The Building Blocks of a Sustainable Consulting Firm

Business success happens through good design. No amount of passion, grit, or discipline can overcome a poorly designed business. That's why your business model matters.

This is what we found out after exploring the topic with +100 founders. Consultancies that neglect business model design end up, sooner or later, running in circles. Low revenue and margins, low partner compensation, high stress and unpredictability.

But instead of zooming out and exploring the different ways their consultancy could look like, founders often get fixated on the negative side-effects without any clue on how to fix them. They wonder why it's so hard (and expensive) to bring in new clients. They accept as a fact the idea of building their lifestyle around their business, rather than the other way around.

As the saying goes, “You can't build a great building on a weak foundation."

And being willing to rethink how their business work is only the start. Many founders still don't have a clear picture of what kind of firm they want to build. Your positioning, service offerings, and pricing are often surrounded by doubts.

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The Three Building Blocks of a Consulting Business Model

There's a fine line between thriving and merely surviving for micro and lifestyle consultancies. Having a bias to action and prioritizing marketing and business development will take your practice off the ground. But the key to really crossing this line lies in a robust business model.

In this handbook we introduced the Boutique Consulting Canvas (BCC), a specialized business model framework for boutique consulting firms. It was shaped through interviews, literature reviews, and empirical observations. And it’s a powerful tool you can use to rethink your consultancy more easily.

The foundation of your firm rests on three pillars:

1. Value Proposition: The benefits you promise to deliver to potential clients. It's about articulating the value you bring to your clients and how you differentiate from competitors.
2. Value Creation: Here, the focus is on the processes and resources you need to market and deliver the promised value to your clients.
3. Value Capture: Finally, you need to transform part of the value you create into profit.

Let's explore how you can use those pillars to identify whether you'd benefit from a business model review for your consultancy.

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Making It Practical

An easy way to check whether you have a clear and coherent business model is to mimic an external advisor and ask yourself some questions you might never really thought of. While this will never replace a facilitated workshop, it's an excellent start to spot doubts or questions.

Below are some recommended questions. The more of them you struggle to answer, the more likely it is there's space for improvement of your consultancy's current business model.

• Are the problems you are solving urgent and expensive for clients? Do you struggle to make a business case of why what you do matters, and why they should act on it?
• What are your value proposition drivers? What benefits do clients get from hiring you and your services that they cannot get from their internal teams or other consultancies in the market?
• Can you substantiate your value propositions? How can you demonstrate to potential clients that you can actually deliver on your marketing promises? Do you have proof that you can "walk the talk"?
• What are the key resources you have at your disposal? What team members, market assets, and/or codified knowledge can you put to work? What are the relationships in your network you could reactivate, nurture, and/or partner with in the future?
• What are your current processes? How are you marketing, selling, and pricing your services now? How are you delivering your products and services to clients?
• What could be different? How else can you bring your offerings to market? In order to deliver on your marketing promises, how else could you be delivering work to clients?
• What resources you might need to support those aspirational capabilities? What people, assets, IP, or relationships do you need to change the way you sell and deliver your services?
• Does the math work? Can you market and deliver your services in a profitable way, and reach your aspirational compensation? If not, what needs to change?

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Don't Reinvent The Wheel

Building a sustainable consulting firm isn't about reinventing the wheel. It's about understanding what value you can bring to the market, leveraging your resources, and building the capabilities you need to keep the motor running. Remember: Your firm's size isn't a limitation but an opportunity to beat larger firms in a game they can't play.

For an in-depth exploration, feel free to dive into our handbook on business model innovation. There, you'll find the Boutique Consulting Canvas and other resources tailored for firms like yours.