It’s okay, not sure why it’s so popular. Most of it felt fairly intuitive. The outline for creating a good proposal was great, though, and easy to incorporate into my own work.
They may well enter Deloitte or McKinsey, but they do so as worker ants who are expected to carry tasks many times their own weight. They are expendable, paid X, and billed out at X times three to cover costs and produce profit.
Consultant: An expert in one or more identified areas who partners with a client to improve the client’s condition.
If you work on an important issue with zero transfer of skills, you’re simply an independent expert (upper left). You ski, but you can’t teach me to ski.
If you transfer significant skills but not for an important issue (lower right) then you’re an interventionist. By that I mean that you help people learn how to respond to complaints from customers, or change a tire in the body shop, or underwrite risk in an insurance policy. You’ve done these things yourself and can teach them. But you teach them generically, not because there is an urgent issue at the moment.
The upper right, collaborator, represents the real value in consulting, where you are both transferring skills and doing so as a vital issue is resolved. That’s where the highest value and concomitant highest fees reside.
Wealth is discretionary time; money is simply the means to obtain wealth. (Hence, some people pursue money so rabidly that they decrease their wealth.)
The analogy is that while building revenues is important, reducing labor intensity is just as important. The reason is that too many people are racing around generating money while eroding their wealth. They are making money but losing time.
Whether you are new to the profession or veteran, it’s always a good time to examine whether you are reducing your labor and not merely increasing your revenue. There are three important aspects to doing this:
Carve away everything that you aren’t great at and don’t love, and you’ll create the artwork of your career.
To begin, state your value proposition.
The following are excellent value propositions:
Once you have your value proposition, you’re ready to find your ideal buyer.
Your ideal buyer is that economic buyer who can spend money for your value proposition, and who would probably find it at least attractive and possibly critical.
We do not grow and prosper by correcting weaknesses; we grow and prosper by building on strengths
Take a moment to sketch out your sweet spot and four to six components. The components are not delivery mechanisms (e.g., coaching) but should be aspects of your sweet spot:
The final consideration here is a vital one: What intellectual property (IP) will support those components?
there is a plethora of opportunity to generate and sustain market gravity. In no special order, starting at 12 o’clock:
Pro bono work. Find a highly visible charity and offer your services
Commercial publishing. Write articles for newsletters, newspapers, magazines, and so forth.
Radio and TV interviews. Start with local talk radio shows and cable television and work your way up to network affiliates and syndicated shows.
Advertising. While not usually very productive for our profession, it can be useful in the arts, charity work, and other fund-raising organizations where “movers and shakers” contribute.
Passive listings. Make sure your business is to be found on Google, in local phone books, and on professional association lists, as appropriate.
Speaking. Pursue trade association executive directors to speak at upcoming conferences.
Web presence. Your website isn’t a sales tool, but it is a credibility statement for those who have met you or heard about you and want some background.
Word of mouth. Pursue viral marketing by equipping your clients and colleagues with an understanding of the full panoply of value you can provide, as well as the types of projects you engage in.
Trade association leadership. If you take on a key role in a professional association, you’ll find that you’ll be quoted, interviewed, and consulted on best practices and trends in business.
Third-party endorsements. Encourage evangelism. Find ways to bring your clients and prospects together, in reality and/or virtually.
Hard copy, print newsletters. These sometimes stand out in the crowd because they are not simply additional electronic communications arriving daily.
Print interviews. Make yourself available to be cited in your field of expertise.
Teaching. Noted consultant Edgar Schein, wrote, “If you want to really understand something, try to teach it.
Alliances. Sometimes someone with noncompeting but complementary skills comes along, where 1 + 1 = 120.
Products. Products can add to your brand and provide passive income, including subscriptions, videos, manuals, and so forth.
Networking. This is particularly effective when not done at obvious places (trade association meetings) but at places where the proper people gather (fund-raisers, for example).
Referrals. This is the most profound and highest-quality aspect of market gravity, since a peer is endorsing you to another peer, with all the credibility that attends such a recommendation.
Therefore, as you go to the right, your offerings increase in value and intimacy and decline in labor, but there are greater barriers to entry (price, commitment, time). On the left, people can get to know you readily (a free download, podcast, inexpensive booklet) and “ride” the accelerant curve toward more complex relationships.
Take a moment to decide, ideally, at present or in the future, three value offerings you would create on the left, middle, and right of the curve, and two offerings that would be in your vault. The left side of the chart is generally representative of competitive offerings, the middle of distinct offerings, and the right of breakthrough offerings, culminating in the vault’s unique offerings.
