How to Fix a Failing Consulting Business

Welcome to today's episode of Black Belt Startup with Feras. Thank you for tuning in. What's new in the world of entrepreneurship? Last week, I had the honor of keynoting the Bronco Ventures class graduation at Santa Clara University. The room was full of early-stage founders. Some were undergrads, some grads, alumni, faculty, and staff. And they spanned— they were spanning a wide range of backgrounds and ambitions. And I can tell you from their questions and the conversations we had after the talk, it was clear these founders were hungry, focused, and well-prepared, the type I like. So kudos to the team at the Bronco Ventures at Santa Clara University for equipping these founders with the mindset, the tools, and the resources they need to take that next leap. And I didn't talk about how agentic AI is replacing us. I figured that ship may have already sailed, but instead I talked about a few inflection points from my own journey on making big commitments, because I think long-term success often demands them, and then how progress isn't always straight, it might look like a failure, but you're making progress, and then how the lowest point in one's career might just open the door to the best doors and the best outlook. So I'll probably write about this, about that talk I gave, and share it on LinkedIn, and also maybe do a live stream on it. But for now, I want to cover a topic that I hear a lot about. I'm about to start a consulting business, or I started a consulting business, and I hear about the failure rate for small businesses. 50% fail, 90% fail, depending on the source of the statistic you read. You'll see a high failure rate. So today's topic is on strategy gone wrong, and also on how to address these consulting companies that you're just starting, or maybe you started a while ago and you're stalling. Like, how do we prevent that failure from being part of those stats? I think sometimes we think of failures as we don't have sales, or maybe the offer is not resonating with the clients, or maybe I can't hire the right people, but I want to focus today on on timing. A lot of times here, it's not that we have the wrong strategy or that our offer is not strong, or maybe we don't have a clear market segment we're going after, but in reality, I think what quietly stalls the growth of many consulting and service businesses isn't failure, it's strategy done at the wrong time. Now, what do I mean by that? Examples: you start saying no to smaller clients too early. Excuse me. You hold off on raising your prices thinking that you're not ready yet. Or maybe you narrow your niche so tightly that your pipeline dries up. Or maybe you stay loyal to a positioning statement, a mission, or a specific thing that you fall in love to, that original idea that just no longer reflects what the market is actually responding to. So these decisions, they all sound strategic, and in the right context they are, but when made too soon or held on for too long, they don't move your business forward, they stall it. And when they stall it, this doesn't happen With a dramatic crash, but with a subtle and steady loss of momentum. The energy dips, leads slow down, and the clarity that once drove your action forward fades. And then despite putting in the hours and the effort and the thought, you're not getting the traction you expected. Now, some of you who are listening here said, you know what, I'm not started. haven't started my business yet, so is this relevant to me? Short answer is yes, because even if you are— if you're just new to the channel and you're listening to, uh, to this episode and you're thinking of starting a business, I want you to take actually a whole lot of notes because soon after you start your business, you're likely to run into one of the— one or more of these issues. So keep on listening. And for those of you who started and are struggling with what I'm— with these issues that I'm covering today, I want you to also let me know what your experience is like. How is it that you dealt with these challenges? How you fix them? I'd love to hear from you. And as a reminder, before we dive into the topic, a couple of housekeeping items here. Whether you're watching or listening live or tuning in later, I'd love to hear from you. Leave me a comment on any of the platforms on Facebook, on LinkedIn, on YouTube, email me directly at startup@feras.com, Feras spelled F-E-R-A-S like my first name, and let me know what is it that you're going through, challenges, wins, big wins, small wins, how you overcome challenges, and ask me questions. I offer this podcast here, this episode every other Thursday at 3 PM, from 3 PM to 4 PM Pacific, 67 Eastern, where I cover a topic and then I answer questions we get from the— I get from the community. So don't hesitate to reach out, and if you're struggling at all, just let me know and I'll be more than happy to help. Uh, and let's see, we have a comment here. All right, uh, it says, I believe your audio is muted. So That is not good if that's the case. Uh, Swapnil, thank you so much for the comment, but I can— I'm checking here. It sounds like the audio is going okay from my end, so maybe double-check on your end if you don't mind and let me know if you, um, if you can hear me now. Uh, but but it looks— everything looks okay on my end. And let me just double-check one more thing, audio setting, and check with one of my colleagues. Yeah, it sounds everything seems to be working well. So yeah, if you can swap, Neil, if you could, if you don't mind, just maybe leave another