The 4 Phases of a Consultancy

“Everyone wants to live on top of the mountain, but all the happiness and growth occurs while you’re climbing it.” – Andy Rooney

Evolution is a double-edged sword for a healthy, growing business.

On the one hand, failure to evolve will kill your business. The world is in a constant state of change, and the markets you serve are shifting right along with it.

Your prospect’s needs will be different 5 years from now. And, if you aren’t advancing your approach, you’d better believe that they will find someone who will. Your competitors are only ever one evolutionary “jump” away from taking revenue out of your hands and placing it in their bank accounts.

This is not fear-mongering. This is a reality check. Things must evolve in order to grow sustainably.

However, there are secret, hidden costs of evolution – such as the costs that result from growing too fast, or growing out of sequence. (Yes, there is such a thing as “bad scale” – ask us how we know).

So, how do we define what “good” and sequential growth in a business looks like? Well, just like anything that grows in nature, we can codify it using stages.

The trick is knowing and understanding what stage you are in, so that you can change before you are forced to change. Let’s take a look.

No matter how much revenue you’re currently doing, how many clients you have, or how successful you’ve been, we can guarantee you of this:

We all started at the same exact level.

In fact, all entrepreneurs do.

It’s called the “Startup Phase.”

Since this term is used rather broadly in other realms of business, let us break down what it looks like for consulting and coaching businesses specifically.

Some common characteristics of a business in Phase 1:

• Still trying to figure things out – You have plenty of good ideas but they lack definition and systemization. Usually lacking an exact grasp on what should/shouldn’t be included in your offer, who your ideal clients are, and how to fulfill consistently and repeatably.
• Probably below the $10K/mo mark – Businesses in this stage have experienced some revenue, but they don’t have the infrastructure to sustain higher levels of revenue. They also lack mastery over their cash flow.
• Almost entirely dependent upon you – This is often true of businesses in both Phases 1 and 2 (as we’ll see in a moment), but it’s far more pronounced in the Startup Phase. If something has to be done, YOU have to do it. A lot of your time is being spent in the weeds and not at a high level.

A whole lot of businesses get stuck in this phase, as there are numerous pitfalls to growth that all start here. We dig into this a bit more in this article on “The Top 5 Deadly Mistakes to Avoid When Scaling Your Business.”

Getting out of Startup requires that you harness the power of three things:

• Speed – controlling the rate of growth by stabilizing monthly numbers
• Leverage – using the power of others (besides yourself)
• Margin – building your forecasts and models in a way that gives you breathing room in your finances, your bandwidth, and your business structure

This is where things have begun to click.

You have at least one attention platform working, one demonstration asset in place, and one monetization model collecting money for you. If you have no idea what any of that means, Taylor breaks down attention, demonstration, and monetization for scaling consulting businesses in his book, The Wealthy Consultant. We highly recommend you pick it up and read it!

Things are going well enough (a.k.a. – not everything is on fire all the time). You’ve got clients, you’ve got some systems in place that are working.

But – you’re still very busy. The business is still primarily dependent upon you and your effort to move forward. You know that the business is capable of growing larger, but you fear that the only way that will happen is if you simply work MORE, and you are already getting very tired.

Getting out of the Buy-Back Phase requires:

• Team – the right people in the right seats to support and enhance your efforts, allowing you to go further, faster
• Financial models – proper financial structure to allow you to reinvest your cash flow into additional team and additional means of securing attention (which allows you to multiply attention platforms)

This is where things get exciting! If you’ve reached the Multiply Phase, that means:

• You’ve got a team supporting you
• You’ve got financial models undergirding your business
• You’ve got control over your cash flow
• You’ve multiplied your attention platforms from 1 to at least 3
• You’ve multiplied your demonstration assets from 1 to at least 3
• You’ve multiplied your monetization models from 1 to at least 3

See now why we call it the Multiply Phase? Essentially, you’ve taken what was working best for you in the Buy-Back Phase and multiplied it (sustainably).

Does this mean all of your problems are solved? Hell no.

“New levels, new devils,” after all…

But, you are diverse. You are close to unbreakable. The business is no longer entirely dependent upon YOU.

Which means it is time to start looking toward Phase 4.

The phase that every entrepreneur dreams about… the phase that embodies everything that you imagined when you first started your own business.

Harvest.

This means:

• You no longer work for the business… The business works for YOU
• You have strong leadership at every position supporting you
• Your systems flow into and out of each other seamlessly, making the hand-off between departments a wonderful “dance”
• There is cash in the bank, giving you enough runway to take the business wherever you want it to go
• You have assets that are consistently making you money, even when you aren’t working

Once you reach this point, you could (if you wanted to) completely step away and sell all, or even just a piece, of your business for a liquidation event.

Why? Because you are no longer vital to the operation of the business.

We’re talking about a profitable exit from something that started out as just an idea in your head – a small business you set out to build on your own!

Any meaningful journey requires not only that you know the destination, but that you know where you currently are.

Do you see yourself in the phases above? Which phase are you in?

At The Wealthy Consultant, we specialize at moving businesses from one phase to the next – no matter where they currently find themselves.

If you’ve got questions about the stage you are currently in, or you feel stuck and want to know how you can move from one stage to the next, click here and schedule a call with our team! We’ve helped hundreds of business owners find a path forward for their business, and we’re standing by to help you as well!