To create your brand or brands, there are three steps
Brand creation. This is the initial effort where you choose your brand, match it to your positioning, and analyze its effectiveness
Brand building is the step of “Once you’ve built it, tell them you’ve built it, and they will come.” Create print, electronic, viral, continual reinforcement of the brand.
Brand equity represents the power of your brand (what people think when you’re not there) in attraction and is worth huge value.
But if you’re building a boutique firm in which you reinvest every year so that you can sell it one day, make the business the brand so the brand equity is of value to the purchaser and the brand value is not dependent on your continued presence.
The starting point is your value proposition (see “Where Do You Begin?” in Chapter 1), in which you state your passion for helping clients improve their condition.
The next step is your sweet spot (Figure 1-5), where you identify what you are great at doing and the few, key components surrounding it.
Carve away everything else and create your David, the artwork of your career, based on those two factors.
Find your ideal buyers (Figure 1-4) for that value and competency.
Use market gravity (Figure 2-1) to attract those buyers to you, through mechanisms appropriate for them and at which you excel.
Place them on your Accelerant Curve (Figure 2-2) with the intent of moving them through brand, trust, and “bounce factors” toward your vault with the benefits to you of high fee, low labor intensity, and high perceived intimacy.
The smaller the project, the more demanding the client. The more cash is tight, the more insistence on a huge ROI on your modest fee.
An economic buyer is a person who has the ability to write a check (have a check issued) for your value without the approval of anyone else.
Encourage clients (buyers and nonbuyers alike) to spread the word. Find and befriend those people who have most supported your projects, initiated new ones, and been credited with success. Keep a special list of such people.
Never cease marketing to new prospects. In any one year, a ratio of about 80 percent repeat business and 20 percent new business is quite good.
Proposals are most effective when they satisfy personal objectives of the buyer in additional to business issues. For example, a desire for more collaboration among departments might mean that the buyer is weary of wasting time playing referee among disputing parties. How would you find that out? Only if the buyer offers it as a result of trusting in your judgment and advice.
Too many consultants “default” to a classroom or training solution because the client requests it or it’s what they know best, even though it’s the wrong solution to meet the real objective.
Every objective requires at least one metric, and more are fine. You and the buyer should agree on how they are measured. Scientific metrics rely on data and information gathered by objective means, such as weekly sales reports. Anecdotal measures are those you agree will be observed by the buyer.
Thus, value is the heart of conceptual agreement, which is the sequence of objectives, measures, and value agreed to with your buyer, pre-proposal. This is why you should hit at least 80 percent of your proposals, because they become summations (of conceptual agreement) and not explorations (of negotiations and other options)
Here is your formula:
Meet with two buyers a week, whether existing or new, whether individually or in groups. (A meeting with 10 buyers would give you five weeks’ worth of meetings.) These are in person, not by phone. 2. Of those approximately 100 buyers per year, half should agree to meet again to discuss projects. 3. Of those 50, half should agree to consider a proposal. 4. Of those 25, half accept the proposal (although your “hit rate” should be about 80 percent). 5. Multiply 12 accepted proposals by your average fee (e.g., $50,000), and you have your annual revenue ($600,000). If your average fee is $100,000, then you have a $1.2 million year.
With rare exceptions (a single speech, one day of coaching, and so forth), the fee should be based on the value you contribute to the success of the project as described in the conceptual agreement on objectives, metrics, and value. If you are charging by the hour, day, numbers of participants, or any other such measure, you are an amateur.
The “formula” for value-based fees looks like this: • Tangible value × annualization + • Intangible value × emotional impact + • Peripheral benefits = ROI
Your fees should reflect a minimum of a 10:1 investment. That means if you’re creating a million dollars in savings or new business or better margins or stress relief—or a combination thereof—your fee would be about $100,000.
If a client were to say, “What’s your fee basis?” or “Why don’t you charge by the hour like all our other consultants?” you should respond: My fee represents my contribution to this project with a dramatic return on investment for you and equitable compensation for me.
There are three variables in a retainer: 1. Numbers. How many people have access?
Scope. If you are on the East Coast and the client is on the West Coast (or overseas), what hours of access are acceptable? Are weekends or evenings included? Is communication by e-mail, phone, and/or Skype (or other electronic media)? Is it by appointment? Is it immediate access or rapid response? (Mine is always rapid response, never immediate access, which is too difficult to guarantee.)