comment here to let me know if you are hearing me now. If not, Maybe, maybe I can check your, your own setting, but it does seem like everything is going well, and I checked with one of my team members and they can hear me, so I'll proceed. And again, let me know if, um, if there's an issue. Thank you. So, so yeah, send me your questions, leave me a comment. If it's something very personal, very private, you can email me at feras@startupwithferas.com. And I keep all this information confidential. I take a look at it. I'll reply back to you. And then again, my goal— I'm on a mission. I've built and I've grown several businesses, some to 7 figures, one to 8 figures, sold that business to Dentsu, the global media giant. And I've seen a whole lot of— all this gray hair that you see here is from starting those businesses and growing them. And yeah, also having 3 teenagers at one point in my life. But the idea here is that I also speak with a lot of founders. On the average, I speak with 1 to 3 founders every week, and I, I take a lot of notes. I learn from my own mistakes, and also I learn from what others are doing, and I share all this with the community. So don't hesitate to reach out. I'll be more than happy to be of help. Thank you so much for confirming that you can hear us. Thank you for— you're a loyal listener and participant in our community, so we appreciate it. And again, feel free to send me any an email. Let me know how you're doing, just offline. Let me know how you're doing with your own venture. I appreciate it. So jumping back in, number 1, being picky too early. And we have some slides here for those of you watching. So being picky too early. It is smart. It's important to have standards. And it's also very wise to know your ideal client or ICP or avatar or persona. That's really important, but too many founders try to skip the climb and start at the top. So some founders want premium clients, big retainers, big logos, long-term contracts before they've built any momentum, especially if they come from corporate where they are used to working with big clients and longer contracts. So the problem when you are early on your journey is that you don't just need revenue. Revenue is important, you need sales, but you also need reps. Reps in selling, reps in pitching, reps in sending proposals, reps in delivering and keeping the clients happy. And you need to sell more and to sell to larger clients, you need case studies, you need testimonials, you need to show that you have a process that works. So So when you work, if you say, if you are being picky too early, you're really not helping yourself getting those reps. So I want you, I don't want you to price yourself out of the market or like avoid smaller projects because they don't match the dream yet. That's not what I want you to do. I want you to take on, especially initially, take on smaller projects, not your ideal client, Price, maybe be aggressive with pricing initially, because if you don't do that, you won't have momentum, you won't have clients, you won't have deals, and, and the momentum will die very quick, very quietly. So, so these early projects, the messy ones, so glamorous ones, they help you build confidence, they help you build clarity and also credibility. So if you try to be too exclusive, or if you try to be exclusive too soon, you look yourself— you, you, you, you're going to look at yourself in the mirror after 3 months and not, not see any traction. You're going to lock yourself out of the process that builds your expertise. Smart founders know how to say and when to say no, and the brilliant ones know when to say yes, long enough to earn the right to say no. So there's a bit of a— there's art, there's science, there's a— business is part science and part art. And some of these concepts you can't really master overnight, right? You can learn how to write a proposal. You can learn how to pitch or start a conversation with a stranger. But as you do more of these, as you do the reps, you'll improve at it. And then you start to be able to act and react very quickly on your feet without a whole lot of thinking because you've heard a lot of rejections, because you've heard a lot of nos, because you've heard, you worked with very difficult clients. So again, don't be too picky too early. And later, as revenue starts to flow in, I don't want you to stay in that same zone. I want you to start to price higher. I want you to start saying no. But initially, or if you are struggling, you want to say more yeses and you want to really bend over backward to make these initial clients happy so that you can again get the logos, the case studies, the testimonials, so you can go then after your dream client. So let me walk you through some examples in, in, in sort of being a bit maybe too picky and too early. A brand strategist who declines maybe $800 projects because she wants to be seen as premium. She provides premium brand services, but she hasn't booked a client in 3 months. And these examples are real from different industries. We don't cover all the details to protect the privacy of people, but these things happen, and not because people are stubborn or, It's just people don't know. They've read a book or they listened to something and then it doesn't, it's not as applicable to that phase of the business they're in. Another example, a virtual CFO, fractional CFO keeps saying no to startups because he's waiting for the established 7-figure clients, even though he hasn't built a portfolio yet. You're not going to close a 7-figure client if you don't have more, some