If I were starting my consulting practice today, knowing what I know today, what steps would I take to streamline my success? What would I do differently?
I was asked this question and it’s a great one. I really had to stop and think about it. The very first thing that comes to mind is that I would not have bought my house so early on. You’re wondering what on earth that has to do with succeeding in my business.
I’ve made a lot of money since I started in 2003. I could have put a lot more away if I wasn’t paying a huge mortgage. While I love my house if I hadn’t had to cough up such a huge monthly nut I could have saved and also reinvested more into the growth of my business. So if I had it to do today knowing what I know now, I would have waited until I had at least $100,000 in savings free and clear before buying a house.
I would have hired people sooner.
As the owner of my practice I would have hired people sooner and delegated more instead of doing all of the work myself. This would have freed me up to focus more on continuing to bring in more business while giving others the work to do and a way to make a living. I was too worried about not having enough in the markup on people’s time to pay my bills. I would have had more people to mark up and it would have worked out.
The Biggest Mistake I Ever Made (and would avoid this time)
I was on easy street. I had two clients who were utilizing the services of one of my bookkeepers as well as a significant part of my own time developing and maintaining projections, reviewing them on a monthly basis with one client and a little less frequently with the other. Between the two clients I was billing about $120,000 annually. With my remaining hours it was easy to pull in another $100K plus. What’s more is that I had really developed relationships with these clients. I thought of them like family and thought for sure I would be working with them for many years to come. We had differences of opinion like you do with all relationships, but I thought for sure these would be clients that would be with me for the rest of my career.
This business is like that. We’re dealing with the most intimate area of people’s lives so it’s really hard not to get close to the people we work with. Perhaps I had a little too much faith that things were going to work. I knew it was a mistake to be so dependent on only 2 clients for so much of my income. If I lost one of them it would hurt. Having thought of this I hoped to keep growing the business by taking on other clients. I had to stay focused on the clients as they demanded much of my time.
One thing I did well was I hired really good bookkeepers. I paid more for them, so I made less of a margin on their time, but I didn’t have to focus too much on them. In fact at one point I realized I was becoming more of a clearing house for the bookkeepers to bill through because I really didn’t have anything to do with the clients except on the rare occasion they had a question or wanted me to review the books. On one hand this was a great because I was making money I didn’t have to do anything to earn. On the other hand I should have been more involved with the clients and what was going on with their books.
In July of 2011 my wife convinced me to start the process of a loan modification for our home. We were fine paying the payment but it was a struggle at times even with all of the money we were making. One big downside to a remote and paperless business is very little overhead which means you get slammed on taxes. Another mistake I made – when I would do my projections I never counted on the taxes. I would do that differently for sure. So the idea of starting the loan mod process was simply to see if we could ease the burden a bit.
In November and December of 2011 not one, but both of those clients went away. It was devastating. Losing half of your gross income in such a short time would be devastating to anyone.
So what would I have done to streamline my success? I would have brought someone in to handle these big clients while I got out there and focused on bringing in more business. This would have enabled me to focus more on the other clients I had as well while checking in on the big ones. The cold part was that neither client gave me any kind of real notice about moving on. One simply stopped calling me. The other told me the week of a meeting I had with them as a reply to my e-mail talking about what I wanted to go over with them that they were going to be having their new CPA handle the projections and the like. They did give me notice about my bookkeeper who was working on their stuff, but of course that was more for their own sake – so they could transition to a new bookkeeper without any trouble. It gets worse. The client who stopped calling. I referred a colleague of mine who wrote my life insurance policy when I bought my house to one of the owners (my primary contact) to help her with her personal finances. Apparently when the time came she asked him (instead of me) for a referral to a new CPA because she wasn’t happy with the one she had. I would have hoped that HE would have come to me and told me about this. Instead he referred his buddy who was young, hungry and just starting a practice of his own. Once he got involved, right in front of me mind you, he told her that she didn’t need projections that were as sophisticated as the ones I had prepared. He assured her he would come up with something much simpler. That was in fact the very last meeting I was invited to attend with that client. A short while later she contacted me to let me know she was going to hire her own bookkeeper. It was the same bookkeeper of mine who was working on both of these clients. I did not want her to suffer just because I was taking a hit. So I offered that the client could hire her. This way she only loses one client, and keeps the income from the other. Actually she got more, because I told her to ask for the same amount they were paying me for her.
There are a few morals to this story. I mentioned above that I get close to my clients. I can’t help it, it’s the nature of what I do. I genuinely care – that’s not a fault. That’s a quality I am very proud of. When one of those clients was really struggling with cash flow at one point I went in for an entire day free of charge to help put together a short term cash flow plan. I did that because I cared. The bottom line on this, however is that in the end it’s still “business” which means that people will do what they will do. Friends will make referrals that will cause us to lose clients. Clients will walk away without any notice.
Have faith and work closely with your clients but remember to always be thinking ahead and growing your business. Do what YOU have to do to keep diversifying. This means have as many clients as possible so that when you lose one or two it doesn’t have much impact. You are much better off having lots of small clients than a few big ones. It’s tempting to want to bring in that big meal ticket. The inherent problem besides the obvious (too much dependence on one or few sources for your income) is that those big clients will take up too much of your time, making it that much more difficult to grow your own business. Don’t fall into that trap. If you get the big client, hire someone to do the work. Do NOT do it yourself.[wdca_ad id=”580″ ]
So how did I make it through without losing my home after losing half of my gross income? That will be my next post..
Here’s a hint:[youtube]https://www.youtube.com/watch?v=TyEvzgC99Iw[/youtube]
Share this Post