Why Most Consulting Businesses Stall Before They Grow

Welcome to episode 102 of Black Belt Startup with Feras. Thank you for tuning in. What's new in the world of entrepreneurship? Let me start with this. Most founders think their biggest challenge is getting more clients. Now, to be fair, That's true to an extent. No sales, no revenue, no revenue, no business. And I've done a lot of content on building your sales muscles, but today I want to focus on something just as critical. What I've seen over the years and what a lot of research confirms is that many businesses don't struggle because of a lack of opportunity. They struggle because they become too complex too early. And the tricky part is it often feels like progress when it's happening. More services, more tools, more ideas, and you're just very busy trying to implement all of that. And suddenly what used to be and what used to feel simple starts feeling heavy. In today's episode, what I want to do is to share a set of strategies and insights inspired by a book I recently— an audiobook I recently listened to called The Founder's Mentality, and more importantly, how you as a consultant, as a service provider, can apply these ideas to your business as an early stage, especially if you're an early stage consultant. And I want to keep this very practical, so I'll walk you through a few key concepts and then how to apply them in your business. And of course, feel free to submit your questions at any time. Now, if you're new to this channel, welcome. I'm Feras, and I got into entrepreneurship over 20 years ago, 23 years ago now to be exact, after a very, very painful layoff. And I had zero background in sales. So I had to learn everything from the ground up, sales and marketing and delivery and all that good stuff, but through a lot of hard work, a lot of struggle, great business partners, and some luck, I eventually built several businesses. 2 of those businesses got to 7 figures, and one actually we grew, it's an analytics, it was an analytics consulting company that that we grew to 8 figures that I later sold to global media giant Dentsu. So I'm on a mission now to help the next generation of founders, those who wanted to turn their expertise into business, into a consulting business across all areas of business, whether it's IT, whether it's finance, whether it's marketing, whether it's workflow automation, AI consulting, you name it, I am here to help you. I'm on a mission to help you get there faster and avoid all the mistakes that I made and then the mistakes I've heard other founders make. Now, and before I dive into today's episode, I want to let you know that I love to hear from you, especially if you're new with us here. I get a lot of questions from the community here on YouTube or on LinkedIn or on other channels, and I have these weekly live streams to answer these questions. So you can, if you're listening or watching live, feel free to add your question, your comment, I'll address it. Or if you're listening or watching later, leave me a comment. I reply to all comments. And then if it's something very personal, maybe you haven't told your boss that you're leaving the company or you want to leave the company and you want to start your own business. So you don't want to put this stuff out publicly. You can email me at info@feralalhloula.com. @startupwithferas, and Feras is spelled like my first name, F-E-R-A-S, and I will be more than happy to— I will reply to your email and hopefully give you specific guidance or at least point you in the right direction. So let me know, let me know about your struggles, about the challenges, and also the wins, the successes that you're having. Just heard it from a lady up in Seattle who was struggling with proposals, and she emailed me on LinkedIn and she did her best to send this proposal and speak with the business owner, and then it was silent. It was silence for months. I gave her a couple tips, and she just messaged me on LinkedIn last week saying, Feras, your tip worked. I closed the deal. I'm so excited. I'm so excited. I'm happy, and thank you so much. So I love a lot— I love hearing these stories. I love when entrepreneurs apply best practices, listen from those who have been to where they want to go, and improve their businesses. So let me know if you have a specific question. I'm more than happy to address it. All right, let's step on the mat. The first concept, the first item I want to talk about is the real, the real problem behind slow growth. And the authors of the book I mentioned earlier, Founder's Mentality, Chris Zook and James Allen, they opened the book with this really interesting paradox. They call it the paradox of growth. They say growth creates complexity and then complexity kills growth. Complexity is the hidden killer of growth. And I've seen this at corporate when I worked in corporate before I was laid off. You'll see as companies grow, you'll see bureaucracy, slow decisions, You'll see layers of approvals and nothing moves as fast as it should. And then obviously, and of course, there'll be politics. But at your stage as a small business owner, as a small consultancy, those issues show up differently. They show up as too many offers, too many tools, too many ideas, too many directions. And what happens in your business is that you're trying to do all of that because you've heard something, you came across an idea, you, you, you're focused on planning and a financial plan, a business plan, a 5-year plan. You're doing