Thoughtful, strategic planning can make a mighty contribution to the success and growth of your freelance consulting business. With deliberate planning, you can guide your marketing efforts and client interactions to spend more of your time doing the kind of work you like best, with clients you enjoy, at good rates.
But strategic planning does not have to be an elaborate process to be effective. You don't have to go on a special retreat, pore over a sophisticated array of "metrics", or spend the day with a management guru to come up with a good plan that can make a major difference in how your consulting business thrives.
One of the most popular and durable business planning tools is called SWOT analysis. It consists of asking yourself:
- What are my Strengths, as a person and as a business?
- What are my Weaknesses?
- What Opportunities do I see on the horizon?
- What Threats could seriously harm my business?
If that seems simple, well, it is. One of the virtues of SWOT is that it is easy to understand, so easy that you can learn to carry it around in your head so you can review how you are doing at any time.
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SWOT is a clear guide to make sure you do not overlook the key factors that might determine whether next year is your best year, or so-so, or your worst. Working through a SWOT analysis of your business every six months, or at least once a year, means taking a few hours to focus on how well you are prepared to deal with what is coming down the road at you. It is a way of assessing whether you have what it takes to not only survive, but thrive, in the months and years to come.
It's one of the best investments of time you can make in building a successful consulting business.
Keep It Simple
You can find templates, matrices, and all sorts of fancy versions of SWOT. But a lot of material on SWOT analysis is aimed at much larger organizations, where management teams take a "retreat" approach to annual strategic planning.
For the freelance consultant, SWOT is more about making sure you have all the bases covered. The basic concepts, Strengths, Weaknesses, Opportunities and Threats, are so straightforward that you could gain a lot of insight by simply writing those four headings on a piece of paper and making lists under each element.
Still, there are some questions and considerations that are easy to overlook when you are new to SWOT analysis. And there are some additional helpful twists that one learns with experience, such as reviewing Strengths and Weaknesses together.
Assess Strengths And Weaknesses Together
Strengths and weaknesses are characteristics of the consultant and of the business. Some call these internal factors in your success.
One consultant's strength may be another consultant's weakness!
- I know a consultant whose focus on the fine details of his work is one of the things that is most valued by his clients. I know another whose focus on details interferes with his ability to meet deadlines and to communicate with his clients.
- Some training consultants are loved for their ability to respond "on the fly" and "shoot from the hip." Some disappoint their clients when they do not think things through before responding.
- Saving money to mitigate financial risk is good. Saving compulsively and never having the courage to withdraw any savings to pursue an opportunity could be a weakness.
Whether any given trait in your SWOT analysis is a strength or a weakness depends on your own business, the clients you are pursuing, and the conditions associated with that market. That's why I recommend looking at your strengths and weaknesses together, reviewing key characteristics of you and your business and classifying them appropriately.
Here are a few starter questions, but you will certainly want to expand the list.
- Finances. Do you have cash reserves available in case business dries up? Do you have savings you could draw upon if it would help you seize an opportunity? Are you afraid to spend money on an opportunity? Are you carrying a lot of debt? How's your credit score?
- Knowledge and Skills. Are you up to date on the specific knowledge and skills you need to serve your clients?
- Interpersonal Skills. Are you most effective one-on-one, in a classroom, in a conference room, online? Do you welcome personal interaction with your client contacts, or dread it? Are you better at working with some levels, e.g., executive vs. front lines, than with others? Who, within the client, tends to love you, and whom do you annoy?
- Geography. Do you need to be physically close to your clients? Does your location allow you to interact easily and often with clients, or is it an obstacle?
- Attitude and Style. Are you casual or formal in your interactions with clients? Detail oriented or big picture? Good at providing surprising insights on the fly, or better at grinding things out step by step? Responsive to deadlines?
- Running a Business. Is accounting a routine matter, or a quarterly emergency when taxes are due? Do requests for information go unanswered, or are you prompt with responses? Do you follow up with prospects and clients when it is in your best interests, or do you avoid follow up? Does your computer, or your office, or your stable of helpers only get attention when there is a crisis, or do you maintain an infrastructure that is ready when you need it?
When you review your strengths and weaknesses, you take a snapshot of where you are right now. Don't fool yourself by counting a "future strength," say, a new skill you are going to learn.
A Great Source of Data
One of the best ways to identify your strengths and weaknesses is to ask your clients!
They cannot tell you whether you do a good job of accounting or whether you are sufficiently productive when you are out of their sight. But they can tell you what aspects of working with you contribute most to their satisfaction. And, of course, they can certainly tell you where they wish things were handled a little differently.
When you are coming to the end of a project with a client, have a meeting or a phone call with your client contacts so you can ask:
- What aspects of this project would you have liked to see me handle differently?
