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Episode 232: Building a Consulting Business That Fits the Role You Want to Play—with Jessica Lackey

Deb Zahn: I want to welcome you to this week's episode of the Craft of Consulting Podcast. On this episode, we're going to talk about what you need to do and pay attention to, to ensure that you end up with a consulting business that you really want to have and that you're playing the right role in. So I brought on someone named Jessica Lackey who is just fabulous, and she's going to walk us through some of the things that you need to consider, the questions that you need to answer for yourself, and ultimately what types of metrics you should be paying attention to, so at the end of the day, you look back and you have the business that you truly want to have, and you're doing the things that you truly want to do. So let's get started.

Hi, I want to welcome Jessica Lackey to the show. Jessica, welcome.

Jessica Lackey: Thank you. Happy to be here.

Deb Zahn: So let's start off. Tell my listeners what you do.

Jessica Lackey: So I'm a business operations strategy consultant. So I work with small businesses from solopreneurs to million dollar plus firms on their strategy and their growth trajectory.

Deb Zahn: Wonderful. And we're going to talk about that today. And one of the things that we're going to focus on sort of broadly speaking is making sure you build a business that's around the role that you actually want to play, which we have so much we could talk about in terms of that.

But let's start off. Let's say there's someone who wants to be a consultant or they just started, and they haven't actually thought through what role they want to play in their business. What kind sticky things could they find themselves in if they haven't deliberately done that?

Jessica Lackey: So there's this mentality of, oh, we want to build a team and a firm so that we can take all this time off. And what new consultants don't necessarily realize, or even those who are thinking about on the verge of building a team is that, that actually is two different businesses, consulting and leading a consulting practice. And I think that's where it gets really sticky out of the gates is how do we craft that business for the life we want and the mission we want versus what we see modeled for us in books and by experts.

Deb Zahn: I love that because there are all kinds of shoulds, but those shoulds lead you down a particular path and you better make sure you want to be on that path to get to where it's headed. So if somebody was thinking, OK, I could be a solopreneur as a consultant, or I could build a team out. What kind of questions should they be asking themselves?

Jessica Lackey: Well, the first question is, how new are you in the business? Because I think until you build a solid book of business, until you build your reputation, you're going to be a soloist anyways, trying to grow faster than your marketing. And your reputation is a really easy path to burnout because the money you bring in by having an extra team member goes right out the door to the team member. And I think that's the first question is, how far are you along on the journey? And the second question is, how much do you want to be responsible for other people? Do you want to be a leader of other more junior consultants? Or do you want to work on cool projects and take time off and kind of go a little where the wind blows without having the responsibility of a firm? There is a limit to scale there, but there's also a freedom and not having to, quote unquote, feed the beast all the time.

Deb Zahn: Yeah, let's dig in more to what we're responsible means because, so in my membership, this question when I've coached, this question has come up because I could be solo, I could be more, and do I bring people on as employees? Do I develop affiliations, partners? There are all kinds of different paths someone could take. So when you say responsible for, what does that often look like if someone goes the, bring on employees as part of now a firm?

Jessica Lackey: Yeah, so you are responsible for training your employees to deliver your products and deliver your process in your IP. You're responsible for training your clients that you won't be the only one doing the delivery. But you're also responsible then for business development because if you bring on someone and they're not able to make a full-time job off of your work, how are you compensating them? Are you giving them license to work with other people? How are you thinking about building that capacity for them so that if they're working for your firm, you're keeping them busy? And a lot of times the people we bring on in our consulting firms are more junior than us, and if you're consistently doing strategy work versus ongoing implementation work, sometimes the work isn't suited for a more junior person. We had to think about the type of work and the positioning we have with our clients to know who should we be bringing on in our organization, employee or otherwise.

Deb Zahn: Yeah, I love that. And the pressures, both financial, emotional, time-wise, energetic, and sort of all the things that go along with all of that.

Jessica Lackey: Yeah, knowing that someone's relying on you for their paycheck, it's a heavy burden to wear, but also knowing that you are responsible for training them and teaching them and coaching them. Your work shifts from necessarily delivering work to the clients, to building out a team and managing that communications and managing the PowerPoint moving from your desktop to their desktop. I mean, the technology behind trying to keep the fonts the same for Mac and PC, that's actually not insignificant.