all this work, you're busy, but then your business with, with this distraction, with the distractions and with all these ideas and all these, the different directions you're, you're going after, the business becomes harder to run. It'll be harder to explain and also harder to sell what you offer. So I want to share with you an example of something that happened with me early on, and I learned this the hard way. We started to build websites. That was our thing. That was 2003. That was cutting edge. We were going after very small businesses and getting a whole lot of rejections, People said, why do I need a website? So that's what we did and we started to do okay and it took us 7 weeks to close that first deal, but that was our core offer. Go to these business owners and say, hey, you want to have a professional image on this new thing called the internet and we help you get there. And through sales training, I learned to look for other revenue streams. So adjacent revenue streams. So we figured once we built the website, those clients at the time, they didn't know where to host their websites. Some people had computers in their offices or in their facilities, but we said, you know, we can host you in this reliable hosting environment and we'd make a buck. We would buy the hosting service from a very reputable hosting provider We buy it for $20 or $15, and then we would sell it for $30, $40, $50. So with 10, 20, 30 clients, had a very nice recurring revenue stream, a little bit of money. That was good though. So, so that, that made sense. It was, it was an adjacent service to building websites, and our clients actually appreciated because they didn't know how to, how to, or where to, to host their website. Now, as we worked with clients and started to deliver great service and clients saw us as reliable, punctual, professional, they started asking for help with other things. I remember my dentist was our second client. She needed help with a direct marketing campaign, so I said, yes, I can help you with that. Then we got another request to design a brochure from another client. Of course. Then, can you print postcards? Of course. So I kept saying yes, and I felt good selling, upselling, and I'd find a local graphic designer, a printing shop, and then I would outsource the work to them at a margin, and life is great. Well, of course, on paper, it looked like a very smart move. More revenue per client, better service, and then we're strengthening the relationships with our clients. At least that's what I told myself, but reality, the reality was different because these things were not our specialization. We had no idea how to manage printing postcards or brochures, so we ended up, my business, my co-founder and I, We ended up spending a whole lot of time managing these projects, and that was eating up our margin. Whatever little money we made was all gone by the hours we spent managing these things that we had no idea about, and more importantly, and in hindsight, vision is 20/20, our focus started to drift. And then came the moment that made it very real. We were referred to a public figure by a friend, by mutual friend, and, and this public figure, they were launching an e-commerce clothing brand. Huge opportunity. They had a good amount of funds dedicated for this initiative. We built their e-commerce website. They loved the design. They loved the functionality. That was our core service. So that was not an issue at all. They paid us. They took care of us. They paid us really well. Then they asked, can you design and print postcards for us when we launch this brand? And of course, I said yes. So we designed these postcards. We sent them to print, 5,000 copies. And then my co-founder and I personally delivered those boxes. And the client was excited. He opened the box, pulled out the cards, and then the person standing next to him looked at the card and said, there's a typo on the front. That moment, it just— Sinks. We missed it. No proper QA, no process, no real ownership of this type of work. And just like that, we didn't just lose money on that project, we lost a client with a significant long-term potential, and I felt awful disappointing not just any client, a friend of a friend who was becoming a friend as well. So we lost money, we lost a friend, and all because in my mind, I said yes to something outside of our core, and I didn't have the systems or the expertise to support it. So that's what I want you to think about before you think of scaling and having different services and having different offers, am I making things more complicated than they need to be? So, so that is something to evaluate for your business. Now, with all of that in mind, if you watched some of my other videos, I encourage founders early on, early on to try different things, you know, see what sticks. If you're not sure, you might want to try with a different vertical, you might want to try different company sizes, you want to try maybe different, you want to pivot into something different, that is always there in the back of the mind of the entrepreneur, but you really have to focus. If your core expertise is in X and that's where, and there's a market for that and you have traction and clients are responding well to your offer, to your pricing, to your approach, on delivering the service, focus on that. If you start, you can add on, you can add adjacent services, you can, you can start expanding your offer, especially if there's a need for those offers from, from