The Benefits Of Staying Small

Hiring junior consultants is not the only way to grow.

One of the biggest benefits of being a specialized consultant is that, if you want to, you can choose to stay small.

The advantages of staying small are, in my opinion, underrated. Those who overlook it are often (but not always) management consultants who worked for the big firms in the past, or independent consultants who run marketing or creative agencies.

They are usually attached to the idea of leveraging labor (selling your staff's work with a margin) and building an asset (consulting firm) they can later sell. This is one way to build a consulting business. But they would also benefit from understanding the alternative world of going solo.

Staying small allows you to:

  • Only work with high-ticket selected or dream clients who will respect and afford your work, and make a great living from these engagements.
  • Avoid the overhead that comes with permanent staff and other costs. This will improve your margins, reduce financial stress, and offers you more flexibility to make your working hours and location support your personal life choices.
  • Accelerate your specialization decision. When you're a team of one, you will soon feel the need to ditch any implementation work, create and document a methodology, and sell your brain instead of your hands.

But the biggest benefit of being a solo consultant is rarely discussed: your uniqueness.

Uniqueness And Scarcity

There’s only one of you, and this makes you scarce. And scarcity increases value.

Scarcity means that the demand for a good or service is greater than the availability of the good or service. Economists usually divide scarcity into three different categories:

  • Demand-induced: Scarcity happens when demand increases.
  • Supply-induced: Scarcity happens when supply decreases, or is very low compared to demand.
  • Structural: Structural scarcity happens when the market doesn't have equal access to the service due to location or political conflicts.

Demand-induced scarcity happens when we choose the right table to sit in - if you are well-positioned and invest time and energy into creating demand, you can expect this to grow over time. And due to the nature of consulting services (where you sell advice) and technological progress (remote work and cheap travel costs), we rarely see structural scarcity acting.

What's left, and consists of soloists' greatest power, is supply-induced scarcity.

When you keep building an audience and generating opportunities while limiting the number of clients you work with, you create scarcity. Maybe that's not visible when you start. But as demand starts to outpace supply, you have all the market conditions to continually increase fees.

How Soloists Leverage Their Time And Build Assets

Soloists, just like boutique consulting firm partners, also make use of leverage to grow. The importance of building assets is also not neglected. But they are not the same.

Leverage shifts from labor to digital products. With fewer clients, you don't need to hire employees and contractors to deliver engagements. Your focus becomes packaging your expertise into products with no marginal cost of replication (books, blogs, videos, podcasts, self-paced online courses).

Assets shift from the firm to your IP and personal brand. When you sell advice, your methodology and intellectual property can be licensed and turn into a new source of profit. And your reputation and credibility in the industry certainly have compounding value.

Of course, it's not all roses for solo consultants - for each advantage I mentioned, there's a correspondent downside. But if you decided to build a business and pursue a career as an independent consultant, those should be carefully revisited and considered.

Thanks for reading. You can get more specialized and actionable growth insights for micro consultancies in our newsletter. Every Tuesday, you get one idea from Danilo, one quote from other experts, one number you need to hear, and one question for you to level up your consulting practice.

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