This is something I've struggled with many times. Here are a couple of examples and a few thoughts.
Maria set up her consulting practice seven years ago. Already an acknowledged expert in her field of industrial energy efficiency, with wide ranging high level connections, she is picky about the projects she chooses to work on and turns down as much work as she accepts. Always planning to work on her own, she now employs an admin assistant to field her calls, submit her invoices, maintain her website etc. Commanding a high fee rate and always with a work surplus, she has reached an ideal position that many consultants will never attain.
Julie left her job in middle management with an electric utility and set up her own consulting company eight months ago. Whilst she managed to get a small amount of work from her old employer, she has struggled to get anything else so far. Whilst competent in her line of work, she is not well known even in her field. Her main source of contacts is at the utility she used to work at, which is limited in both scope and range of potential consulting work.
So, first question – are you a Maria or a Julie? If you’re Maria, you can afford plenty of marketing. If you’re Julia, you can’t afford much. But how much can you afford? And can you afford not to spend very much?
Most of us fall somewhere in the middle between Maria and Julie and regular marketing actions are key to keeping the business moving forward, maintaining presence in the marketplace and developing the scope of services. So we market too little at our peril but of course the limit of peril is different depending on the development of the business. Marketing is also difficult because it is usually difficult to extrapolate a direct line between your marketing actions and sales. This means that it is also possible to spend far too much time, effort and money on marketing actions. Or way too little. Maintaining the balance on an ongoing basis that works for you is the ideal. Ok, we all know that, but how much time and how much money?
Let’s look at time first. We all need to make sure the forward-load pipeline has enough in it to keep us going. That generally means proposing work to potential clients and subsequently converting the proposals into work. When we start out, we have to find the potential clients in the first place, and marketing actions make that happen. Of course, there are a multitude of potential actions you can take—and they’ll all take up your time.
So here’s a rule of thumb that has worked for me: allocate 20 percent of the time to marketing (one day per week) in the first five years of the consulting business. After that, hopefully you’re moving more toward Maria than Julia, so you may be able to ease off.
Okay, so you’ve allocated one day per week, but how much money do you spend? Of course every dollar you spend on marketing is one dollar off your profit margin. How much did you expect to make on an annual basis after you’ve paid out for all your other expenses, like office rent, software, travel costs, and so forth? So, as a rule of thumb, allocate 10 percent of that figure. And see how it goes.
This is a difficult area, and many of you might be rolling your eyes right now, thinking I’ve recommended way too little or way too much. Of course it depends where you are with your business but also what consulting business you’re in. Some require much more in the way of corporate marketing, wining and dining, attendance at trade shows, and so on, than others. You know your business, and if your clients expect bottles of champagne and box seats at the hockey game, a budget of 10 percent probably won’t cut it.
As always, any thoughts and comments greatly appreciated.
As a highly experienced consultant and author of “Consulting Made Easy”, Adrian assists consultants, or would be consultants, to achieve success on their terms in their own consulting businesses. Adrian helps consultants increase their fee rates, find more clients, have more free time and have more fun.
Contact Adrian at firstname.lastname@example.org to learn more.
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