have to invest? • How much work are you turning away? • How consistent is work coming to you? • How available are others to do the work? • Is there a shared model for bus dev, admin, and delivery? • How fast is your industry or market niche growing? • Can you maintain quality as you add people and/or projects? • What hours do you want to be working? • What’s your ideal work/life balance?
  8. 8. Business Development Considerations • Who sells the work? • How do they get compensated for selling? • What are they selling versus what are you delivering? • Who is on the client team and how is schedule determined for deliverables? • What is your profit margin requirement? • Is referral fee income better than growth? • Have you developed strong partnerships locally, regionally or nationally?
  9. 9. Other Ways to Grow Your Income • Develop a product to sell (leverage yourself!) • Turn client work into syndicated studies/research • Webcasts, podcasts, articles/tools/templates • Become a national speaker and expert/guru • Write a book or produce a DVD • Be paid just to show up and facilitate groups • Become certified in a “hot” tool or methodology • Referral fee(s) for other people’s work • Other?....
  10. 10. Nitty Gritty Realities • Office space or work from home • Your cost structure goes up as you grow • Marketing requirements increase as firm grows: – Website design and content – Newsletters – Seminars – Advertising – Tradeshows – Blog(s) – Print collateral – Keeping your brand fresh and current w/ the times – Case studies • Growing employees and projects adds structure: – Job descriptions – Recruiting – Performance reviews – Utilization analysis – Reporting layers and work product oversight – Scheduling and pricing methodology – Quality assurance process

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