After physically running a new consulting-like company, we would like to share with you what mistakes we have made and what lessons we have learned, hope this will be helpful for you.
Mistake 1: Not Filtering the Clients
In the begging, we take whatever clients we get, because we are new on the market and we would like to build our client base and brand awareness. Having a client is always a good sign, however, after acquiring more clients than we could handle during our limited working hour, it is time to make some changes.At the early stage, we didn’t set up a clear goal about how we could help our clients. Sometimes, the clients engage with us is just because they want to learn something from our experiences, not because they really want to engage with us. We totally understand that the clients would like to get to know us better, then they will make a decision if they would like to move forward. However, the time of converting potential clients to be paid clients is too long. We have spent lots of time engaging with clients that they will never pay.
Lesson 1: Letter of Engagement, Client Setup Fee
After we meet or call the client for the first time, we have added the Letter of Engagement in our process. Letter of Engagement allows us to explain to our clients what service from us could help them to grow their business. We try to make it maximum up to 1 page. The longer the contract, the longer your client will reply to you. By this LOE, the client will start to take our relationship seriously.
Later on, we found out, LOE seems not enough. We started to add the Client Setup Fee. This Client Setup Fee will help us to filter the client if they really want to engage with us, if they are sincere, they will pay for it and we will put them in the Active Client List, otherwise, we will put them in the Inactive Client List and we will review their case only when we have extra time for it.
Mistake 2: Not Focus on Revenue, We Don’t Know When to Charge the Client
We didn’t control the cash flow and we didn’t follow up the invoice we have issued. We didn’t clearly discuss the payment term with our clients, and there is no due date on the invoice.
Sometimes, clients are our friends, we help them because we are friends, when they asked us anything, we try to answer everything. When they ask us to do something, we try to do it for free. There is a blurred boundary between friendship and professional services, and we have spent our time helping friends too much. When you open a company, your time is really your money, because no one will pay your salary, the only income you have is your client’s payment. Sometimes, the clients think we are friends, so they don’t think they need to pay for it, this kills our opportunity cost on creating more value with other clients.
Lesson 2: Setup Priority, Setup Deadline, Optimize Time Management
We optimize our time management by filtering the task isn’t generating the revenue, then we put in the minor list. We try to record how much time we have spent with potential clients, when spending too much time, and we have done all the process we could, the client still didn’t sense they need to pay or be grateful for our time spent on them, we will not entertain them anymore.
We set up a monthly target, weekly target, and daily target. Then we focus on the clients that could generate a faster value. We detail what kind of activities we have done every day and do the priority first, ex:
1) Check bank account: To understand how many targets we still need to achieve.
2) Check invoices we have issued, how many clients overdue the payment
3) Clients had paid
4) Potential Clients that we need to prepare an invoice
5) Potential Clients that we need to prepare LOE
6) Potential Clients that we have met
7) Getting New Clients
8) Marketing
Mistake 3: Not Getting Enough Clients
In the early stage, there is no stable client will pay your monthly income, having a few clients is a big risk for the company. Once the client finished the project, and you want to find the next new client, it might be too late.
Lesson 3: Getting As Many Clients As You Can
Brainstorming who are your target clients, and meet them where they will be. Partnering with different industry to gain more network. Marketing yourself that leads the clients to come to you automatically and directly.
Mistake 4: Unclear Business Scope
In the initial stage, we set up a business scope that leads our target clients to be very limited, selective and out of our league. We didn’t know that we could update our focus, and we keep walking in the wrong direction.
Lesson 4: Updating the Business Scope
Setup up a new clear service scope by review what is your strength in the past, and select the most valuable part that you could help your clients. If your strategy is wrong, then be flexible to change it to the direction that will bring more potential clients to you. Analyze the competitors, differentiate your strength, and find your niche point in the market.
If you have any question, or you have some advice, please feel free to leave your comment, or discuss with us, thank you so much. :)