Deb Zahn: And we've all been caught in that particular version of hell.

Jessica Lackey: You formatted it one way and then you uploaded it to your shared Google Drive. And then they formatted it and ends up with a new font on it. Those are some of the intricacies that you don't think about when you think about, oh, I'm going to have this junior person lead this part of the work stream. There are a lot of administration back into it that we don't really consider when we think about the freedom of having a team.

Deb Zahn: Right. And I also think I know one of the questions that has come up when I've been talking to people is, client interface. So who actually has any interactions with the client as one of the decisions that has to be made, and then if you're giving more junior people access, then what does that mean for your overall client experience, brand, et cetera?

Jessica Lackey: Yeah. How do you maintain that quality knowing that you know how you would operate in situations, but so again, how are you teaching your clients to work with you? How are you teaching your more junior team members to work with that client? Your reputation is on the line, and that means that maybe you can't take as much of a step back as you would've wanted to, otherwise. So then you have to say, how involved do I need to be with a particular client knowing that I've kind of handed it off to a more junior team member or to a partner, but I maintain that client relationship. It's a dance and it requires, I think, more time and energy than people want to admit it does, especially in the early years of a partnership.

Deb Zahn: Yeah, I love this. So I hear all of that. I'm a solopreneur consultant, but I grab people from other firms and independent consultants to work with me. So I am trying to have my cake and eat it too. But a lot of what you just described sounds exhausting to me, but there are benefits to folks actually going down that path. What are some of those benefits?

Jessica Lackey: The benefits are, you get to expand more, you get to work with more clients, you get to do work that's outside of your... Especially if you work with partners or people that don't have the same experience that you do, you get to work on bigger, broader, more expansive projects, which can potentially lead to more revenue. When I started out, I was a subcontractor for another consulting firm. That's how a lot of us start is, we start out as subcontractors. I had really deep expertise in my old corporate experience, and that was a expertise that they didn't have quite as much boots on the ground experience as I did. So I got to give them a different show of expertise than they would've had available with their capacity otherwise. So it can be a benefit. You get bigger projects, more revenue because there was always an upcharge when you're working with team members, you can continue to expand your influence and get larger projects and more exposure.

Deb Zahn: And get projects you wouldn't otherwise get because no one would think a solopreneur could actually handle that. It increases your credibility in your market.

Jessica Lackey: Exactly. And you can take on multiple projects potentially at a given time knowing that you're handling business development work for some, strategy for some, implementation for others, all at the same time. When you're a one person trying to do multiple projects at the same time it's really tough.

Deb Zahn: So let's say someone has taken the time as I think we are encouraging them to really think through the nitty-gritty details of the pluses and minuses of whatever approach they're thinking. And now they're like, all right, I've decided and now I'm going to set goals. And what often happens is people say, I want to make this much money annually or this year and then boom, goal set, done. What would you suggest instead?

Jessica Lackey: Well, before you say, I want to make this amount of money, I would look really hard at your marketing pipeline and sales pipeline because just because you want more projects, if all of your projects are related to referrals and you don't quite know when they're going to happen and there's no consistent rhythm to those inbound conversations, that's where I would focus on solidifying first. Do you have a solid pipeline? Do you have multiple projects kind of waiting kind of in the wings, and do you have a business development process that you feel rock solid about? Because that's the leading indicator to more clients and that's missing from many of our consulting friends who don't really want to network and don't really want to market and haven't gotten a reputation for the type of work they do. It's business development first and foremost.

Deb Zahn: Right. Which is hard for a lot of consultants, particularly new consultants who are like, I wanted to do this because I wanted to do cool work and make money doing cool work. Which, yes, that's a fabulous thing to want to do, but you got to go get said cool work because you eat what you kill essentially.

Jessica Lackey: Yeah. So when you're setting the goal of I want to bring on more projects, I want to increase that revenue and support another team member, it's two things. It's again, locking down that business development. What is your strategy? Where are your channels? How are you showing up and how are you meeting new people? Do you have a strong consultative sales process? And then do you have productized IP? And it sounds so jargon-y when I say it, but do you have a process that you run people through that you could train someone else to deliver? Deliver with you, deliver on your behalf? Because if you don't have those types of projects and that documented process, then the uniqueness that you bring and the point of view that you have, it might be diluted by bringing someone else on too early.

