Which advisory practice business model fits you best?
There are 2 general paths you can choose when growing your advisory practice.
Do you want to offer customized services? Or productized services?
It’s a choice.
Neither is right or wrong.
But these are two different models – and when we try to combine them – we run into problems and frustrations.
Custom and consultative
This is the model that Blair Enns advocates for in his book Pricing Creativity. (The book is written for creative agencies, but the concepts are applicable to trusted advisors – especially those who sell strategy work.)
The custom consultative model appeals to more creative types and those of us who got into the business to BE consultants or advisors. We enjoy practising our craft and working with clients. (If you read the E-Myth and felt sad for Anna because she didn’t get to bake pies anymore, you might fall into this category!)
- You know your clients’ names and work closely with them
- Every project and client is different and customized
- You may think of yourself or your firm as “generalist”
- If you bring on additional advisors, you hire them based on their expertise, creativity, contribution
- Marketing revolves around thought leadership, becoming “known”, and relationships
- Sales are consultative: you find out what your client wants and needs and you propose a solution that fits their situation
- Pricing can be value-based with high fees (Alan Weiss is another excellent resource here: Million Dollar Consulting.)
This type of company isn’t saleable or scalable. It relies too much on the individual consultant or in the case of a boutique firm, the advisors who work there.
The goal is to create a growing, high volume, ideally recurring revenue business model in a company that is designed to run without the owner’s involvement.
- The owner separates themselves from the “rainmaker’s role” and hires salespeople who sell products (ie: are NOT consultative)
- The company chooses a specific specialty and establishes a system for production: no exceptions, no customizations
- All team roles are defined and replaceable, creativity is constrained
- Marketing centres on highly automated funnels and sells the “program” or the “outcome” – not the people
- Services are productized (group coaching/training programs, online courses, digital products, apps)
- You have customers, not clients – and because this is a volume business, the relationship is transactional vs personal
- Pricing is standardized, ideally in a recurring revenue model
This type of company can be scaled and sold.
Which model is right for you?
There is a tendency for experts to advocate for their chosen model by presenting it as the *right* way – to the point of disparaging the other model.
I frequently see the consultative model described as “making yourself a job” or “trading time for money” or painting it as an exhausting hamster wheel of feast and famine.
Every once in a while, some brave soul calls out the “scaling” model as highly competitive, high overhead, and low margin.
Each option has its pros and cons.
Ultimately, I think it begins with a personal choice of which job you want in your own small business:
Do you want to (mostly) coach, consult, and work with clients?
Or do you want to be the CEO of a business and lead a team?
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