the client that you already have, the clients that you already have. That's, that's all awesome, but make sure you focus on your core competencies. If you're, if you're having too many ideas, I— another book I'm, I was, I'm listening to right now And this one guy for one year, this founder, creative, smart, had 32 projects. He started 32 projects, never finished one, any one of them. So, so, so especially if you're the— if you, if you read and follow what, um, Professor Psychologist Kiersey talked about, you have different personality types including the, the artisan and And the artist, if you don't like structure and you're creative and you go from sort of one thought to another, you really have to be careful if you're a founder. You need to find a co-founder or a first employee or maybe a partner, a spouse who would make sure that you're focused on the core offer, the core business. Again, I'm not saying be rigid. You have to be listening to the market. Listening to external conditions, listening of course to your clients. And but if you're getting traction and you're doing well in one area, don't just cross-sell, upsell things that are not related at all to what you do. Okay, so, so that is the lesson here, is to reduce complexity and focus on, on fewer services, fewer offers, and do those right. The second point I want to talk about today is The founder versus operator mindset, and that's another big shift that slows founders down when they move from this founder mentality, and I'll describe that in a little bit, into an operator mode. So too early. At one point, you got to move from an owner to an operator, but early on, I want you to focus on a founder mindset, which is built around, you have that high sense of ownership, speed, bias to action, you watch out for every penny that you spend, all of that. Compare it to now an operator mindset, where you're thinking of process, optimization, systems, structure, All that good stuff. I'm not saying this is not important. Structure, systems, processes are key to scale. Without them, you cannot scale, but I don't want you to be hyper-focused on processes and systems and structure before you have consistent demand, before you have consistent sales. So if you're still figuring out who you serve and what you offer and how to price it and how to get clients, then the focus should be on action on these things and how to get clients and how to validate the offer and how to service clients better, not on optimizing your processes. And a lot of founders get stuck in that area. They're, in my case, I was too scared to go out and sell, My co-founder and I were, we just found reasons to stay at home and not go out and knock on doors. Eventually, we had to. Eventually, we mustered the courage to leave my partner's garage, put on, you know, look good, look professional, and go and knock on doors. That's what we had to do. So we were busy for weeks. Let's look at our different pricing strategies. Let's look at our 5-year growth plan. Look how much money we will make. Look at these amazing spreadsheets. But what I want you to do is, is focus on doing the work initially. And this is, I think, very applicable, especially back to Kiersey, Professor David Kiersey, and his framework. He talked about now 4 types. I mentioned artisan and the artisans and, and, um, um, but the other one I mentioned earlier. But the other 2 that are more likely to fall into this trap here, the rationals and the guardians. Those who are like systems, like processes, like frameworks. They want the perfect model. They want the perfect process before they do anything, or the guardians who like structure, they like stability, they like predictability, they like to have a solid foundation before moving forward. So, so if you're of this type, you really have to be careful about spending your time developing all this infrastructure without actually talking to clients. So what I want you to do instead is knock on doors, and if that's very difficult, cold emailing, that's one thing you can do. Cold calling, very hard to do, but have real conversations with potential, with real potential clients, and I cover this in a lot of videos in terms of I'm a big proponent of founders being out there, unless you happen to live in a place where you don't have customers, small city, or you're in a different country, you can do things, you can do things locally still to practice the pitch or the conversation starter, as a better name than the pitch, because you as a consultant, you want to have those conversations not just to practice to tell people what you do, but also to listen Listen to the problems they have. Listen to the issues they have with the other providers that you are unseating. Listen to the issues. Is it an issue of cost? Is it an issue of quality? Is it an issue of delivery timeframe? Is it an issue of accessibility, responsiveness? Once you are out there speaking with potential clients, You're capturing all that information and then you're mapping this to your strength. Like if you're a very responsive person, just naturally you are, and you're hearing clients complaining about vendors who are not very responsive, that's what will make you stand out. Like you don't have to work very hard to become responsive because that's just your nature, right? If you have a high attention to detail and you make sure everything is done right and quality is, is a top value for you, compete on quality, right? And maybe compete on a premium price point because