Duration. How long is the retainer to be in effect? I suggest never less than 90 days to give it a chance to be tested well.
Restrict a retainer to advice. Never allow it to include project creation, implementation, or oversight, or you’ll be trying to play soccer with a lacrosse stick.
My suggestions for consultants with fairly strong brands is that they charge at least $7,500 per month (with a three-month minimum) for retainer work in 2016 dollars; for stronger brands, at least $10,000 or more per month.
Adopt the habit of always giving options, even on minor matters, because it’s never excessive, and failing to give them can be extremely costly.
Fees escalate with the options because they provide more value. Option 1 will meet the objectives, but option 3 meets the objectives and also includes much more value. This is the principle of adding value to an RFP to enhance your chances of acceptance, as discussed in the preceding section. You will see an immediate increase in every aspect of business acquisition (meetings, follow-up, suggestions, and so forth), and every aspect of your life once you form the habit of naturally offering options.
Note that these are all outcomes, as described earlier in conceptual agreement. They are not deliverables or tasks or inputs. They have demonstrable improvement for the company.
Never prematurely present or suggest your fees. Leave them until the proposal has already emphasized value and potential savings.
I don’t like to present proposals in person. My preferred sequence is this:
Ask the buyer this question: What could I have done differently to convince you to have accepted my help? I’d appreciate your candor for my own education and growth. You can at least learn from the refusal.
The “must” in the process of conceptual agreement with a buyer is to convert business outcomes into value. Here are some generic questions to use during the conversations:
Never lose sight of the difficulty of acquiring new business on a consistent basis. Not many people are excellent at it.
On average, you should be seeking about 80 percent repeat business annually, and 20 percent new business.
Every 18 months or so, try to drop the bottom 15 percent of your business (based on amount of profit). The business most eligible to be abandoned:
If you’re not acquiring more than 50 percent repeat business from existing clients, either you’re not doing a superb job, the client doesn’t realize you’re doing a superb job, or you’re not asking.
Never wait to ask for a referral until the project is completed. Wait until it is about two-thirds completed, then use this language: Referrals are like the coinage of my realm. Almost all of my work comes from referrals from delighted customers. I think we’re both ecstatic about our results to date, so I’d like to ask a favor: Can you introduce me to three people who you believe can profit from the same type of value? Or, even better: Can you introduce me to Betsy Taylor at your main supplier, who I think would be ideal?
You have to have a plan to continually offer new and more alluring services, or your growth will sputter and eventually stagnate.
How do you best acquire retainers?
Second, you need “aerodynamics.” You must have a recognized field, specialty, point of focus. Mine is boutique consulting. Dan Pink’s is sales. Nessim Taleb’s is decision making and risk. Otherwise, you have a flying barn, not a sleek arrow. I’ve found that you can’t teach goats to fly, even if you strap wings on them and throw them off a building. What you will have is an angry goat. What is your niche or focus? _____________________________
We hear frequently, “We can do that ourselves,” to which I’ve had two standard replies:
Always ask yourself, “Would I be proud of this if it appeared all over the Internet tomorrow?”
You need three kinds of financial help,
A bookkeeper, who will take monthly deposits, pay stubs, check stubs, bank statements, and similar documents and reconcile your checkbook, provide a general ledger, and show you income and expenses by category. I suggest you code your income categories to track performance—for example, consulting, coaching, speaking, product sales, and so on.
Tax professionals who complete your annual taxes on federal, state, and local levels, as needed. They will take the inputs from your bookkeeper and advise you of potential deadlines, penalties, and escrow needs. These days all filing is electronic.
Financial planning. You will need people to apprise you, often in conjunction with your attorney, about estates, wills, powers of attorney, investments, and similar matters. They should never have products to sell, only advice.3
At the end of the day your physical and virtual desktops should be clean with nothing on them. No one wants to face a desk of leftover “stuff” in the morning
Pay your bills twice a month, on the fifteenth and last days of the month. They will never be overdue, and you won’t have to fuss with them daily.
Any magazine or periodical, hard copy or electronic, that you don’t read before the next issue comes out, get rid of and unsubscribe.
Make sure you have a healthy line of credit. Your bank should be prepared to advance you $100,000 or more. Demand overdraft protection on your accounts. Place all of your business—mortgage, investments, savings, checking—with one institution if it will increase your leverage.
Then consider joining the 30,000 other people getting the Monday Medley newsletter. It's a collection of fascinating finds from my week, usually about psychology, technology, health, philosophy, and whatever else catches my interest. I also include new articles and book notes.