How To Decimate Your Profits As A Data Analytics Consultant

In the past few articles, we have discussed how to get clients.

This is a key concept, as in order to even have a business or consulting company, you must have companies that are willing to pay you.

But now that you’re closing deals and getting closer to that financial goal you have set for yourself, how do you take it to the next level as a data analytics consultant?

Well, one way you elevate your consulting game is by avoiding activities that lose you money.

And this is coming from someone who has made all the mistakes listed below. I don’t want to think about the amount of money I have either lost or left on the table because some of these issues and I’d love to help you avoid these very same problems!

So, let’s dive in.

Don’t Keep Up With Invoices

I lost nearly $20,000 two years ago due to not being on top of invoices.

Did I make sure to get a downpayment before starting work?

Of course.

However, there was one client that was paying me regularly for an entire year, and then they missed an invoice. I initially assumed it was because there was a mix-up. I waited a few days and reached out.

I didn’t hear anything back from them, so I reached out again. Eventually, one of their employees informed me that things were likely headed south.

The next thing I know, I get an email from a lawyer letting me know that the company had filed for bankruptcy. Well, now what? Do I continue to chase down this contract? Maybe I’ll get pennies on the dollar.

Or do I move on?

In this case, I moved on. I had other projects, and sometimes you need to move on from sunk costs.

But this is why it's important to be strict with your clients. If you have a 30-day term, keep them to it. If they don’t pay, then you don’t work.

Your job is to work, and their job is to pay you. If they fail to do so, then you don't need to feel guilty not doing your job.

Of course, not getting paid is one thing, but taking on projects that distract you from what you’re good at is another.

Saying Yes To Everything

I still struggle with saying no to projects I know are either too small or involve technology I don’t want to get involved with.

Saying yes to projects you know might be a poor fit comes from a few different areas.

Perhaps you feel insecure about landing your next large project, so you say yes to a small one.

Maybe you want to overcompensate and take on a technology or type of project you’re not accustomed to taking on.

Or maybe you just want the other person to like you because you’re a people pleaser.

Whatever the reason, saying yes to every project just because you want it to work will kill your company's growth.

Yes, initially you need to say yes to projects in the future you’ll say no to. But as your data analytics consultancy matures, you need to start defining the types of projects you’ll take on.

Not Setting Minimums

Somewhat connected to saying Yes to everything, not having minimums is a great way to lose money.

Early on, when you start working on projects, sure, say yes to everything and don’t have a minimum. You need to.

You likely need to ensure income is coming in and you want the experience.

But as you get better at consulting, and as your clients list begins getting larger, the focus shifts from trying to gain experience to trying to make sure you’re working on the right projects.

The correct projects should combine both the work you enjoy doing, and should fit some sort of minimums. Either this is driven by the needs of your business because you have employees that need to be paid or by your business model.

Perhaps your target is to make $30k a month. Well, it’s really hard to make $30k a month if you’re taking on $3k projects. Even if it's only 10 small projects, each project takes up head space, and you won’t be able to do said work. So, you’ll need to occasionally pass on smaller projects to wait for larger ones.

The pre-requisite here is that you must have enough prospects to pass on certain projects. To do that, you’ve got to have some sort of funnel either through marketing, sales, networking, etc.

That's what I have been focusing heavily on in the Technical Freelancer Community I started. So if you'd like to learn more, then feel free to check it out.

Accepting Equity

Some business owners will offer part of your compensation in the form of equity. In my experience, 99.9999999% of that equity is worthless.

In fact, as a baseline litmus test, if a founder or business owner needs to offer you equity instead of money, it’s not a great sign. You should want to be the one asking for equity (this has happened on a few occasions). If you look at a company and think, “Man I want to be part of this rocket ship,” then sure, take a chance and ask.

But if on day one, the owner is telling you they don’t have money to pay you, then what kind of business are they running?

Exceptions:Saying no to equity is not a hard and fast rule. There are many reasons that you may want to say yes.

Now if you'd like to read more about the opposite of losing money as a data analytics consultant, check out Why Everyone Loses When You Charge By The Hour - Becoming A Better Consultant

It’s Your Choice

At the end of the day, you’re running a business…and it’s your business. If you don’t take care of the basics, no one else will.

• You need to pay attention to your invoices.
• You need to ensure clients keep coming in and want to work with you.
• You need to only take projects that fit.

It’s not easy owning your own data analytics consulting company. However, it can be extremely rewarding. You can land clients you never expected and work to solve problems you may never have had a chance to work on.

You’ll also likely get brought into far higher-level conversations than you assumed possible, all because your clients will now view you more as a strategic partner vs. just another individual contributor. But to get there, you need to drive yourself up the value chain. Some of this will be via learning about how to deliver projects of higher value, and some of this is through sheer will by pushing for larger projects and constantly asking yourself, “Ok, but what more value can I offer?”