Good At Consulting: Chapter 3
Durable Business Practices
I am writing a new book. It should be done very soon.
As an experiment, I am going to be publishing chapters (as they are edited & ready for publishing) here on the site. When it is complete, you will have all chapters hosted online and I will likely leave it here for free consumption.
Some links may be inactive until the final chapter is written.
Chapter 3: Durable Business Practices
“Genius is the man who can do the average thing when all those around him are going crazy.” —Napoleon Bonaparte
We don’t want to grow fast.
We don’t necessarily want to grow slow, either.
We want to grow predictably.
Early in my career as a consultant, I flew to San Diego to meet with a mentor. He said, “What do you want?” I said, “Well, I want to grow! I want money pouring in from so many places I can’t keep track of it all!”
This sounds ridiculous now. Obviously, you need to be able to keep track of where your money is coming from (oh, the joys of hindsight).
My mentor looked at me and said, “What a terrible idea.”
I was shocked. But the lesson it taught me was an instrumental one… some lessons are so good that you proceed to completely IGNORE them, and that’s what I did with this lesson.
I grew multiple things too quickly… couldn’t keep track of it… and, ultimately, had to reset multiple times (very painful, by the way).
In this chapter we’re going to cover a few important lessons that are designed to keep you safe. If you are already in the business of consulting (or coaching), this will be a very unique and instrumental chapter for you. In fact, I doubt you’ve seen or read anything like this before.
Most marketing experts & growth consultants are exactly the OPPOSITE of what you’re about to read from me. This is because I’ve been through the lessons personally, and lived to tell you about them.
There are only two ways you can kill a good client-business:
Hire the wrong team
Take the wrong clients
Both of these things are virtually guaranteed if you are growing too quickly and missing the fundamentals laid out in this chapter.
How I Learned (the hard way)
In 2019, the company I was building started getting serious momentum. I didn’t know it at the time, but the decisions I made would one day put that company in jeopardy. These mistakes led to me having to walk away due to the stress.
You might recall from other places that I started as a service-provider. I wrote professional copywriting campaigns for legitimate businesses and made them money. I was good at it, so my business grew without me having to “try” to make it grow.
Before long, I had waiting lists and people were talking about me. If you specialize in a “niche” or an industry, you’ll notice the same phenomenon: people talk.
Once they started talking, it became easier to sell my services, and more people wanted to hire me to do work for them. I saw an opportunity in this, and created my first consulting brand called Traffic and Funnels. The premise of that consultancy was simple: we helped legitimate client-based businesses grow through online paid advertising & operational support.
It was very successful, but it started getting big in 2019. By the middle of 2020, we were taking almost 100 clients every single month. At the same time, my business partner had spun off a sales consulting company and began scaling that. The sales company was putting up 100+ clients every month, too.
Rest assured, I have firsthand experience in the dangers of scaling too quickly. It was a struggle to hire people fast enough, and after about a year of trying to “keep up,” we slowly wound them down. That was difficult, because we had partially staffed for a certain level of clientele, but then had to unwind that because we no longer wanted to be as big as we had become.
The lessons you are reading now are from real world experience. They are practical, and maybe even “common sense,” but they are rarely applied.
Today, I take these lessons and install them into my equity portfolio. In fact, I just had lunch with a solar company that I am on the board of advisors for — and explained why they are growing too quickly and (hopefully) convinced them to slow down just a bit.
It’s not that I don’t want you to grow.
It’s that I want your “constraint” to be health. I don’t want you to grow faster than your infrastructure can protect you (and your clients).
In other words, if you can’t grow it quickly while remaining healthy, do not grow it quickly. As they say, “slow is smooth, smooth is fast.”
A key component of “health” is the ability to predict what the terrain is going to look like in the future. I divide revenue for my clients & companies into two different categories:
Current income (revenue)
Future income (revenue)
I have good clarity, within a small margin of error, around what my companies will do in revenue next year and the year after. Of course, there is always a margin of error, but even having a “range” is helpful when making growth & staffing decisions.
Your current income is based on your current goodwill and sales capacity. Your future income is based on the consistency & predictability of your marketing & nurturing systems. The better you get at future income, the more control you have over your current income.
