Top 5 Revenue Models for Consulting Firm in 2022￼
Being a consultant is not the same as running a consultancy firm. What revenue models can you come up with if you’re selling consultancy as a business especially if you are a startup business consultant? We have a few regularly used models that might assist you in innovating and determining the optimal business model for your company.
Jet fuel, like that used by airplanes and jets, is a specific type of fuel that works better with their engines. Similarly, there will be a revenue model that is better suited to your company than others. The art is in choosing the perfect model to propel your company to new heights. The list is as follows:
1. Firm Model
Consider a typical big consulting firm. Many consultants, associates, juniors, and senior employees work for these firms.
As the owner, your job includes doing a little bit of everything at first, but it quickly shifts to learning how to hire, train, and manage people.
You shift your focus from client project execution and business development to management, strategy, and business development. The majority of the client-facing work will be done by your consulting team.
The differential between what clients pay your firm and what you pay your employees is where money is made.
The more clients that come through the door — especially those with higher-value engagements — the better.
Working with more clients and hiring more people leads to growth.
The pros of the firm model are
• Scalable businesses allow you to hire more consultants and take on more tasks.
• You are removed from day-to-day customer work; the company may continue to operate without you.
• Businesses have a higher market value and are easier to sell than other assets.
The cons of the firm model are
- It necessitates a large amount of personnel management.
- The profit margin is lower.
- To stay afloat, businesses require greater infrastructure.
- More people rely on you (and you have to pay the bills).
2. Independent / Solo Model
As a solo consultant, your company normally consists of just you and sometimes some contractors or assistants.
From client work to marketing and sales, you’re doing it all.
The Pros of the Independent/Solo Model are
- Profitable and efficient
- Because it’s flexible, it’s easy to adapt or change.
- By adjusting the lifestyle focus, you may personalize it to the type of life you want to live.
The Cons of the Independent/Solo Model are
- It’s difficult to sell because you’re the company’s face.
- You are the company; if you stop working, it will be impossible to generate income.
3. Commercialized Model
The productized consulting business model is frequently derived from one of the preceding types.
You identify one problem that your ideal clientele has and come up with a solution for it.
Everything in a productized model is focused on resolving a single type of client’s key issue. You establish systems and methods to solve the problem. You keep doing the same things again and over. As a result of the repetition, you get rather proficient at solving it.
Often, 80 percent of what you do for each client is the same, with just around 20% of it being tailored to them.
With procedures in place, your attention shifts from doing everything yourself to delegating or hiring others to manage delivery, service, sales, and marketing (full-time or freelance/contractors).
You can scale with these systems in place. You’ll target clients with high volume and low, medium, and high value.
The Pros of the Commercialized Model are
- You’re constructing a marketable asset.
- With recurrent revenue, there are high multiple potentials.
- There’s a lot of room for growth.
- You have the option of removing yourself from the day-to-day grind.
The Cons of the Commercialized Model is
- Some people find that doing the same thing over and over again is boring.
- You’ll need to recruit individuals to do the work.
- It is necessary to train and manage individuals.
- It is necessary to manage a large number of clients.
4. Hybrid Model
The HYBRID model, a fourth consulting business model, is also available.
The hybrid model enables you to combine elements from other models to create your perfect consulting company model.
5. Intrapreneur Model
In this paradigm, an individual or consulting firm behaves like an entrepreneur while working for a company ( intrapreneur). The person/firm is responsible for the financial success of the section they lead in the organization, and the person/firm and the business owner have a profit-sharing model.
What Kind Of Impact Do do You Hope To Make?
Consider what kind of influence you want to have in your consulting business.
You may need to work closely with your clientele if you want to have a bigger impact.
For example, if you’re offering direct consulting, coaching, or ‘done for you’ services to your clients, publishing a book or recording a course won’t allow you to have the same amount of influence as if you’re giving direct consulting, coaching, or ‘done for you’ services.
You’ll be more involved with your clients if you work closely with them, and you’ll have a stronger impact on their business.
There is no correct or incorrect response. There is no such thing as a “one-size-fits-all” consulting model.
Consider your company, your situation, and your objectives first, and you’ll be in a lot better position to choose the appropriate consulting firm model for you.