The 6 Stages Of A Collapsing Consultancy: A Cautionary Tale for Business Owners

When you expand the time horizon, the model begins to break… fast.

They go through a predictable “6 Stages Of Collapse”… I’ve seen it happen multiple times (and experienced it firsthand).

Take a tab on the gurus that were popular 2 years ago. Half of them are irrelevant or launching new brands trying to recapture the “glory days”.

And the thing is… they’re intelligent individuals. They are just operating a model that’s not designed to last.

When you’re running a model that’s entirely dependent on NEW clients, here’s what you go through:

Revenue: Plenty | Expenses: Minimal | Margin: Great | Team: Happy

This is the part everyone loves. You have a converting offer.

Revenues are good. Expenses are minimal. Team is happy. The levers are obvious: book more calls, hire more team, acquire more clients.

Revenue: Rising | Expenses: Rising | Margin: Steady | Team: Challenged

Now, you want to “scale”.

You hire more team members, up your marketing budget, and invest in more tech – in other words, your operational costs scale with your revenue targets.

You feel stress – “but it’s the good kind of stress”, you tell yourself.

Revenue: Steady | Expenses: Rising | Margin: Decreasing | Team: Stressed

Deceleration doesn’t mean you’re hitting the brakes. In fact, you’re “scaling” with more intensity than ever. It’s your MARGINS that are decelerating.

You’re in a constant race to feed the beast that you have created through operational expenses and burn. And no matter what you do, your foot has to stay on the gas.

You feel forced to grow by necessity, not by choice.

Margins are decreasing, but revenues are still on an upward trend. I’m winning, you tell yourself.

Revenue: Slowing | Expenses: Rising | Margin: Breakeven | Team: Reactive

Life is… problematic.

It’s your first breakeven month (or even a slight loss). You feel like every month is a race against the last. Revenues are actually starting to slow down because you cannot focus – it’s getting more expensive to stay afloat.

You’re forced to try what the “experts” tell you: ‘Expand your TAM and take on subpar clients Hire unskilled labor to handle the volume Push your team harder ‘temporarily’

Keep pumping more pressure into the beast that created this situation.

Revenue: Slowing | Expenses: Rising | Margin: Loss | Team: Burnt Out

The ‘tactics’ work for a month or two, and you manage to stay afloat. But the pressure is nonstop – your expenses feel ‘heavy’.

Operations are overloaded. Sales is overloaded. Marketing is overloaded. Everywhere is overloaded… And you’re working more to “cover up” other people’s mistakes than your own workload.

Nothing is working. Other competition is eating your lunch. No levers to pull and all creativity is gone. It’s time to exit… not the good kind, the painful crash kind. You’re done.

When a business reaches Stage 6 – they are bartered off for parts or just disappear entirely. And believe it or not… this happens all the time.

This is why “scale” is ridiculous.

You’re forced to operate under the same logic as a cancer:

Grow at all costs – even if it kills everything around me.

There is no “slowing down” option in this model. You either accelerate or you die. It forces you to trade moments for money, longevity for bragging rights, sanity for “scale”.

This is not the right way to operate a business – That’s why I had to invent a better way.

The model we use today is ****called the “Wealthy Consultant” model. It’s built with health, happiness, and service in mind. We optimize for MARGIN.

If you’re interested in learning more about how we operate our businesses, I’d ask you to subscribe to our Consulting Memo.

Each month my office will send you a small but potent training memo. This will include what’s working (and what’s not) from the top consulting & education businesses across 100+ different industries.

This is not a money-making scheme or a “for profit” offer in any way. Every 30 days like clockwork Taylor and his team sit down to meticulously document what’s working and what needs fixed across all his clients & equity partners, and this letter is a result. You will become addicted to the lessons – and there are no long term commitments.