experience under your belt. Or maybe a consultant who refuses— another case here, like a consultant who refuses hourly work even though it would lead to case studies and referrals. They've heard that you should sell based on value or based on performance or project-based, but you're not getting those kind of projects. You're getting clients who want to pay you hourly. Take it for now. Okay. Another example here, a systems expert who only wants to work with SaaS companies despite getting inbound requests from maybe local, from local agencies ready to pay. So I get it that you want to be focused. I always say, if you watch some of, some of my videos, focus on your ideal client profile, understand your target audience. That's really important. Along the way, if you are getting leads and clients and business from outside of that and revenue is dry, it's okay to take on some of those less than ideal clients because you're building the reps, you're doing the reps, you're building the muscle. All right, so that is on that first point. The second point here, and again, if you have any questions or comments, I know there's a few of you who are watching live, please let us know. Let me know how you dealt with this or maybe things that are related to this and you're not sure, like give me the specific use case that you have and I'll be more than happy to address it. Now the second point here is skill stagnation, mistaking comfort for mastery. I'm not being judgy here, but a little success can feel like a green light to coast. You start getting clients, get some wins, you have systems in place, processes, checklists, maybe some, some consistency in revenue. And without realizing it, you stop learning. You assume— and this is very common— you assume that the version of you that got you here is enough to take you further. But in reality, what got you here won't take you there because markets evolve, clients raise their expectations, and there are a lot of environmental changes that that are outside of our control that take place now that weren't there when you started, maybe when we were doing well a year ago or so. So the business side of consulting demands a lot of new skills, sales, marketing, thought leadership, negotiation, and also operational thinking. And if you stop investing in yourself, if you're not learning, if you're not reading, Whatever areas of business that you feel you're lacking, if you're not learning, and also like areas that you're good at and you want to keep sharpening, if you're not learning, you quietly become outdated. And while, while you think in your mind that you're still delivering good work, it could be subpar. It could be way below what clients expect because, because the competition is on the cutting edge and they're learning and they're implementing that learning. Into their delivery, so there's who scale sustainably. That's what I've seen in my experience. They keep a beginner's mind. This this concept that I talk about it in Black Belt Startup, in in this shoshin, this Japanese concept of this beginner's mind, this mind with curiosity. You come in and you want to you want to be a you want to absorb all the knowledge that you can. You want to be a sponge and, and, and always learn to improve what you're doing and to add more value to the client. So, so if you want to have a sustainable business, you have to update your knowledge. You have to try uncomfortable things. Talking about your business to strangers, that's one thing. Sending that email newsletter to maybe a list of 200 people that you have that you've been really shy or you're not sure if this is going to work or they're going to open those emails. So try something uncomfortable, it's going to help you, and that builds a muscle, that curiosity of trying new things. So if you're not trying new things, you're not improving your craft and you're not sharpening your business instincts either. And when we stop learning, growth will stall and long, long, long, long, long before your revenue does. So I want to walk you through some examples here. Uh, in this category of, of— I don't want to say coasting, but not really not taking learning seriously. One is example of a leadership coach who hasn't updated her methods since 2019. A lot has happened since 2019, not to mention COVID, and wonders why client retention is slipping. There's no maybe mention of AI in, in her curriculum. A marketing consultant who's great at organic traffic but refuses to learn paid ads, whether it's Facebook ads or Google ads, and, and clients outgrow him. Again, I'm not saying don't focus on organic traffic and SEO, search engine optimization, if that's your niche, but at times, remember the context of this conversation. Sales are dry. You have one strategy that hasn't been working. Something is going wrong and you don't know what it is. So if you're getting— if, if one aspect of the business is not doing as well and it's dry and you're getting leads and clients, you see your clients grow and expand and they're tapping— they want to tap into your resources because they like you, they like your attention to detail, they like your responsiveness, and they have an opportunity to, to potentially offer you more services explore these new services, especially if revenue is slow. If revenue is dry, you can't be too picky, and you don't want to be too focused on this one thing. Another example is a web designer who won't touch strategy or copywriting because they want to take on full design, uh, or— and brand identity project for mid-sized companies or the enterprise. So while you're