Deb Zahn: Because if everything's bespoke, then you don't have something you could easily plug people into unless it's like project management. And even then, there's a way to do it and there's your way, and then there's all the gazillion other ways.

Jessica Lackey: So having that clear framework for how you work, your perspective, the problems you solve, that needs to be dialed in and something that people are coming to you for, because sometimes they're coming for you and sometimes they're coming for your process in your leadership, and we have to know which one they're coming for before we start thinking about expanding to other team members.

Deb Zahn: And I would say before you go out and do business development, I've fallen into that trap before where I show up and I'm hoping it's for a team, and they're like, well, we really just want you to do this. And I didn't really have time for that. So now I'm in a conversation that surprises me and it shouldn't have surprised me.

One of the things that I love that you talk about is metrics, and in particular, not just being financial metrics, but also energetic metrics, which I heard that term. I'm like, that's the coolest thing. So describe what types of metrics then, if they've got really clear goals that is based on the reality of business development, what kind of goals or metrics start to make sense if ultimately what you're trying to do is scale a business?

Jessica Lackey: Well, I think there are two different types of metrics here. The energetic metrics that might say don't scale a business, might be what percentage of your time is your own? How much time are you getting to spend quote unquote in your zone of genius because your zone of genius as a consultant might actually be doing client work. And as a consulting firm, zone of genius might start to shift into marketing and sales. Energetically, do you love cracking the problem with the client and watching the face as their light bulbs go on, or does that shift more to leading that team and watching them go through that transformation? So these are some of the energetic metrics that may say, I actually would trade profit for the freedom and flexibility and the ownership of these projects.

So that's the flip side, but some of the metrics we're looking at are leading metrics like, how many conversations am I having on a day-to-day basis, how many connections on social media platforms aren't a great proxy for business development, but how are connections leading to those conversations? Those would be some metrics on the business development side. Where are your leads coming from? Are they referrals? Are they coming from social platforms? And then on the time side, again, just thinking about where do we want to see spending our time and are we moving forward with intention on the goals that we set? Because those are some of the leading metrics that say, yeah, if I'm consistently moving forward on the goals I've outlined, then it might be time to bring on additional people that can help. But if I'm already overwhelmed and overloaded, having another person on the team isn't going to necessarily help with that. You got to get the rest of the house in order first.

Deb Zahn: Yeah. I love that. And doing it all quite deliberately, which is the sort of thread that I'm hearing through everything is, because what a lot of folks do is they'll set their financial goal, if even, and then they start to feel bad if it doesn't feel like there's forward movement because they're not measuring forward movement. So some of this is habits, some of this is mindset. How do you encourage folks to embrace that measurement is their friend in their business?

Jessica Lackey: I think the adage that, what gets measured gets managed. But I think we need to go even further upstream on those outcome-based goals and think about our activity-based goals. Am I networking with intention? Am I creating real conversations? Am I aware of where my time is going? That's one we didn't talk about on the metrics side is, how much time are you spending on business development? How long are your projects taking? That's one killer of consulting profitability is you think a project's going to take X amount of hours and it takes 30% more hours, and by the way, your contractors are going to bill you for that. And so at the end of it, you don't actually make any profit because you under scoped and over-delivered on the project.

So these are some of the activity-based metrics that help keep you focused on the nav- I think about a measuring a performance on both the strategic lens like you're flying a airplane, looking out the cockpit and looking at the horizon and saying, "Am I headed in the right direction?" But also keeping an eye on those navigational dials of, am I having conversations? Do I know where my time is going? Am I consistently profitable on my projects? Those are the leading indicators that let you know, are you headed in the right direction or are you off course?

Deb Zahn: I love that. And if you get used to them, I find that it reduces stress because otherwise you feel like you're in the feast and famine cycle all the time. And if your pipeline has big holes in it, it feels scary and it often causes people to run back to W-2 work. The one metric that I like is lead time between first conversation to contract. Because what I often see that people do is they don't measure on average what is that for the different types of work that I do. And so when they see a hole in their pipeline, they don't know, do I need to start having conversations a month ahead of time or 6 months ahead of time or 10 months ahead of time?

