Making It—As a Consultant.

The key is preparing your strategic plan.


  • NOT EVERY CPA FIRM that tries its hand at consulting can report financial success, and although there’s no such thing as a single universal cure for an unhealthy consulting business, the one that comes closest is strategic planning.
  • IF CONSULTING FIRMS WITH LOW PROFITS have one thing in common, it’s that they function without written strategic plans. As a result, most of their decisions favor the short run. When they try to set a long-term course, they flounder because they can’t capitalize effectively when business opportunities appear.
  • AT A MINIMUM, A CONSULTING organization should have strategic plans for the following areas: business, marketing, recruitment, compensation, new staff training, new niche development and quality control.
  • SEEK TO STANDARDIZE MOST OF YOUR processes around best practices. Here are a few proven tools:
    • Prospective clients screening.
    • Marketing message.
    • Preparing for each consulting engagement.
    • Consulting services delivery.
    • Consulting fee estimates.
  • AVOID OFFERING CONSULTING SERVICES that you’ve rarely performed and are not likely to do often.
  • IGNORING A STAFF PERSON’S poor performance creates problems that affect more than that person’s work. It often has a negative effect on staff morale, client satisfaction and, as a result, the firm’s profitability.
SAM M. ALLRED, CPA, is a partner of Anderson ZurMuehlen & Co., Helena, Montana. He is the director of Upstream Academy, a network designed to help technology consulting organizations, details about which are at . His e-mail address is .

onsulting—especially for the complex and fast-changing information technology (IT) field—is a burgeoning and potentially lucrative business. Yet, if truth were told, not every CPA firm that tries its hand at IT consulting can report financial success. For the past decade my accounting firm has been providing IT consulting, and for the past five years I’ve been conducting workshops on how to make IT consulting a profitable business. In the process, I’ve had the opportunity to discover why some IT consultants succeed financially and why others struggle, even though they are competent in technology. Although my experience has focused on the IT field, the advice in this article applies to any consulting practice.


There’s no such thing as a single universal cure for an unhealthy consulting business, but the one that comes closest is strategic planning. If consulting firms with low profits have one thing in common, it’s that they function without written strategic plans. The result? Most decisions favor the short run, so when they try to set a long-term course, they flounder; they can’t capitalize on the opportunities in the marketplace. As the adage goes, When you don’t know where you’re going, any road will take you there.

Understand, however, that strategic planning is not about trying to guess where the market is going; its purpose is building an organization that’s adaptable to a changing market. For those that can adapt, opportunities are always available. Understand, too, that the most successful enterprises aren’t necessarily the largest or those with the most formidable market presence.

The problems run deep: Without a marketing plan, consultants generally struggle to find new clients; without a recruitment plan, they experience gaps between workload and available staff; and without a compensation plan, they struggle with motivating and retaining staff.

At a minimum, a consulting organization should have strategic plans for the following areas: business, marketing, recruitment, compensation, new staff training, new niche development and quality control.


If you have to continually reinvent your business processes for each client, you’ll have little time or energy left for consulting. The solution is to standardize most of your processes around best-practices principles. Here are a few techniques we use in our practice:

  • Prospective clients screening—a form that lists the key questions and outlines the necessary due diligence steps we take before bringing new clients into the firm.

  • Marketing message—a binder that contains our full sales pitch. We use it, along with marketing scripts, to ensure the consistent delivery of our message.

  • A checklist for preparing each consulting engagement.

  • Consulting services delivery—a process for installing accounting software, including step-by-step implementation plans, network system reviews and checklists for implementation.

  • Consulting fee estimates—a standard for delivery of our consulting services so we can give prospective clients a good estimate of what a project will cost them.

This kind of standardization helps manage each consulting engagement—from reviewing the work completed on a project, to tracking the outstanding issues and change orders, to keeping a time line of the job.

A good book that provides the tools needed for standardization—including checklists, procedures and forms—is The E-Myth Revisited, by Michael E. Gerber (HarperBusiness, 1995).


A consultant usually doesn’t invest much effort in his or her marketing message—what’s said to a new prospective client or referral source. The following should hone that message:

  • Hold brainstorming sessions with key sales, marketing and consulting staff to review your current message. Focus on how it can set your firm apart from the competition and thus give you a competitive advantage.

  • Develop a script for a 30-minute presentation. This doesn’t mean all presentations should take only 30 minutes, but you should condense your best message to fit a 30-minute time frame. Include visual supports—sample reports, projections, budgets, checklists, procedures, implementation plans—to demonstrate you can deliver the promised results.

  • Develop a marketing binder of handout material to help prospective clients better understand the value of the services you provide.


One of the biggest challenges facing most consulting organizations is the feast-or-famine cycle—they either are swamped with business or have nothing to do. Inconsistent marketing efforts, such as using one type of marketing one month and another the following month, produce inconsistent results—and a wide ebb and flow in workload.

One of the keys to profitable consulting is to keep your staff producing billable hours for at least 70% of their time. With wide workload swings it’s hard, if not impossible, to achieve that goal. A good marketing plan that eliminates those swings contains the following basic components:

  • Marketing standards that everyone in the firm will adhere to.

  • Agreement on a geographic region on which to focus your marketing efforts.

  • A profile of the competition.

  • Risks that may stand in your way.

  • The marketing message that sets you apart from your competitors.

  • The ways you will monitor and report the results of your marketing efforts.

  • Quantifiable goals for things such as quantity and quality of leads, software sales and number of new clients.

  • Identification of your strategic partners and how you plan to work with them.

  • A budget and how you plan to execute your marketing plan, including the key assumptions on which your costs are based.