The Codex (bulletproofing your business)
There are always “swan” events that could destabilize any business. Be aware of that, and keep enough cash and margin in place to provide coverage if needed. I like to keep about 6 months of operating capital liquid for each business that I own or operate.
However, in the consulting world (where you are transferring experience, expertise, or skill sets) it is possible to setup systems that largely protect your business from unforeseen changes. We are going to go through one of my favorite “models” here in this chapter.
As part of my work with clients, I implement dozens of “models,” some similar to this one and some very different. Every problem has a model and every complex issue has a framework that can be applied to fix it. The Codex is just one of those models.
Here is the basic premise: you need to master 3 key areas if you want to grow.
Attention / Acquisition
We are just talking about growth here.
Later, we will get into fulfillment & services. In many ways, your fulfillment capacity is more important than your growth capacity. If you can’t take care of the clients you already have, you don’t deserve to have more clients (nor should you want them).
One of my big red flags, when I dig into a business, is if the majority of the staff’s attention is on “getting more clients” instead of KEEPING the clients they already have. This is a spiral that only leads to one place: the death of the business.
Attention & Acquisition: how you capture the attention necessary to take new market share.
For many years, I only operated with one source: paid advertising. This became problematic, because paid advertising is (a) linear at best and (b) volatile. When the paid platforms change algorithms, or rules, or whatever they change — you’re at their mercy.
I have good news and bad news for you.
The bad news is, this volatility is never going to stop.
The good news is, paid advertising is still a great way to test new angles and messages to a cold audience. “Cold,” in this instance, describes the nature of someone’s relationship with you or your brand. A cold audience has never heard of you. A hot audience knows who you are and what you stand for. You can use paid advertising to reach a “hot” audience through methods like retargeting.
Many businesses are in very bad positions, because they are over reliant on one type or source. This is known as “concentration risk,” and it will cause enormous stress in your business if you scale with just one traffic source.
There are four main sources of traffic that we use with clients:
When a business is under five or six hundred thousand a year in revenues, it’s okay to have just one source. When you go from $500k/year to $2M/year, you need to have two. And I typically don’t like growing past the $2M/year mark without having three sources working together.
This REMOVES the volatility from your acquisition methods. Let’s move on.
Demonstration: how you prove to your market that you’re actually legitimate.
So we’ve got the market’s attention, now what?
Now we need to show them that we can actually help them. The best way to do that is to just help them. You can do this in many different ways, but people usually just figure out one demonstration asset and never diversify from it.
One of my former employees is a genius at sales. He went out on his own, started a sales coaching company, and scaled it. The thing that made me nervous, and is now becoming a problem, is he scaled it with ONE demonstration asset. If you only have ONE of these assets, it means you are not adequately “incubated” from market volatility.
I have six preferred demonstration assets:
Products (like courses)
Direct offers (like VSLs and Webinars)
For the consulting brand I’m running at the time of this writing (The Wealthy Consultant), we have a community (hosted on Facebook), a few direct offers (short VSLs and trainings), a suite of products (courses ranging from $10 to $500), events that we host a couple times per year, and (in progress) a book (this one!).
I know what you’re thinking, “Why so many? That sounds exhausting!”
For starters, I know all the phases and stages of taking a consulting company from $0 to 8-figures in a relatively controlled and predictable manner. But I didn’t start with all of these things, I started with a community (on Facebook).
Then, I launched a direct offer (a short and sweet VSL training video).
Over time, especially if you’re working with a legitimate team that knows what steps are needed (and when), adding different demonstration assets becomes easy, and fun.
What you don’t want, is to wind up with a $3M, $5M, $7M business with only one demonstration asset. You’re asking for trouble if you do this.
There is no guarantee that any one demonstration asset will keep working, or that your traffic source will like the current asset that’s working. The most stressful place you can be, if you’re a consultant or a coach, is to have a fixed burn that requires a certain level of revenue, then your marketing or demonstration assets stop working.
Again, you can see how I am optimizing the volatility out of the business, and am using the Codex to do it. I don’t want volatility, I want predictability.