Jessica Lackey: Yeah. It's a really good metric. I almost didn't even think about that because I'm always of the mindset of I'm always having BD conversations, so I'm tracking. Yes, it's important to track time to close. I think it's also important to track time to close for small give-to-get type of engagements versus full-blown engagements and what is that conversion between them. Another metric is how often is your project leading to continued work? So if you're always just churning through projects and they don't lead to more expansion or small projects don't lead to large expansion, that would be something to consider. But I think if you're always having conversations, then the time to close is really short. But if you're not always having conversations, then the time could close, especially in this economic environment, could be a year or two. So I'm thinking about the pipeline. People look at me like I'm crazy when I say I have six to 10 good networking conversations a month, they're like, "How do you have time for that?" I'm like, "How do you have time not to do that?"

Deb Zahn: Yeah, because the panic you'll have later takes more time. It does.

Jessica Lackey: Right. And also, those conversations, those with referral partners, with potential clients, with other connectors in your space, you get to be a source of value to them just as much as they're a prospect potentially. And so I think that's where it's like I'm looking at the health of all my relationships, not just how many leads I have in the pipeline.

Deb Zahn: And you're talking about this in a way that I really like, which is not just how many sales calls am I having, or something along those lines. But you're talking about it as if real relationships matter, which is one of my favorite things to talk about in consulting is, you're not just trying to get people to buy, buy, buy, buy. You're forming actual relationships with real people. Say a little bit more about your approach to that.

Jessica Lackey: Yeah, I've talked about this on my blog. I have this spectrum of relationship marketing, which is really human-to- human one-to-one relationships. And then there's the concept of traffic-based marketing, which is paid ads, social, cold outreach. But then there's this part in the middle, which is also called collaboration marketing. Collaboration marketing is using one-to-one relationships to reach one to many. So it's through that relationship that you might be on a panel interview that's going to reach hundreds of people. It's through that relationship, you might get a press pickup. It's through that relationship, you might be invited to write a guest article, speak on a panel, be on a webinar, and those are opportunities you don't just get from cold pitching.

So how do we look at the relationships we're building in the communities and the practitioners that we know who speak about us in rooms we're not in, and how do we also use those relationships to gain authority building opportunities that we wouldn't get otherwise? No one gets picked up for a podcast or a PR press pitch by just cold pitching. There's almost always a relationship involved.

Deb Zahn: Yeah. Especially podcasts that give you that many that you actually want because they're going to be pickier. Love that. So let's say somebody wants to scale, and that's really what their whole intent is, is they want to start off small, but they want to grow over time. And I know this is your specialty. How should they approach that? Should they be thinking about it in terms of stages? What does that tend to look like in real life?

Jessica Lackey: So I have the first stage in my business-building framework called the sprout stage. You don't quite know what works. You don't quite know your positioning. You're like, basically, I'll take any work that comes at me and we see what works and we see what sprouts.

Then we start to move to strengthen. We start to look at our consulting business like a tomato plant where we prune off the suckers. We prune off those clients that are not a fit for us, those projects that are not a fit for us, the red flags and the bad fits. And then we start to home in on, OK, if those are not for us, what is for us, this type of project, this type of niche, we start to get some more landscape of how long each project takes, how much it costs to deliver, time-wise, profit-wise. We start to systematize and document our intellectual property. This is the strengthen stage where we're putting structures around our activity. This would be also where I would say make your first hire, which should probably not be another consultant. It should be bookkeepers and potentially assisting teams and if you're going to do more of that traffic-based marketing, get someone to help you with your marketing.

But retain for as long as possible your unique special sauce until you get to the point of scaling, which is when you're starting to document that special sauce into more white papers, case studies. You're starting to really show those results in a tangible business to business type of environment, you have enough cash buffer to bring on people with standard operating procedures and with clear communication protocols.

And then you're able to basically tide them over in times where there's not active project work. You can start with 1099s, contractors that can help you test out those onboarding processes. But when you're ready to bring on employees, you got to make sure you got the buffer in the cash to sustain when they aren't fully leveraged on projects. And those are the stages.

