Archives For consulting

What allows a company or individual to command higher fees?  I’ve written various posts over the past few weeks on fees, and yesterday, I commented on setting higher fixed fees vs. totaling your projected hours and presenting a fixed amount (this generally leads to underestimating and a decrease in project GP).  But what allows a company to propose higher fees without the competition coming in to win the deal on lower pricing?  Commodity sales compete on price…high-value sales don’t.  Here is a list of category offerings I use when considering how to go to market.

1. Product

2. Staffing

3. Projects

4. Strategy

5. Vision

The order builds from pure commodity to greater intellectual capital.  On the low end, companies like Dell are selling low priced desktop systems online.  Nothing unique here, but they are fulfilling a market demand; consumers want inexpensive computers, in fact they demand them.  Dell can fulfill this market demand by finding more efficient ways in manufacturing and distribution.  What was once a $5000 entry point in the early 80’s (and 5K back then was something to talk about), is now a few hundred dollars.  Netbooks and IPads may further change the game here.

Staffing follows with various skills that set apart individuals.  Projects help companies move forward with initiatives that change the business.  This is where value pricing really starts to make sense.

An interesting question arises with my model at this point.  What about a utility such as SaaS like Salesforce.com?  Cloud computing should fit in here somewhere…but we’ll come back to that another day.

As we move up, start thinking about Accenture or PWC.  Strategy commands big dollars.  In a prior life I referred to our growing company as, The Andersen Alternative (Back before the days of the Accenture brand).  The message was clear; we were consultants, working up the model toward higher value consulting, while selling the technology to implement those things we recommended doing.

Finally we have people who create vision.  People like Geoffrey Moore (Author of Inside the Tornado) come to mind.  Consultants working at the top with large high-tech companies, helping them figure out where to go next.

Most resellers are not built to reach vision creation; their sweet spot is probably in the project area.  Larger integrators are beginning to build business process, ITIL consulting, and other forms of business consulting into their model to offset the commoditization of product.  If you don’t start thinking about this now, you may find yourself without profits next year, and perhaps out of business in the near future.  But let me point out, the problem is not with the area you play in, rather it is in the model you’ve built.  Resellers are built to sell projects, Dell was built to sell hardware.  Both have high profit potential…but building one model and selling another is destined for failure.

© 2010, David Stelzl

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We’re back from a week of home school training – but along with great ideas for schooling comes some great thought provoking business concepts from the sessions I attended:

  • We need to be writers – writing forces you to think precisely.  This in turn enables you to speak persuasively.  Whether selling or running a business we all need this.  One speaker said, “What book are you writing?”  We should all be writing a book on the lessons we’ve learned and how to succeed.
  • Clutter creates confusion, slows down learning, leads to irritability and stress.  Take a look at your desk.  Perhaps post it on You Tube!
  • 4% of new businesses make the first 10 years.  What are you doing to be on the list of successful companies?  Not all of them will be profitable – this requires extra thinking.  So what are you doing to stay alive that the other 96% just won’t do?
  • Everyone needs a coach, wise counselors, and great books to read.  Success doesn’t just happen.
  • Whether in sales or running a company, you need a clear vision – one that makes sense.  If your vision is to make a certain amount of money, it probably won’t happen.  Making money is the result of a well constructed plan and vision, not the core of it.  It’s just one of the gauges of success.
  • Fire your team every year – mentally.  Picture everyone gone, then figure out who you will rehire for the coming year.  Those that don’t make the cut have been on staff too long.
  • Hire the right people.  Things you don’t like in the interview will be even more annoying once they start.  Once hired – invest in them.  Everyone needs training in order to keep growing.  This is expensive, yet if costs less than having untrained people, or people who over time, lose their edge.
  • Stay out of debt.  Companies that take on big debt to grow are making a mistake.  Interest will eat at your profits for years to come.  Remember, top line revenue is a poor measure of success.
  • Avoid 50/50 partnerships – they rarely work.
  • Charge the right amount.  Companies tend to charge too little for their consulting services.  This requires a solid value proposition, but is necessary to grow.
  • If you want to make a million dollars, then you had better have million dollar people, million dollar coaching, million dollar training, and million dollar abilities.