nurturing and working on, on the enterprise and the mid, mid-sized, uh, clients, if again revenue is, is dry, it's okay to do other things. Maybe again, maybe you're not good at copywriting. Maybe you can have a contractor who can work with you, and then you can— they pay you $50 an hour, you pay them $50 an hour, and then you can sell this at $125 an hour. You can also look into strategy and other, other aspects, and then The last example in this category is a career coach who's still using the same offer from year 1 despite changes in the hiring market. So the idea here is to be aware of the surroundings, changes in the industry, regulations that are updated, new technology that is disrupting processes, you know, AI here, and learning about what is impacting your market, your clients, your offer, and then, and then changing. Remember, learning is, is education and application, right? Now I know there's, there's a lot to do. I, I'm busy trying to sell, I'm busy trying to grow my business, I don't have time to learn. Well, you have to You have to allocate some time, maybe when it's slow Friday afternoon, block an hour to read, maybe Sunday night, maybe whatever works for you, block time to learn and apply what you learn into your processes, into your service. All right, the third point here is on overconfidence in assumptions. This is where founders fall in love with their own ideas. And at the beginning, that's not a bad thing because falling in love with your idea fuels you through uncertainty and resistance, and there's a lot of it when we start a business, but as your business grows, this rigid loyalty to a vision, actually, it could become a liability. We get attached to a niche, an offer, a pricing structure, or maybe a messaging angle that worked once but now feels off, and you keep telling yourself, you know what, maybe it's just a quiet season, or clients just don't get it, they'll get it in the future. But the truth is you've stopped listening. The market is always giving us signals, it's always sending us signals, and our job as consultants, as business owners, as entrepreneurs is to notice these signals. And if we're not willing to question our assumptions, especially the ones that used to work, then we're not being strategic and we're being blind. A good founder validates their idea. A great founder revalidates them consistently, not every day, every week, but once a quarter maybe. And if your business feels stuck and when your instinct is to double down, pause and ask. There are times where you have to double down, but pause and ask, what if the strategy that I'm loyal to is the thing holding me back? Let me give you, let me walk you through some examples. One is a consultant who insists on selling 3-month retainers, even though clients, prospects keep asking for audits or maybe or a one-off project. I get it, the value of retainer service is unmatched because it's ongoing and hopefully the client keeps renewing the retainers. But if you're not getting the retainer job yet, oh, it's okay to do an audit, it's okay to do hourly. Get that client, get the business, get that revenue. Or another example is a LinkedIn ghostwriting agency that keeps targeting tech CEOs Despite getting traction with executive coaches. Go where the fish are. If you're getting traction with executive coaches, service that, that segment, and then get the revenue, pay the bills, stop the bleeding, and then you can go after that. Or in parallel, you're going after the big, big contracts with the tech CEOs. Another example here is a service founder who refuses to change her messaging, although she's not getting any inbound leads. Again, please take this in context. I'm not saying you try something today and then in a few days you change it. You have to get some, some traffic to the landing page. You have to maybe get expert opinion from others and, and, and give it everything that you have. But at one point, if you are not getting any inbound leads and the messaging is not resonating, it is time to change. Another example here is from a sales coach who still offers cold outreach scripts in an area where prospects expect warmer, maybe relationship-led approaches with a lot of value provided. I mean, I'm shocked at some of the cold emails I get, some of them very sloppy, Not personalized, grammar, typos, all kinds of issues. And then I get some cold emails that are like, it's like a piece of art. Like someone really invested the time to do some research about me, about my business, about what I could potentially need. And then they craft that message and maybe they're using AI to do that. And that's totally okay. But the message comes in very personalized. And actually, I do reply. Those ones, I actually thank people and I tell them that they're doing a good job. And if I need that service, I still, you know, I follow up with the vendor. And I can tell you that cold outreach still works, but you got to do it right. You got to personalize it. You got to make sure it works for your client. So went on a tangent here about this sales coach, but the idea here is to make sure that you evaluate and you revisit your assumptions as things happen and change in the industry. Number 4, we got 2 more to go, 4 and 5. Number 4 is you're being too broad, kind of niching too broad. I don't know if that's a word, but you're way too tight. You're niching way, way too tight or you're being too broad. And I think niching down is probably the most overused advice in business. And yes, most founders still get it wrong. They either stay too broad. I help businesses grow. Very