- Are there any characteristics of how I worked with your company that created hassles, increased stress, or gave rise to worries about the eventual outcome of our collaboration?
- What features of my approach to this project, my actions and my style, helped reduce hassles and inspire confidence in the final outcome?
- If you were to name two or three things about my work and my approach that made the biggest different in reaching your goals for this project, what would they be?
Many, many consultants ask for feedback about how things could have gone better (weaknesses). But very few ask about their strengths. And I believe that failure to recognize one's own strengths is one of the most common factors holding freelance consultants back from growing their businesses. If you have always focused your efforts to collect client feedback on "what could be done better," you may be surprised to learn what clients value most about working with you.
Opportunities and threats are typically viewed as external rather than internal factors in your analysis. They refer to events and changes in the world around you. And while strengths and weaknesses describe you today, opportunities and threats describe possible tomorrows.
Sometimes the same event could be an opportunity for one consultant and a threat to another. The recession is certainly a threat for most consultants. But it has spurred new regulations for the financial services industry, and that means a lot of employees have to be trained in new procedures, so there is a training opportunity for some consultants.
But most of the time, it makes sense to treat opportunities and threats separately, so we'll start with opportunities here. You should find it easy enough to identify your most immediate opportunities for more business, or for better clients. Let's just look at a few questions you might easily overlook:
- Current Clients. If you are thinking of "opportunity" mostly in terms of new clients, are you overlooking opportunities to expand your business with your current, satisfied clients? Could they make internal referrals to other departments, or to friends and colleagues, depending on your target market? Are there related consulting areas that you could address for them, that they won't see until you point them out and ask for the business?
- New Problems. Will changing technology, a changing economy, changing legislation and regulation create new problems and needs for your typical clients? What events will force your clients to change in ways that you can help them with? (Threats to clients are often opportunities for consultants!)
- Technology. Do evolving technologies open up new services you could offer, or new ways to deliver existing products and services?
As with strengths and weaknesses, clients can help you with the opportunities and threats elements by pointing to trends and changes they anticipate in the coming year or two. After all, if you are tightly focused on your clients' needs, what concerns them will concern you.
One of the biggest benefits of the SWOT approach is that it drives you to take an explicit look at what could harm, or kill, your business, beyond vague fears of "not enough business."
I'll leave it to you to sort through some of the obvious challenges: competition, economic downturns, changes in demand for your services, and so on. Let's check a few threats that are often overlooked:
- Concentration Risk. How much of your business is generated by one or two clients? If your best client went out of business, or moved, or your champion within the company retired, how would that affect your income? How easily could you replace that client?
- Technology. Are technological changes going to impact the way you deliver services? What are the costs (money and time) associated with adapting to those changes?
- Interdependency. Where are the "ripple effects" in your market? If you are, say, a consultant to small businesses in your region, but many of those businesses are suppliers to a large corporation that picks up and moves, will your business dry up? If you provide help to individuals, and their income is threatened by that big corporation leaving town, will your clients still be able to afford you?
- Personal/Natural Disaster. If your computer melts down, or your house burns down, or hurricanes or floods visit you, can you stay in business? Health issues?
When you've completed your SWOT analysis, what do you do with it?
Many next steps will be obvious, as you address the most significant opportunities and threats and find ways to use your strengths and to compensate for your weaknesses. That simplicity and immediate clarity is one of the appealing features of the SWOT approach.
Beyond the obvious, consider these strategies:
- Focus On Your Strengths. As a consultant, you probably started out doing everything, that is, stuff you were good at, and stuff you were not so good at. As you gain knowledge and experience with your target market, your best return comes from focusing on what you're good at. Look for opportunities that play to your strengths, and for ways to spend more time applying those strengths.
- Weaknesses: Fix or Delegate? It is only natural to look at your identified weaknesses and think about how to correct them. Some weaknesses can be fixed in a single step (buy insurance, set up an automated computer backup, take a class in a skill you need). But when you start thinking about changing the way you behave, about "fixing yourself" by "trying harder" and "being more disciplined," you are often better off delegating that weakness to someone else. Hire administrative help, or writing help, or design help, or technological support. You almost always get a better return from time spent applying a Strength, compared to time spent trying to change a Weakness you see in yourself.
- Beware The Rare. When it comes to opportunities and threats, the likelihood of the events is just one factor. Just as important is the magnitude of the possible event. Particularly with threats, the tendency is to prepare for those that are likely to happen. But thriving over the long haul depends on also being ready for rare, but catastrophic, events. You back up your computer, not because crashes are frequent, but because they have a huge impact if they do occur. A few years ago, a global economic meltdown of the magnitude we have seen appeared unlikely to many. And many later wished they had prepared better, financially, for that rare event.
The most important next step? Make this simple, but powerful, SWOT framework a central element of regular and deliberate strategic planning for your consulting business.
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