The complex landscape of starting and sustaining a consulting practice: Key challenges and responses

If you want to build a business consulting practice, especially for the underserved, the SME category offers a blue ocean of opportunity, but it also comes with key challenges that you have to overcome.

Ever-shifting market demands, constantly evolving technologies, and the continuous need to adapt and evolve are just a few of the challenges that can give someone sleepless nights. Today, I will discuss some of these challenges and how to build a business consulting practice.

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Key Challenges

New client acquisition and retention: This is obviously a challenge in any industry and even more so when there are a lot of intangibles. The value you drive for your client is never seen on Day 1 or even Day 60. Some initiatives start bearing fruit much later during the engagement. Client confidentiality prohibits you from sharing other success stories effectively, and scrubbed case studies have their own limitations, too. All of this, while the modern client is increasingly becoming more informed and demanding retention, building deeper relationships with the client and not having them look outside for other options is certainly a stressful situation.

Competition: The large MNC entities, the smaller boutique firms and independent consultants are all out there, creating an intensely competitive environment. It is absolutely essential that you stay ahead in the game, and this is not about winning but survival in most cases.

Technology: Rapid technological advancements have transformed business operations and increased client expectations. As a consultant, you also ride this wave and be at the forefront of these changes, using the best available tools and technologies while keeping an eye on the cost that this change brings, possibly eating into your own margins. Internally deploying and testing some of these tools is necessary in many cases only for you to have an edge over your competition and reduce the learning curve on an engagement.

Regulatory and Compliance: While some Geos have little to no regulations for the practice, a few countries in the developed world do. Depending on the Geo you operate in and where your client is domiciled, you must strictly adhere to local laws to avoid a sticky situation with the authorities.

Pricing: While the growth opportunity is massive, the existing market is plagued by intense competition, and both extremes of the size of the consulting practice bring the ability to undercut you on engagement pricing, more so in the price-sensitive markets

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Responses

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Strong Client Relationships: Effective relationship management is absolutely essential. Regular communication with multiple checkpoints for reviews helps this cause, too. Aim to deliver beyond expectations and build a team culture to go the extra mile for the clients. Not every client will recognise and appreciate, but the few that will are the ones that will also enable referrals and additional work. Building strong relationships will ensure that your clients turn to becoming your cheerleaders.

Innovative Models: In a largely service approach, productisation can cut through the clutter. Business consulting practices rely on either a fixed fee or retainer model. One way you could differentiate is to defer a portion of the fee and link it to outcomes. This will help build confidence, especially if you are new to the space.

Leveraging technology: Advanced technology and Business Intelligence solutions help consultants deliver precise, evidence-based recommendations and continue to measure the impact, which will help demonstrate value to clients.

Specialisation: This is particularly important when you are just starting off. Specialization helps consultants build deep expertise in specific industries or functional areas, enhancing the ability to offer unique insights and offerings and, more importantly, carry forward learnings from one engagement to the next. Carving a niche is important for both internal and client communication. Let’s face it: You can’t be everything to everyone. This doesn’t mean that you can’t expand to other industry verticals and functional areas, but it should be done in a gradual manner, and specific teams should be built out as you grow.

Learning: The field of business consulting requires an ongoing and unwavering commitment to learning and adapting. This is critical to staying relevant. Refining your skills and methodologies will help you stay up to date with industry trends and technological advancements.

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Building a successful consulting practice is undeniably challenging but achievable with the right strategies and mindset. Consulting firms can survive and thrive in this competitive landscape by understanding and responding to the industry's challenges with innovative solutions, specialised knowledge, and strong client relationships.