Early on my business, I realized that the only thing holding me back from making more money and taking on bigger projects was myself – I could only work so many hours in a day and was good at some things but not everything. The opportunities that I was seeing in the marketplace needed more than what I alone could deliver, and yet I did not want to build a traditional consulting company with multiple partners, employees, or bricks-and-mortar overhead.
As a result, I decided to create a simplified business model in which I as the owner/principal consultant would have 5-7 strategic alignments with other established consultants in areas in which I had less expertise, and I would act as the account manager and project manager, as well as the primary consultant. I would get the business, put together the team, and manage the consulting engagement, which typically lasted from 6-18 months. These team members were my associates, although in legal terms, I was the prime contractor and they were subcontractors working under my company’s name.
What I learned, much to my horror, was that not every other consultant had the same business values as I did! (Looking back on it, why I assumed otherwise is beyond me.) Some canceled at the last minute if they got a better gig. Some charged for in-town travel time and mileage to visit clients, where I saw that as just the cost of doing business. Some wanted to charge for every minute they talked to me or my client, much like a lawyer or accountant (which does not work well with fixed price contracts.) Some wanted to retain all rights to whatever they produced (which was in opposition to many of client contracts.) Some competed with me for my own clients once they got in the door! (Very painful when that happens.)
After about a year of skirmishing and realizing that my company’s name, brand, and profits were at risk, I decided to start all over again. I let all of my early associates go and decided to become more structured in my approach. This time I started by writing a “Code of Honor” – a set of business values – that I would ask every associate who works under my company’s name to commit to, as well as a legal document defining our relationship.
This business model has worked well for me over the years. I have been able to survive two recessions and one market bust (the tech bubble) sometimes with thin margins, but still there. I have also been able to ramp up quickly when needed and provide a full-service approach without the overhead typically charged by a larger firm.
RESOURCES: For more on my approach to hiring associates, check out my 6-page article Beyond the Handshake which I presented in the past.