A good rule of thumb, for my OWN businesses, is this: I want to get at least $1M per year of revenue out of each demonstration asset. And then, as soon as one is working, I want to create another one. That doesn’t mean you can’t do more per asset. It just means I don’t want to create a new demonstration asset until I’ve done $1M from the previous asset.
The purpose of these demonstration assets is not to “sell more stuff.” It’s to legitimately, and genuinely, help your market and make their lives easier.
I will go out on a limb here and “assume” that by reading this material, you are getting clarity. That clarity is making your life make more sense. Maybe it’s showing you why you’re stressed about certain things, and generally how to fix them.
That is the point.
The next part of the Codex is monetization.
Monetization: how you convert goodwill and trust into earned revenue.
Every month we work with clients to stabilize or simplify their business. They will come in, and go through our onboarding materials (which are designed for me and my team to get up to speed on what they’re doing, why they’re doing it, and what assets they have to work with).
Without fail, a LARGE percentage of new clientele list only having ONE model for monetizing their business. This, again, allows volatility into your business.
There are four models I like to use:
You’re probably noticing some overlap, and that’s a good thing.
Products, which are also used as demonstration assets, are things that cost less than $1,000 (usually even cheaper), and offer value in exchange for a small investment. They are mostly education/information based and should always teach something to your market that they’re wanting to learn (if it doesn’t teach them what they wanted to learn, you should refund them and let them use that money to go learn elsewhere).
Programs are “experiences,” and they deviate from products in two ways:
They’re more expensive
They’re more hands on
A program is something that goes beyond education/information into implementation.
We have two main programs for The Wealthy Consultant brand. One is just under ten thousand dollars and it lasts a year. The other is a hands-on training product that works with clientele to actually build out all of our models (Codex, Phases, Assets, Burn Limits, Tiers of Teams, 3 Rails, Coaching System, etcetera). That product is more expensive because it is more inclusive.
As you can see, our programs are much more hands-on and therefore, more expensive.
Services go beyond programs because you are actually doing the work for them. In my portfolio of service companies, we have brands that do paid traffic, organic content creation, sales operations, copywriting, and there are always other layers of services we are adding on. Services are usually more expensive than programs because they require more team and more work (and they replace the client as the one doing the work).
Partnerships are great because they allow you to add more value to your market, in areas that are outside of your expertise.
One of my favorite examples of partnerships can be found with my friend John. He trains people on their health and wellness goals. What he doesn’t do is go deep into the mind. But one of his partners, Will, does. So when someone wants help with their thinking, or their cognitive programming — John doesn’t necessarily offer that, but he refers them out to Will who does do that.
The client is happy, because they got what they needed. John is happy, because his client is happy and he got paid from William. William is happy, because he got to help someone who needed him, and he got a new paying client. It’s a win-win-win situation.
You can use partnerships like this to perform simple JV (joint venture) arrangements. You can also partner with the softwares or tech stacks you’re using. For instance, the program we use to connect our clients online is called Circle. We love it, use it for all of our businesses, and when clients want to clone what we’ve built — they pay Circle and Circle pay us.
Imagine if every tool you used in your business, your clients also wanted to use it. You can see how this stacks up over time and protects your business from the ups and downs that are inevitable in changing economic environments.
This chapter was written with the goal of making your business safer. If you apply and implement the lessons, I think you will notice more safety and predictability than ever.
When I take a new client or an equity stake in a business, the first thing I look at is this: “How many of each does this business have?” If they have 1 of each, my goal is to add to them until they have three of each (so long as it does not violate their revenue tier).
There is another model we use in-house, called “Phases.” We know whether to add to the Codex based on the Phase the business is in. I don’t have time to get into detail on that here, but I’ll list the phases before we move on:
Phase 1: Codex Rating is 1x1x1, no team
Phase 2: Codex Rating is 3x3x3, tier 1 team
Phase 3: Codex Rating is 3x3x3, tier 2 team, asset strategy in place
Phase 4: Codex Rating is 4x6x4, tier 3 team, asset strategy in place, prepping for exit
None of this will be a “quick fix.” In fact, it should NOT be. Nothing good happens “overnight.” But the growth here will be safe, and worth it.
The next chapter will cover one of my favorite topics, “Pricing, Products, and Outcomes.”
very informative, keep up the good work