your responsiveness and your quality are top-notch. So that's why it's really important for you to be out there having those conversations and not which is the founder mindset that buys toward action, that speed, and not having the operator mindset where you are focusing on, again, systems, processes, and structure. Again, to say it for the 3rd time, I want you to focus on structure and systems and processes, but a little bit later down the road. Initially, conversations, sales, getting clients, delivering to these clients, making those clients happy, making them delighted, getting amazing testimonials and case studies, and then selling and upselling and, and growing that revenue stream that you have, right? So initially, to recap this point, we don't need better systems yet. We need more reps. All right, the third point I want to talk about today And let me make sure if we have any— oh, we have a comment. Let me get to that comment. Let's see, this is from Conduct Consulting. Thank you for these insights, uh, my friend. I appreciate it. Thank you for, uh, for being on this live stream, and thank you for your kind words. If you have any questions, any comments, feel free to drop it in the comment. I'll be more than happy to answer it before we the end of this session. All right, thank you. Um, now the third point I want to cover is on staying close to the front line. Now in corporate, the front line means if you're the CEO and you have 200 people who work for you, front line means employees who are dealing with customers. They're the closest thing to the pain points of the customers, to the complaints of the customers, to the amazing feedback that customers might be giving you, right? So you want to, you want to pay close attention to, to, to customers and to the frontline employees. But for you as a, as a small consultancy, it's simpler. Initially, you might not have any employees, or later when you have employees, they're then you want to be close to these employees who are interacting with clients, but for you, initially it's very simple, it's your clients, and I think this is where a lot of early-stage founders drift, you're initially pitching, you're marketing, you're trying to close deals, and then as you get busy delivering and you're making money, and that's great, you start— you stop networking, or you slow down on your networking. You slow down on, on keeping your ear to the ground so you understand what's happening in the marketplace. So, so that, that is, that is another danger. So, so yes, you want to spend some time, you want to focus a lot of time on delivering what you sold, but if you want to avoid The very common thing that happens in consulting, the syndrome that's known as, um, from a revenue perspective, from a business perspective, consultants go from like 2 extremes, from feast or famine. So at times we're super busy delivering clients, making money, and then it, it's dry. There's, there's no revenue, no clients, no projects. What do I do? We're panicking. So one way of addressing this feast and famine is you'll go through phases. If you're very, very busy with delivery, you cannot ignore marketing and networking and connecting with leads completely. You can reduce that effort. You can focus 70% of your time on delivery, 80% of your time on delivery, 10% on admin and paperwork and back office type work, and then maintain some level of consist consistency. Maintain some level of consistency. I can't say today. Maintain some level of consistency in outreach. Now that could be if you're a bit more established and you have a mailing list of your clients, you're sending your weekly, biweekly, or monthly newsletter updating your clients on what's going on, sharing a case study, industry insights, all that good stuff. Or if you don't have an email list yet, you're out there meeting people, which I'm a big proponent of, or you are planning maybe a paid marketing campaign, or maybe you're doing some warm outreach to your ex-colleagues, ex-suppliers, ex-vendors, ex-classmates. You're telling the world about your new consulting business. So all of that, are things you can do. Some of it again will be sort of guerrilla marketing type where you're not spending money but you're spending time. Other, you might have associated or you might have allotted a budget to a specific marketing campaign. So when you're very, very busy delivering the service, servicing clients, do not ignore marketing. So that is It's hard. It's a hard balance, especially when cash is coming in and clients are happy and they're keeping you busy, but to remember things could change in a— like all of a sudden. I remember recently actually, we have a business out of Dubai, a company in analytics called ESense, very established brand. We've been in Dubai for 13, 14 years now, and the business is doing well. And earlier, a few months ago, the war broke out— hostility, and then the war broke out and things were impacted. Like, who guessed that something like that would happen specifically to Dubai? So, so external factors. If you're in the supply chain business and then tariffs were imposed your business is impacted. If you're in the data privacy business and there's some new regulation, you're impacted. So just, you never know. I'm describing things that are more sort of at the macro level, external factors. Those could be unknown unknowns, but you never know what could happen to you. or to the business or to the environment that you operate within. So keeping clients