© David Stelzl, 2010

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They all say they’ve got it covered…no one does!  Here is a summary article from one of my contacts at DiData…great info, thanks Matt.

http://www.msnbc.msn.com/id/37115813/ns/technology_and_science-security/#storyContinued

Summary:

  • “Our systems are probed thousands of times a day and scanned millions of times a day,” – speaking of government defense systems…
  • “We are experiencing damaging penetrations — damaging in the sense of loss of information. And we don’t fully understand our vulnerabilities,” – Now I feel safe!
  • Hackers have already penetrated the U.S. electrical grid and have stolen intellectual property, corporate secrets and money, according to the FBI’s cybercrime unit. In one incident, a bank lost $10 million in cash in a day. (Yet your clients all have it covered!)
  • “We’re talking about terabytes of data, equivalent to multiple libraries of Congress.” – (But those in the SMB don’t need to worry – right!)
  • United States military would need to prepare for fallout from a cyber attack, which could leave cities in the dark or disrupt communications. – (If you don’t offer DR planning, you might reconsider)

When your clients say, “We’ve got it covered”, remember, most are just ignorant, some are lying.  Don’t take no for an answer – instead educate them on what is really going on, and drive forward with the sale.  Take advantage of my latest ebook on selling through assessments… it’s free!  http://www.stelzl.us/training/CreatingSales.pdf

© David Stelzl, 2010

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Black Friday

November 30, 2009 — Leave a comment

Everyone’s watching the numbers, predictions continue to say the recovery is on, and shoppers did spend over 4 million this past weekend…however, don’t be fooled.  No one knows what the economy looks like in the coming year, and shopper’s spending has nothing to do with a consulting company’s success in 2010.  In past years, you may have coasted through December, figuring hard work will continue and you’ll likely make your numbers or continue to some level of growth.  This year I’d recommend taking some time to plan.  Companies that plan outperform those that don’t.  Sitting around worrying is not the answer, and continuing down your current path may not be either.  Take time to reflect on what really did work, what contributed to growth, and what was a waste of time.  Chances are you’ll discover things to cut, and new things to build.  Creativity, determination, and persistence will go a long way as we move into the new year.

Every workshop I conduct is a learning experience for me.  Here are some of the key thoughts I had coming away from today’s workshop on Mastering Boardroom Presentations (Richmond VA):

  • Assessments and studies justify new business.  If your clients are calling for product quotes, someone else created the justification.  Your value proposition is now “Price”.

 

  • If your engineers are delivering your assessment findings, you’re either in front of the wrong audience or your client is sleeping through the presentation.

 

  • Learning to present in front of an audience is non-optional for sales people.  Practice, record it, listen to it, critique it, change it, practice it…etc.

 

  • Don’t start your presentation on a white board and then abandon the picture.  Your audience will be staring at the picture wondering, while you pontificate to no one in particular.

 

  • Don’t write your proposal until you’ve received verbal agreement.  Your presentation is the sales tool; the paper simply solidifies the agreement.

 

  • Language matters – speak is specifics, articulate benefits and outcomes, establish your credibility, and offer solutions with confidence.

 

  • Poor self esteem is one the primary contributors to stalled proposals.  Turn this around – practice until you’re comfortable presenting in front of your worst critics.

 

  • Don’t ask questions IT can answer and don’t speak in technical terms – this leads to an immediate demotion.  Keep a business focus throughout the process.

 

  • Hold off on writing proposal and delivering pricing until you’ve had an audience with the buyer.  To proceed otherwise is just a waste of time.

 

Also – don’t forget to sign up for October’s Teleseminar!  We’ve got a great group already…join us by signing up for Successful Marketing to Management at  www.stelzl.us/store.asp – this material is of utmost importance to sales professsionals looking to establish their brand.

 

© David Stelzl 2009

In my travels last week I met a doctor who specializes in treating body imbalances.  His business is contrarian to say the least.  No insurance network affiliations, no insurance filing services, no discounts, no kidding; yet he is busy and obviously doing very well for himself.  What is the secret?  Rather than going along with the pack, he has created specialized branding and gone off on his own.  Referrals keep him going because he gets results.

This is the essence of personal branding and value proposition.  Becoming like everyone else does you little good.  Discounting, begging for business, and focusing on commoditized products will leave you strapped for cash in 09.  This doctor leads with a very sophisticated assessment process, sells products that treat the conditions he uncovers, and provides ongoing support by phone and through learning tools he creates and sells; a recurring revenue model.  This is consulting vs. vending.

Leading with product results in price being your differentiator; leading with managed services requires that there be a trust relationship already established, making new client acquisition nearly impossible.  True value differentiation comes through consultative offerings, generally in the form of analysis or strategy. 

Fluctuations in staffing utilization and consultant availability eat at profits as operational costs rise and fall, on the other hand, product gross profit (while admittedly low) and managed services revenues offer stability. 

Building a profitable business model is complicated.  Having the right mix of consultative offerings, followed by products and services, and finally managed services has the potential to create a very strong business model; both for the company as well as the individual sales person.  Tomorrow’s Podcast explores this in greater detail as I deliver Part III of Building the Profit ProgramTMMake sure you have the worksheet located at http://www.stelzl.us/training/003-Podcast-Talc.pdf