Then there's potentially sustaining, and then there's potentially a sunset model where you might want to go back to being a soloist. You're at a different stage in your career or a different stage in your practice, or maybe you decide that you don't want to be a consultant anymore and you want to be a keynote speaker and write a book and be a teacher of others and that's a fantastic decision as well. But those are the stages. It's sprout, strengthen and then scale.

Deb Zahn: I love that. At the last one, I'm just dying because I'm a rabid gardener, I'm dying to call it the compost and regeneration stage, where now you imagine something different.

Jessica Lackey: And that can happen even if you stay in consulting, maybe you've gone all in for a couple of years on a particular product. Maybe there's a regulatory change that you've gone deep with your clients on navigating them through that change. But then it's not even just your pipeline dries up. It's that is no longer as dire of a need in the marketplace so there are less projects. So you're not going to start from scratch, but you will have to rethink about your positioning and your assets and your talking points, and those are things that transition from one stage of your consulting lifecycle to the next.

Deb Zahn: Got it. Love this. And of course, you mentioned standard operating procedures, which makes me swoon. I love them because they make my life easier. So you're talking about systems also, which is sort of within that process of getting the systems in place that will support further growth. What are some of those that you encourage, and how should consultants be thinking about that as they start to progress through those stages?

Jessica Lackey: I think there are marketing and sales systems. So again, both the tech of how you show up and where you show up and the process for it. There's your delivery and communication systems. So are you communicating over email? Are you communicating over Slack? Where are you storing all of your documents? How are you handling project management when it's yourself, you don't really need, you can't have a Gantt chart, but when you're with a team, it's got to be really clear who's on the hook, when are things due and how are you communicating around each other?

And then there are systems for team. When you start bringing on an employee, especially if you're a small firm, how much lead time do they need to give you for vacation days? What are your policies with parental leave, with bereavement? Those are things that when we worked in big corporate or big firms, that was handled by HR. But now, if you're going to do that, you're going to be responsible for leading that team. Are you set up financially to pay retirement benefits or pick people up as a W-2? Those are some of the financial systems that we need to be thinking about as we start to scale and grow our team.

Deb Zahn: Love it. And all of that also relative to the decisions you've made about what you want your life to be like. So how do you keep the human part of it? The, I want to have a life, and the people who work for me want to have a life. How do you keep that human part in it?

Jessica Lackey: This is where I think slowing down is the number one thing. So when you are hiring someone and scaling because you've got a project that landed in your lap, that's probably the wrong time to be thinking about this even though it's like, well, if I turn this work down, then it's never coming back. One, it will come back. But two, how do you walk forward with intention? Are we bringing on employees? Are we bringing on project-based? Are we considering some of the implications that we have around our people and are we priced appropriately to pay them well and not just pay them the little bit that's left over, but really what happens when we pay them what their appropriate rate is? Those are the types of things that get lost real quick when we're quick to hire because we're not thinking about the long-term sustainability of what that partnership could look like.

Deb Zahn: Yeah. Oh, I love those. Those are great. And then I know one of the other things you talk about is collective wellbeing and ensuring that your business also focuses on that. How does that fit into all of this really good solid business advice?

Jessica Lackey: So collective wellbeing, it's you, your team, your clients, your community. If it starts to, when you start to bring a team member on, let's say the quality of your work goes down because you haven't spent enough time with them talking about your process, about your communication mechanisms, that's something to be considered. If things are starting to slip and delay project-wise because there are more team members involved, how do you guard against that for your clients? And then one of the things I talk about with community is when you start to bring on team members, are you, again, pricing appropriately and scoping appropriately for your clients? How are you communicating back and forth, about there are more team members there? So projects need to be scoped with a little more lead time. You can't do as much rapid turnaround of deliverables. I've been there big corporate, too. The client says, "Oh, I need this turned around by tomorrow." And you're the owner and you're like, "Oh, all right. I'm just going to give up, sacrifice my night and just do it." But what if that's a junior team member? How are you holding the line with your clients so that you're not pushing the burden on these rapid turnarounds to someone whose maybe not being compensated for that kind of sacrifice?

Those are some of the things that I like to consider because the top line revenue looks great, but if we're doing it without boundaries with our clients, without boundaries with our teams, and without considering the impact of having other people involved, it can go sideways real fast.