vague, very forgettable. What do you mean you help businesses grow? In what? How? Or they just go so narrow. I help vegan SaaS founders in Austin build pitch decks for millennial investors. Okay, maybe that's an exaggeration, but that's just way, way too niche. And then you end up trapping yourself in a micro market too small to scale. Both are problematic, whether you're being too broad or too niche or too narrow. Both are rooted in poor timing. And this is again part of the art of business. You don't want to be too general, you don't want to be too niche Early on, you're you're you're casting generally you're casting a wide a wide net and gradually over time you start niching down. So it's okay to experiment. It's okay to try different things because you'll you'll you'll never know what will end up sticking with you. So again, even over niching too early can kill your learning curve and and and your lead flow, and then under niching. For too long can make you just invisible in the market, in a very crowded market. The right niche is a moving target. It's all based on what your experience, what you've learned, who's buying, and where the traction actually lives. So keep that in mind. I know it's hard. It's a hard balance, but as a general guideline, Don't go too niche early, go a bit broader and then see what's working well, the industry that you end up enjoying doing more business in, where maybe your relevant experience is, your experience is very relevant to them, you have maybe network contacts in that vertical, all of those are good indicators that this is a niche you want to go after and then you can revisit, you can tweak, maybe when you do your quarterly review of your business, See if you want to expand maybe your scope or maybe narrow it down, but it's— this niching is a series of refinements based on data and experience, not on theory. Let's walk through some examples. And again, if you have— for those of you listening or watching live, if you have a question, let me know. Like, what is it that you're struggling with in terms of niching? Maybe you tried one thing that didn't work and you tried something else that worked and now you're not sure what to do. So feel free to leave me a question or a comment on whichever platform on, and I'll be more than happy to answer before we end today. So example here, a copywriter who serves anyone with a website, and then she's struggling to attract anyone at all. As we say, if you're targeting everyone, you're targeting no one. Another example is a strategist who helps female founders of ethical wellness brands in California Okay, maybe we've kind of expanded this example a bit more, a bit much, but you see some of this stuff. I speak with a lot of founders and some of them are niching too narrow— narrowly. You can't really scale past word of mouth. You might be getting some clients in this very niche, and you know, they say riches in the niches, I get it, but, but if you're just too narrow and you're getting some revenue, you might not be able to grow at all because, because That's it. You've sort of used— you've serviced the people that are serviceable. Another example here is a content consultant who resists specializing, so she's consistently and constantly explaining what she does, like this whole example about I help businesses grow. And then the last one is a fractional CMO who only works with fintech startups, even though she gets consistent traction with other adjacent verticals. So it's okay to specialize. We made a whole lot of money in several of my businesses in specializing, but early on, don't specialize. Don't go too narrow. All right, the last point here, the last issue, that's preventing companies from growing and where founders feel stuck is the complain mindset, sort of masquerading as justified frustration, and you probably, you've probably heard yourself say it, or maybe heard someone else, another founder say this, the market is slow, no one is buying right now, It's hard to stand out these days. People don't understand the value of what I do. I hear you. I've— those thoughts came to my mind many times, especially in the first business. And, and while those observations might feel true, but they really lead to growth. And it's a trap, I would say, of justified complaining, venting that sounds intelligent, but ultimately it It just replaces adoption or adaptation with blame. It's easy to point fingers outward when there's an issue. You know, I think Jim Collins, he said, when there's an issue, look in the mirror. When there's something— when something goes well, look out the window, you know, give credit to others. But when there's an issue, first you have to deal with it. Like, what can I do to fix that issue? So it's easy to point fingers outward, but the truth is every business is a system of adaptation, and the market doesn't reward frustration, it rewards evolution, evolution. So if we replace the question of why isn't this working with what do I need to change next, I think that will help you get overcome this challenge. And yes, conditions fluctuate, algorithms change, and clients ghost. But none of that is a reason to freeze. You're not going to get stronger by analyzing friction. I guess if you're a scientist, maybe. You get stronger by moving through it. And let me show you, let me walk you through some examples. And, you know, this is related to mindset, and I don't think we talk enough about mindset because there's a lot of fluff out there about mindset, but it's really important in entrepreneurship, in business, To keep— we talked about learning, that