How to grow your consulting business through an economic downturn
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Uncertainty around how to plan for the future while surviving during the current crisis has led to many of us thinking about our careers and what move to make next. Large-scale quarantines, travel restrictions, social-distancing and even forced business closure have driven a steady fall in consumer and business spending during the last few weeks, with many predicting an economic recession. This is not the first time we have experienced an economic downturn and it is certainly not the last. The impact of the Coronavirus will no doubt have profound consequences on all of our lives, however, having learned from the past, it is possible to not only survive during a recession, but continue to grow, and possibly even thrive.
As governments call on consumers to stay home and flatten the curve, businesses have started to lose revenue, forcing them to lay off workers and reduce spend. We are seeing unemployment levels rise sharply and business investments decline. According to a report by the United Nations, on 28 February 2020, stock markets worldwide reported their largest single-week declines since the 2008 financial crisis. Has this looming recession sent you into a panic about the future of your consulting business? If so, you’re not alone.
Many consultants, independents and freelancers are asking questions like:
“Will there be work? When will there be work?”, “How can I plan for the financial year when no-one else can?”, and “Will my client’s business fold before they pay me for last month?”.
At Riverflex, it’s our goal to support independent consultants grow their own business which is why we want to share some advice on how you can push through and build your consulting business, even during an economic downturn.
Firstly, we’ll look back at the lessons learned from the 2018 financial crisis to help us respond to our current circumstances. Secondly, we’ll share with you why we think being an independent consultant is one of the best professions to be in, even during a recession. Lastly, we’ll give you a few future-proof tactics to help you thrive under any circumstance.
Lessons learned from the 2008 financial crisis
One of the biggest lessons we learned was that during the financial crisis, consultants became an important resource in helping businesses overcome complex challenges. Research during this time shows that leading up to 2010, there was an upswing in consultant hiring spend estimated around $149 billion in the US alone.
Good consultants are well equipped to handle change with the profession requiring exceptional problem-solving skills and the ability to adapt to client needs. We have seen consultants play a central role in helping companies adapt to fast-paced technological change, supporting them with change strategies and road mapping to drive business success. These skills are well suited to addressing business challenges in times of crisis. Nancy Van Brunt, head of talent success at Upwork says:
“Companies might be shifting their strategies and reprioritizing the projects currently on their roadmaps, but they are still in need of support”.
Although consulting is not completely immune to the current economic pressures with firm-wide hiring freezes and layoffs, we have learned that consulting professionals who are agile, adaptable and focused on corporate restructuring will be in greater demand as companies themselves look to react to current challenges in the wake of this crisis.
Benefits of being solo during economic recessions
“The larger the entity, the less flexible it is to the unforeseen.” Derek T. Havens
Being a consultant with refined problem-solving skills is great, but being an independent consultant with refined problem-solving skills and the ability to be responsive and nimble is even better. Another important lesson that was learned during the 2008 financial crisis was that those who had the flexibility to pivot were more likely to rebound and rebuild their businesses post-crisis.
While large organisations with permanent employees usually react to crises by going into a self-preserving mode, independents have the speed and agility to react and in some cases, grow in challenging times.
There are 3 key factors that make being solo beneficial during tough economic times:
- Project-based work is less risky when faced with uncertainty. During tough economic times, companies try to reduce costs and often slow down or even stop hiring permanent employees. Project-based work is an ideal solution for businesses that don’t want to commit to permanent employees knowing they may have to cut costs and expenditure with uncertain economic factors.
- As an independent consultant, you are more likely to have multiple clients and projects running simultaneously. This means you’re not exposed to being obsolete if one client has to fire you or pause a project.
- Working for yourself also means that you are free to adapt to market trends and offer consulting services that address the actual challenges companies find themselves struggling with during economic and financial recessions.
4 Essential pieces of advice to help you grow
As we mentioned previously, if we are able to learn from the past, be agile, adaptable and respond quickly to new challenges, it is possible to not only survive during a recession, but continue to grow, and possibly even thrive. These pieces of advice are not profound new concepts but in fact the very building blocks of growing a successful consulting business that is future-proof and holds up in challenging times.
1. Activate your network
Have you built quality relationships that will allow you to leverage your most successful client relationships, and connect you with new clients through referrals to grow your business? In one of our previous posts, we spoke about how to build a professional network as an independent consultant and why setting up and nurturing a professional network is the best way to get leads and clients. This is especially important during an economic downturn as it becomes a bit harder to find work and the clients who are still willing to spend on consulting services.
2. Position yourself in the market to meet client needs
Is your area of expertise in demand or losing ground? Have you adapted to market and business trends to meet client needs? The world is changing so quickly that many professional areas are becoming obsolete. By upskilling and positioning yourself as an expert in high demand consulting services such as technological transformation and change management, you have a better chance of finding quality client projects. This is also true during a crisis such as the one we find ourselves in now. We are seeing more companies struggling with challenges such as remote work, employee organisation and financial restructuring. Consultants who recognise the challenges their clients are facing and position themselves to be able to solve these challenges will continue to find work.
3. Manage your finances and cut back on personal expenses
According to an article published in Forbes, businesses who had 5-7 years of safe spending in fixed income made it out of the 2008 financial crisis mostly unscathed. If you haven’t managed to make any fixed-income investment, good old ‘saving for a rainy day’ should have been part of your financial plan from the day you started your first job. Being an independent consultant is tricky at the best of times as projects are often not consistent and periods without being staffed on a client project are not uncommon. Having a cushion to fall back on is the best way to plan for unforeseen slow periods and will help alleviate financial burdens during economic recessions.
4. Find new ways to build business through new propositions and self-promotion
If you’re a freelancer who’s found themselves sitting on a canceled project, Van Brunt advises updating your portfolios and social profiles “to highlight how you can help clients through this time with your specific skill sets and experience” as well as reaching out to past clients with new ideas. As we mentioned previously, the Coronavirus outbreak has forced companies to change their working structures as well as restructure finances in preparation for a recession. Now is a good time to pivot and use your expertise in a way that addresses the actual challenges these companies now face. This speaks to one of the key reasons you most probably chose a career as a consultant, to help businesses solve their problems.
Finding a few new clients during a recession as an independent is much more feasible than finding a new job as a full-time employee during a recession. Consultants are also arguably much better positioned to survive a recession than traditional employees and have the skills and adaptability to remain relevant to changing client needs. Still, you’ll probably need to be prepared to start putting in quite a few extra hours helping clients with brand new challenges, pivoting on existing projects and marketing your services if you want to continue to grow your independent consulting business during turbulent times.