Deb Zahn: And if you care about your life, then you should care about the lives of the people that you're working with. And so I know having been in situations where somebody is a caregiver for their parents or they have kids, or they've made a deliberate decision not to work on Fridays, and it's none of my business to tell them they can't do that. Whatever it is, thinking through those details before you're like, oh, let's just bring a bunch of people on. This'll be great.

Jessica Lackey: Yeah, I love consultancies that have gone to four-day work weeks, but if you go to four-day work weeks and you have a team, you have to be really considerate of, are your clients going to respect that? Do you have lead time built in for the project where you cannot have to work on the weekend because you took Friday off? Those are some of the things that we consider as we, and again, if it's just you on the team and you don't work on Fridays, but something really, really urgent comes in, you might say, with this client with this time, I'm going to bend that rule. It's harder to do that when you have a team.

Deb Zahn: Yeah, agreed. So any other advice that you would give to consultants who are trying to think through all of the details that you've been talking about? Other than slow down, which I think is a fabulous one.

Jessica Lackey: Don't discount the power of being oversubscribed when you tell people you have a wait list. I know slow down is the number one thing, but when you tell people you have a wait list and you're saying, I'm booking for six months out, or right now I'm booking for 2024, I've got two spots. People tend to act with a deadline. I know B2B engagements always aren't quite as deadline driven, but I think there's power in saying, I'm increasing to raise your rates as you become more oversubscribed before necessarily taking on more work. How are you making sure you're getting compensated in your pricing per value appropriately in that work versus just doing more delivery?

Deb Zahn: And the funny thing is, it's sort of the other dimension of it. I have found saying no to potential clients because you have a six-month waiting list while you're figuring out where's the appropriate pricing, where's the appropriate team, and all those, nothing increases demand quite like that. And so that's where you have room to then reconsider the rates because your, basically, stock just went up because you said no. I've seen the look on people's faces where suddenly they get a hunger to work with you because people don't like scarcity and they respond to it accordingly. And I'm not faking it because I think faking it is bad, but it's a real thing.

And I love how you bring price into it as well, because I know a lot of consultants who are killing themselves and working really hard because they think that that's what they have to do in order to bring in the dollars that they need. And my point is always, but you've proven there's demand. Are you sure your price is right? And so how do you help people think through the price that would make more sense if they've actually proven that there's demand for what they need or for what they do?

Jessica Lackey: This is when you start bottoms up. How many hours? How many projects? What's the buildup? Let's dig into your financials and let's really look at the profitability. Let's look at the value you're getting for your clients, and let's look to make sure that your positioning matches your pricing, matches the value that you're adding, and it's all hangs together.

Deb Zahn: Yeah. Love it, love it, love it. So this is all wonderful stuff. Where can folks find you if they want to find out more,

Jessica Lackey: They want to find out more, they can go to my website,\welcome. There, I have a link to my service portfolio, my weekly newsletter where we dive deep each week into the intersection of business at the intersection of strategy and humanity, and they can listen to other podcasts on the topic.

Deb Zahn: Fabulous. Wonderful. Well, let me ask you my last question because it relates to everything we're talking about, is making decisions about life. So I'm going to assume you've made decisions about your life. So how do you bring balance to your own life? However, it is you think about that.

Jessica Lackey: So I'm really big on creative practices, so I spend some time crocheting and knitting.

Deb Zahn: Nice.

Jessica Lackey: You can't see this if you're on the podcast, but I make little crochet animals.

Deb Zahn: Oh my gosh, that's adorable. It's a little whale.

Jessica Lackey: Yeah. Anything that I can do to get back into my body and get out of the mental space and into a more physical capacity is definitely soothing for my soul and allows me to come back to my mental practice of consulting with more integration.

Deb Zahn: Love it. Love it. Well, Jessica, I want to thank you so much for being on the podcast. There are so many gems in here, I can't tell you. So thanks for taking the time to share them with us.

Jessica Lackey: Thank you.

Deb Zahn: Thanks so much for listening to this episode of the Craft of Consulting Podcast. I want to ask you to do actually three things. If you enjoyed this episode or if you've enjoyed any of my other ones, hit subscribe. I got a lot of other great guests that are coming up and a lot of other great content, and I don't want you to miss anything.

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