Are we going through a recession or not?
Many say "yes," with the GPD reporting the 2nd quarter of negative numbers for the year, and other experts say "no."
Either way, as a firm owner, you must prepare your business for the worst.
In this episode, I will provide you with four strategies to recession-proof your consulting firm starting today.
For a consultant, a recession can be the scariest and most stressful time.
If we are going through a recession and you lose clients or projects because of it, how long will your firm last?
With declining revenue, can you comfortably cover your operating expenses, pay your team and invest in the firm's growth over the next six months?
Or is it challenging to see how you will make it to the next 90-days, one month, or even one week?
Your answer to those questions will determine how aggressive you must be with the four strategies I will provide you today.
To complement today's episode, I created a free mini-series titled -
7 Financial Mistakes That Keeping Consultants From 7 Figures.
Build an Emergency Fund
I recommend you build a six-month emergency fund based on the total operating expenses for your businesses.
For example, review your operating expenses for the last six months, such as your accountant fee, utilities, rent, office supplies, telephone, marketing, and payroll.
If the total cost to operate your business on average was $10K, you need an emergency fund goal of $60K.
With a six-month emergency fund, you proactively position your firm to be recession-proof.
This leads to my second strategy.
Perform An Expense Audit
Review your operating expenses and see where you can cut costs but still operate effectively and efficiently.
I recommend you ask yourself if each item is needed to operate your business.
I also recommend that you determine the ROI of each cost. For example, each member on your team should help your firm generate revenue and save time.
If you can't determine how each team member helps you generate revenue and save time, maybe you don't need that team member.
Ask yourself the ROI and impact question for every cost. When you complete this strategy and find ways to cut costs, you are operating lean and, therefore, you are recession-proofing your firm.
Focus on one service offering and become an expert at it. For example, we offer CFO services.
Our clients can invest at different levels (I'll show you how to use your one offer to have four revenue streams), but we only offer CFO services. – 1 Service
What service or project could you offer in excellence that will fix the pain points of 90% of your ideal client?
Center your marketing to position you as the expert in that area and learn everything you must know about that area.
By doing this, you will position yourself to make more money faster!
And by charging more coupled with pricing for profit, you are recession-proofing your consulting firm.
Create Multiple Revenue Streams From Inside The Firm
I believe you should have at least three revenue streams birthed and maintained from within your firm.
For example, there should be an Elite level. At this level, your client's investment is the highest, and they receive the most value and personal interaction with you and or your team.
Next, you have your target. For those that are unable to afford the Elite level, they will ideally fall at the Target level.
Next, many of you may have a Base (bottom tier) service offering.
And finally, you will have your Passive Service or Product. At this level, you make money while you are asleep or away.
I've given you four ways to recession-proof your consulting firm. Begin to take massive action today so that no matter what happens in the worry, your consulting firm will make it through profitable!
Also, download the free mini-series - 7 Financial Mistakes That Keeping Consultants From 7 Fingers