December 2008

How to survive in tough times

We continue to have challenges in the overall economy.

There remain opportunities for consultants, however.  Most companies are cutting back, so the need for specialized services remains – especially from temporary sources.

When the market is challenging, consulting firms are tempted to move into new markets.  If you are doing this to compensate for difficult markets, it is likely too late.  It is a challenge to move into new markets even when times are good, for you must establish a resume and authority in the new area.  New markets are not opened-up overnight.  They usually take time to establish, especially when there are many companies chasing a limited number of projects. 

Base your foundation on a multi-legged stool comprised of a variety of services and/or niches.  These can be either separate niches or complementary services that address different aspects of the business cycle.

I am familiar with a well-established consulting company that was committed to one specific market, but now is attempting to move into new markets as it primary segment is weak.  It is having trouble doing this quickly and, as a result, has already reduced staff by 50%. 

Strategic alliances are more important than ever.  Those relationships you have cultivated and established over time represent trusted business partners you can count on and, more importantly, they know they can count on you.   

There are several ways you can work with business partners.  First, acknowledge that we are all in tough times, so let them know you are willing to work with them to get through this slow period.

Here are several strategies to use, especially when it comes to providing crucial services.

• Provide discounts:  While cutting fees is never recommended, there are times when reductions are necessary.  Where possible do this in the context of reduced services.  Be sure to let your clients know you are working with them.  All invoices or proposals should reflect any reduction, such as:  list full fee, then show the percentage reduction you are providing.  This lets them know you are sharing the pain.
• Defer payments:  If your cash flow allows, propose to defer all or portions of payments.  Interest can be charged and deferred, as well. 
• Reschedule payments:  Another form of deferral, propose to stretch out your fees over a longer period to help with your client’s cash flow.  A project that would normally require progress payments over the life of the project can be set up to be paid over a longer period of time.  This will impact your receipts, but then provides for an income stream beyond the life of the project.
• Barter:  This may be the time to work out some trades of services.  This can be useful with joint venture partners, in which you can provide services in exchange for services you need from another.
• Specialized services:   You may find there are unique niches in which your services are useful. 
  For instance, I know of a golf course architect who is finding a lack of new golf course design opportunities, but he is finding a market in helping existing golf courses redesign or improve their operations.  So, look for opportunities to adapt your services to short-term needs of clients.

Tough times call for creative solutions, but opportunities abound for those willing to find niche opportunities or can work with clients in new ways.