beginner's mind, but also when we go through tough times, when we go through a period of, you know, there's feast and famine, sometimes there's just no sales, there are no leads, and we start questioning everything we've done and our ability and the processes we have, or maybe my idea is just not viable. I get it. Don't let— don't lead Don't let these thoughts take over, you know, don't let these thoughts take over, influence your action, and make you, you know, not continuing to build and grow what you've started. It's okay to question things. We talked about questioning your assumptions. It's okay if you have a— if you have like, what am I doing? You know, the market is dry. That's a fact, but have I done more in terms of lead generation? Have I sent that weekly newsletter that I wanted to do? Have I gone to networking events? Have I researched my competitors? Have I gone on LinkedIn and downloaded my list of friends and followers and connections and reached out to those who potentially can buy from me or maybe can introduce me to other people? So instead of— it's okay to feel down sometimes, it's okay, like the market is dry, dry, I get it, okay? Vent for a couple of minutes, vent with someone who will listen, who will lend you an ear, but you really have to turn that into action. What is it that I can do to counter this challenge? It's hard, it's difficult, especially if you're a solo founder, you're a freelancer, but I don't want that feeling or those thoughts to control you or to just be prominent and dominating your thinking. Deal with them, address them, recognize them, and then see what you can do about them. So let's walk through these examples and then we'll wrap it up here unless we have some questions. Examples in this mindset category is about a mindset coach who posts daily content that— but she never adjusts her offer because nobody is commenting, nobody is recognizing what she's doing, nobody is Asking questions about the content. So again, maybe instead of stopping, maybe change your offer. Maybe change the way you write. Maybe take a take a course on how to write better for LinkedIn. But don't just blame it on bad leads. Or maybe or the other example here is a funnel consultant who hasn't booked a project in two months and keeps saying the economy is just. Folks, I'm not making this stuff up. I hear this all the time. Another example is a service provider who keeps saying people don't value this work anymore, but they haven't tested new positioning in over a year. You got to experiment. You got to try different things. And then last but not least, a branding expert who hasn't invested in improving their sales skills. And wonders why conversion rates are dropping. If you're getting leads, they like your portfolio, you get them on the phone and you're not closing them, maybe it's time to invest in sales skills. All right, so there you have it. We've covered these 5 areas that get people stuck, that people find themselves locked the strategy is there. It's in, in one context, the strategy is right, like the pricing piece I said earlier. It's okay to, to set a specific price for a specific client portfolio, but the timing could be wrong. So a lot of the— most of what I covered today has to do with timing, like when to apply a specific strategy. So if the current strategy is not working for you today, that's okay. Do something else. Adopt adapt or adopt a new strategy, but the same strategy that's not working today, like getting these mid-level enterprise clients, it will work in the future once you've done some of the prerequisites. So keep that in mind, timing is important. And before we wrap it up, a couple of things. I do offer a 20-minute private session. I call them Ask Feras, and they are 100% free. They're tailored exclusively to answer questions from founders. I learn a lot from these sessions as well, so feel free to go to startupwithferas.com and sign up for an Ask Feras. I offer 2 or 3 spots every week, and again, they're free. It's my way of giving back because a lot of people helped me along the way, and I want to pay it forward. We do have our YouTube channel, @startupwithferas. Again, Feras spelled F-E-R-A-S, so if you're liking this content, if you're benefiting from this content, click the like button, subscribe and share it with someone who could also benefit. And same thing on LinkedIn, on Instagram, on, on, on, on X, on all the platforms. Let us know, um, what you're liking. Share a comment with me and I'll try to, uh, again address it. I will respond to you personally or I'll address it in upcoming episode. And we have our Black Belt Startup, uh, coaching and training program, and we have a promotion that is For those of you who listened this far and want to make— take advantage of this offer, our program is a complete curriculum on how to start and grow your business, a professional services business or a consulting business. We help you set up your roadmap, how to get your first few clients, and then I offer weekly office hours where I can answer your questions. And it's all based on timeless principles in business and in martial arts. And we have the— let me see the coupon that we have for our— Podcast listeners is the 20% off on all things BBSU Black Belt Startup. We have we have a pricing course, we have the curriculum, and we have the curriculum with coaching. And it is the code is BBSU20 Black Belt Startup 20 BBSU20. So check it out. Go to blackbeltstartup.com. And again, if you have any questions, let me know. I'll be more than happy to help. Thank you so much, and see you next time.