How to build a successful consulting business; never stop marketing and set your fee as high as you competitively can

Black Enterprise, August, 1994 by Caryne Brown

Never stop marketing and set your fee as high as you competitively can.

Greg Campbell and his wife Alva Baker Campbell closed their first consulting deal almost by accident. Oh, sure, they had talked about leaving their corporate jobs (his in marketing, hers in banking and finance) to start a management-consulting firm. They had even discussed their ideas with a friend who asked them for advice on a business project of his own. The result: The friend ended up becoming their first client.

"We didn't even know we were proposing a deal," Greg Campbell says, recalling how the discussion took place while he and his wife were using the friend's beach house for the summer. At the end of their stay, the friend wrote them a check.

That was in 1984. Since then, the Campbells (he's 41 and she's 42) have learned a lot - most of it the hard way - about building a successful consulting firm. Today, Baker Campbell Associates, based in Dallas, is a management-consulting firm with a staff of seven and a practice that offers strategic planning, market research, diversity training and financial management. The firm's client roster now includes Texas Instruments, Nations Bank and the City of Dallas. And for 1994, the Campbells expect billings to approach $1 million.

Of course, not every consulting practice expands at a 25% to 30% annual rate, as Baker Campbell Associates has over the past five years. Nor do all firms employ five consultants and three support staffers, as Baker Campbell does. Many successful practices with more modest, but healthy, returns have been run as one-or two-person operations from home offices for years.

But jumping off the corporate ladder and hanging out a shingle is one thing; staying in business and growing at a healthy pace is another. Experienced consultants have learned that setting your fees high enough and staffing projects properly are just as important as doing quality work for your clients.

Owners of successful one-person operations and large firms alike know that to succeed you must also engage in ongoing, aggressive marketing. In addition, you must be adept at negotiating, and then closing, a deal. You need to lay out your contract terms in a way that makes your clients happy, while still providing you with a healthy profit.

Frequently, you have to do all these things simultaneously, especially when you're first starting out. As Greg Campbell puts it: "If you're going into a consulting business and are planning to build a firm, it's not for the weak of heart or [for] those without physical stamina." You'll put in a lot of hours, he warns, "usually because you're handling multiple activities at the same time, selling while at the same time doing, and usually creating something new" as well. He points out that it's pretty easy to find yourself soon putting in 60-plus-hour weeks.

Want to emulate the Campbells' success by starting or expanding your own consulting firm? Here are six key areas where you can benefit from what the Campbells and other consultants like them have learned along the way. Plus, some helpful tips from corporate clients who frequently hire consultants to advise their companies.

PRICING

If there's one truism about consulting, it's that people rarely charge enough for their services when they first start out. "Pricing is the hardest thing for a consultant to do," says Stan Berliner, president of the New York-based consulting firm Consultants' Network, formerly a membership organization and now a clearinghouse for consulting opportunities.

Obviously, you don't want to charge so much that potential clients are scared off. You want to be sure that the amount you charge reflects your experience level, your reputation in the market and the actual value of the services you provide. Fees also vary according to the industry in which you're working and the kind of project you're doing. Therefore, it's a good idea to engage in a bit of industrial "espionage" in order to sniff out what competitors are charging and/or what larger clients generally pay.

John Aldrich, president of Shelton, Conn.-based Aldrich Associates, which specializes in management training for clients like AT&T and the Port Authority of New York and New Jersey, emphasizes the importance of inside knowledge. "You've got to know what your competition is doing," he says. He suggests contacting special-interest consultants' associations for information on what other consultants are doing in your field.

Vaughan A. Smith, president of the 45-year-old American Association of Healthcare Consultants (AAHC), emphasizes the need for a pricing methodology. "One consultant is typically available 2,080 hours a year," he says. "If you know what you want to make from a 40-hour week, and you know your overhead and the other costs associated with running your business," he points out, you can "make assumptions that go into billing an hourly rate." The fact is that busy consultants may put in 50 or 60 hours a week, only half of which may be billable to clients at an executive rate. In order to make a decent profit, it's essential to set your fees in a systematic way.