  • An action plan that lists specific tasks, the persons responsible for carrying them out and a time line.

After you develop the first draft, seek out a smart business colleague outside your firm and ask for honest feedback.


One of the greatest challenges facing consultants is managing what is euphemistically called client expectations— that is, when a client thinks the engagement should include something that you don’t. Not only do such disconnects lead to bad feelings but they also can result in writeoffs, slow payments and, worse, no repeat business from that client.

Identify the services that carry the most significant risk of false expectations and make it a point to give those areas special attention when outlining the engagement to the client.


Avoid offering consulting services you’ve rarely performed and are not likely to do often. The most profitable services are those you perform repeatedly. If you decide to undertake the less frequently done services, be sure to evaluate the risks and manage the expectations carefully. And, of course, charge accordingly.

In addition, develop a process for evaluating each new potential skill or service you plan to offer, addressing these questions: Will it be done often enough so your staff will become proficient at it? What is its billing-hours potential?

Develop a skills inventory worksheet to monitor the breath and depth of the services you can provide. Create an alliance network you can draw on to help your clients find professionals in areas in which you have chosen not to offer services.


After polling a number of IT consultants, I discovered to my surprise that the average time invested to gain proficiency in a new technology skill or service was eight months. Talk about a barrier to profitability!

It’s difficult to sustain healthy profits when dealing with such a steep learning curve. Obviously, you need to seek out ways to shorten the learning time. Start by brainstorming the subject. My organization found we learned faster when we used outside experts to assist us on our first two engagements.


Another significant barrier to profitability comes from poorly managed consulting engagements. Ask yourself whether you have for all engagements

  • An engagement letter.

  • An entrance and exit conference.

  • A written progress report.

  • A plan for conducting the engagement.

  • A project manager to oversee the work.

If you answered “no” to any of these questions, you’re endangering the profitability of your engagements.


Ignoring a staff person’s poor performance creates problems that affect more than that person’s work. It often has a negative effect on staff morale, client satisfaction and, as a result, the firm’s profitability.

Many consulting firms reluctantly retain poor performers because it’s difficult to find competent people. If you stop to realize how many of your resources are consumed by dealing with a troubled employee, you’ll likely raise your hiring standards.

In the long run, it’s best to deal quickly and directly with poor performance. After all, by failing to do so, you’re sending the message that poor work is acceptable, and that may be a great disservice to the poor performer.

For guidance on whether you’re addressing the problem, answer the following questions:

  • Does your staff know what is expected of them on a monthly basis?

  • Do you have a way to monitor individual performance?

  • Does your compensation system encourage and reward performance?


You may be surprised to see weak culture listed as a barrier to profitability. While it’s hard to define, you know it when you experience it. A firm with a strong culture is both professional and ethical; while it’s a good place to work, it also strives and compensates for first-rate performance.

Firms with a strong culture generally have low turnover, highly motivated employees, excellent recruitment success and a good track record for capitalizing on new business opportunities.

The best book I’ve read on how to build a strong company culture is NUTS! Southwest Airlines’ Crazy Recipe for Business and Personal Success, by Kevin and Jackie Freiberg (Bard Press, 1996).

Each of these barriers to profitability can have a profound effect on the success of your consulting practice. Spend some time identifying which of these barriers pose the biggest challenge to your organization and create a plan to turn whatever weaknesses you’ve discovered into strengths. It’s the formula for healthy profits.

How to Create a Strategic Plan

Follow these five basic steps for developing a strategic plan—in this case, a plan for creating a new profit center:

  1. Standardize a process of searching out opportunities. It should include the basic question, What do your clients need?
  2. Standardize the process of finding and evaluating business opportunities by creating a matrix to evaluate each opportunity. The criteria should include profitability potential, market opportunity, ability to standardize the new service, the risks associated with delivering the service to clients, the current competition for this service and your staff’s learning curve. Use a consistent scoring process for each of these criteria to greatly streamline the evaluations.
  3. Standardize the process of performing due diligence on opportunities that pass step 2. Pick the brains of consultants who deliver this service outside your geographical area. Visit several key clients to gauge their interest in the service. Put out feelers to see whether any of your peers are interested in teaming with you on this new business.
  4. Create a business plan that identifies how you will approach a launch of the new service. The plan should contain the following components:
  • Executive summary—a one- or two-page review that outlines the entire plan.
  • The rationale—the reasons for forming the new service, stakeholder support details, available and needed resources and an organization chart.
  • The market—a description of the marketplace listing market trends and recent developments, including a desired customer profile and an estimate of the total market size.
  • The offering—a description of the proposed product and service, the size of a typical engagement, a schedule of billing rates, a proposed learning plan and a maintenance and support plan.
  • The competition—a description of the competition, including similar services and products; and an outline of the competitive strategy you will use.
  • The risks—the downside of such a launch, including your existing clients’ reactions, your competitors’ reactions and how you propose to deal with these potential dangers.
  • Marketing strategy—your goals and objectives, strategic partners, marketing message and process and budget.
  • Financial forecast—the profit/loss and cash flow outlooks and their assumptions.
  • Standardization plan—the key processes for marketing, sales and implementation of the new product and service and the needed tools (see “Standardization Tools” ).
  • Action plan—the steps to take to meet this year’s goals, including checkpoints for measuring results and assignment of responsibilities.
  1. Create a plan to launch the new business as quickly as possible. Most CPA firms are too cautious. They think they can reduce risk by moving slowly. On the contrary, risk rises with delay. Best approach: Plan to launch the new business within 60 days.


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