Table of Contents
Four Proven Consulting Business Models
Firm Model
It is a typical consulting firm, with many consultants and associates. When you begin the business, you will do a bit of everything. As the company grows, you will focus on hiring, training, management, strategy, and business development. It is your team who will deal directly with the clients.
Advantages of the firm model: [You can scale the business by adding more consultants] [You don’t need to do all the day-to-day client work] [The company runs well without your presence] [The company is a valuable asset, easy to sell]
Disadvantages of the firm model: [The company demands a lot of people management] [Profit margins can be low] [The business requires infrastructure for running] [Lots of HR depend on you]
Solo/Independent Model
As the name states, the business is basically you – sometimes, contractors or assistants as well. You will take part in everything, from face-to-face client work to marketing and administration. Your profit will depend on a few valuable clients.
Advantages of the solo model: [It is a lean and profitable business] [It is flexible and easily adaptable] [You can customize your work according to your lifestyle]
Disadvantages of the solo model: [You don’t work, you don’t get paid] [It is hard to sell since you are the face of the company]
Productized Model
The product will be 80% of your business (20% of customizations), and the system and process are targeted to solve a core problem for that specific kind of client, over and over again. This repetition builds efficiency. You can scale everything “delivery/service/sales/marketing/staff”.
Advantages of the productized model: [You build a scalable asset] [You have recurring revenue] [It is easier to scale] [You can be out of day-to-day work]
Disadvantages of the productized model: [Your work will be doing the same] [You need HR to keep it running] [You must invest in hiring and training] [You need to manage lots of clients simultaneously]
Hybrid Model
It is the consulting business where you select elements from more than one of the models above and create your own, in a way that fits your necessity and expectation.
Three New Consulting Business Models
Collaborative Consulting
It is a network of firms collaborating with expertise, IT, tools, and knowledge to meet client needs. By connecting work, the consultants access a broader knowledge while creating flexibility to deliver value to clients. It reduces fixed costs, but it may lead to high variable costs. Two types following:
- Closed Networks: a fixed set of companies collaborating repeatedly on client assignments.
- Open Networks: firms collaborate on projects in multiple constellations, possibly with different partners for different projects.
Continuous Consulting
It centers on data analytics and subscriptions to deliver permanent solutions that clients can use every day, such as benchmarking/diagnostics/analytics in pricing/organizational structure/lean operations, corporate performance, and much more.
The firm uses expertise/strategic insights to provide tools and processes, migrating from a one-time income to an evergreen model, which creates ongoing value for clients and generates recurring revenues through subscription-based services.
The solutions attract clients for repeated use because they help navigate regularly occurring problems. It is an easier model for established brands and harder to sell for new firms.
Instant Consulting
If offers faster value and results, does not require extensive research, thus enabling advising, execution, and implementation in the shortest time possible. The model benefits environments where agility is key to keeping pace with competitors, allowing clients to gain ground on their rivals/maintain their lead. And companies can measure results from day one.
4 Innovation Shifts of CBM
Typical CBM is based on two main ideas: [Hiring Talents] [Charging clients for gaining access to these talents], it is basically about selling sophisticated expertise. Following are the 4 shifts
From hiring a team to offering flexible access to top talent
The traditional model utilizes consultants as much as possible and puts as many consultants on the teams as possible, the problem here is that clients hardly get suitable consultants. The Euro-based management consultancy EdenMcCallum has a wide network of highly experienced, independent consultants whose expertise is offered to the clients, Clients can choose the consultant.
From Staffing Projects with People to Commercializing Expertise
Expertise can also be available through products/tools instead of personal consultation. The way of providing consultancy generates new revenue streams. PSF sells reports on various industries and areas, with customized research services that provide strategic advice for clients.
From Consulting to Solutions
Consultancy can be sold in the form of repeatable and standardized solutions. McKinsey created software and tech tools for clients’ problems. They offer solutions for data analytics and data-driven decision-making in several functions and industries.
From fixed fees to aligning fees with the client’s success
The Fahrenheit 212 charges clients for objectives achieved, 2/3 of the company’s fee depends on the achievement of pre-defined goals. So the clients will only pay if the output of the consultants’ work is successful, thus reducing the risks.
Examples of Consulting Business Models
Bloomberg’s Data-Based Consulting Model
By offering marketing strategy, communications, and brand consulting advice. Now they have converged models including media/ad spending/consulting, all in one, grounded in data.
Accenture’s Expanded Value Proposition
It expanded its value proposition by acquiring Fjord, a global design consultancy. The objective is to show the clients how design can improve their business, allowing great returns from minimum effort, by putting design into a system and process.
Mckinsey’s Productized Approach
M created some solutions based on clients’ problems, it was a way to get the most out of their IP, thus capitalizing its collective knowledge, by applying it in over 20 solutions that combine data, analytics, software, and advice.
Eden McCallum Consulting Meets the Gig Economy
It is proof that freelancing can be interesting for both clients and consultants. The firm built a wide network of independent consultants that can match clients according to their necessity. It reduces costs and offers more freedom and control to consultants, as well as more decision-making power to clients.
GLG Introduces the As-A-Service Model
The professional learning services company Gerson Lehrman Group (GLG) offers on-demand services to clients from different industries, by providing a subscription business model that ensures access to its network of experts. The as-a-service model allows consultants to have more long-term work, with smaller volumes, rather than large-scale projects for a fixed period.