happy is one thing, and get that money in, get that cash flow in, and then maintaining some level of outreach, some level of marketing, some, some level of interacting with potential clients is, is really important. So, so staying close to the front line in the sense that you want to be close to clients And also close to new leads. And I think if I were to give you one KPI, one key performance indicator, especially for new consultants or those who are struggling with sales, there's one thing you should be tracking: the number of conversations per week. The number one KPI, the number of new conversations per week. Set that, set that as, as a benchmark and find ways to have these conversations. You can't be just chasing one lead and they're promising you this 5-figure contract and it's going to have a retainer with it and that's going to make the rest of the year and you put all your eggs in this one basket, this one lead, and then something happens. It— someone I know came to us for some consulting, and, and he and 3 other highly, highly qualified, highly credible and knowledgeable consultants in their niche, and they left their jobs and started a business, and they're going after some top-level, some Fortune 500, Fortune 100 clients because that's their background. They've worked with clients of, of clients of that stature. So, so they had that first deal, they're all happy working on this deal, and then the client, due to some external factors, had to cancel that contract. And then for months it was, it was famine. No business, no leads, no clients, no business, no revenue, right? So, so While you can aspire to have this one amazing whale as a client, that's great, but you never know what could happen to you. I remember it happens more often than people think. We had another Fortune, very well-established brand, I won't mention it, this is almost 10 years ago, and we signed this initial implementation, it was a 6-figure contract with, I think it was about, I think $12,000 or $13,000 a month of retainer, a lot of services. This is when we were, much more established. We were close to 8 figures at that time. So they're happy, we're happy, we're going on site. It was, it was in another state. We had our top consultants on it. And then there was a merger, merger and acquisition, and a new agency came in and they're doing everything for that client, and they had to cancel our contract. Now we had some terms to get some protection, because we hired for this project. Um, so, you know, it wasn't— didn't really have a big impact on our business. We did lose a large client and a, a, a significant amount of revenue, but we had some protection for a few months. We, you know, we got compensated for that. So, so anyway, we survived. It was fine. We were doing well financially. But if you're just starting out and you get hit by something like that, if you're relying on one lead that could actually not just damage the business, harm the business, but also psychologically you feel awful. So always, always, always take care of the clients, deliver on what you promised in the sales process, but maintain some level of action, of outreach action, maintain some level of marketing and sales, even if it's 5% of your time, keep that going and establish a way for you to network with people, go to conferences, go to exhibits, go to local meetups, find places where your potential clients are and be there. So those were the 3 points I want, or strategies, insights I wanted to cover today. We talked earlier about the real problem behind growth and the too many ideas, the too many services, the too many offers, then I covered the founder, mindset versus the operator mindset. Yes, for systems and processes and structure, but not early on. Early on, focus on finding clients. And then last but not least, I covered staying close to the frontline. And in your case, if you're starting out or you're a smaller agency, the frontline for you, not just employees who are dealing with clients, it's you staying in connection staying in connection with clients, with leads, with those who are likely to buy from you, even if you're very busy at delivering what you just sold, right? And before we wrap it up, if you have a question or a comment about growth, about starting out a business or about growing, let me know. Leave me a comment here or email me at info@startupwithferus.com, and I do, for those of you who are— let me share this. I want to share this with you quickly. I, um, one second. Um, this video, if you're, if you're struggling with sales— so we talked a lot about today things outside of— didn't talk a lot about the techniques or the tactics and strategies for sales. But if you are struggling with sales, if delivery is okay on your part, if you are not distracted by many offers and too many ideas, but you're struggling with sales, check out this video called Why Most Consulting Businesses Stall Before They Grow. No, this is— no, wait, this is— no, no, no, no, not this one. My bad. Uh, yeah, um, The Ultimate Guide, The Ultimate Guide to Sales for Consultants Without Feeling Salesy. I talk about it. There's a mindset shift for you as a consultant. You're a problem solver, you're not a salesperson. So check out this video. Um, I have 10 steps that you can apply right away and improve your chances of closing deals and also to just sell more confidently and solve problems more confidently. Use it this week. That's it for today. Thank you again for being here, and we'll see you next time.