Consultancy needs to change. Here’s why

Four-fifths of new consultancies fail within their first two years. Mine was nearly one of them.

What follows is a story about why I’m here writing this, and hopefully why you’re here reading it. It’s a story about how independent consultancy is hard — and why I’m passionate about changing it. And, in the process, making the working lives of independent consultants less punishing and more rewarding.

A quick origin story

Two years ago my consultancy Corporate Punk won a national innovation award alongside a much-respected client. Shortly after accepting the award I returned to our table, where several other clients were applauding us. If you had told me at the outset that we’d have made it to this point, I’d have laughed in your face.

Forgive the brief humblebrag. The point is that we had very nearly not made it, and we’d carried on very nearly not making it for many years. It had meant leading my consultancy through two periods of near insolvency; three major bad debt incidences, including one long running and brutal legal case; myriad pitch losses; and a series of client engagements that had started with great promise then, for reasons beyond our control, fallen apart.

So what, you might say. Success is hard won in any field, and most small businesses don’t survive the journey. I had no right to expect it to be any different for us.

But the fact is that it is different for consultancies like ours: it’s even harder than it is for other small businesses. 

Most of us get knocked out

According to the US Bureau of Labor Statistics, 80% of new consultancies fail within two years. Figures in the UK won’t be much different. 

That means that four-fifths don’t make it past the first lap or two. This outstrips the general small business failure rate by a considerable margin (roughly 60-70% in the UK, measured over three years).

Behind almost every failed independent consultancy is an all-too-human story of struggle, disappointment and financial hardship. 

But there is a knock-on impact: the loss of opportunity for that individual (or group of individuals) to harness their unique insight, knowledge and experience for the benefit of clients who need their skills. 

People start consultancies because they feel they can see and solve certain problems better than anyone. It seems reasonable to suggest that only 20% of people getting to exercise their ability to do this for more than a year or two might be resulting in a lot of lost potential. 

Not to mention a lot of client problems going unsolved.

The fittest do not always survive

It can be easy to adopt a hard-nosed attitude to all this. You might suggest that markets have a wonderful way of weeding out mediocre talent. 

But this assumes that the consultancies that do make it are the ones who can add the greatest value. Which seems questionable when trust remains the hardest earned currency in consulting (Google it).

That itself is perhaps not a surprise when Gartner research indicates that nearly 70% of transformation projects — the kinds of projects that tend to require consultancy input — fail to achieve their stated aims in whole or part.

What if, instead, those who survive are not the fittest from a talent perspective? What if they just happened to have access to sufficient resources to stay the course?

Support across the industry is poor

Even a cursory examination of the available options suggests that such resources are hard to find. There are three common types of support for new consultants and consultancies. 

The first is mentors and advisors that are known to the individuals in question or their network. There are some decent ones, but client feedback over years and years indicates that they are rare. Too many advisors lack the insight or skills in professional development required to add sufficient value.

The second is specialist (often online) consultancy training propositions such as those offered by the major business schools. They tend to be primarily concerned with sales and marketing. This is no bad thing in isolation but it neglects other vital survival skills. Their courses also tend to be archetype and exemplar focused (i.e. ‘if you do this, and embrace this model or behave like this person, you will thrive’). This negates the unique potential and sovereignty of the individuals participating, which compromises their ability to develop businesses that only they can.

The third source of support is what we might term “search engine fumes”. This includes most stuff given away for free online. Indeed, ask any consultant about their late-night Google searches and you’ll hear a grim tale or two. Massive Online Open Courses (MOOCs) also reside in this bucket. They are basic, generic, and low value.

All this conspires to create a situation where people who have the potential to be brilliant consultants and form brilliant consultancies don’t get the support they need — and are likely to get half-a-job, one-size-fits-nobody advice even if they do get it. 

The likely result? They will churn out of the market or end up failing to make good on their initial promise.

Luck shouldn’t come into it

Which brings me back to that awards evening. 

I can’t claim to be smarter than most other consultants, any better at sales, or more cut-throat. But I had enjoyed access to some world-class mentors and advisors, as well as a supportive network. This helped me to navigate the challenge of building a consultancy that reflects both my value and my values. 

Frankly, given the paucity of support available for people in our industry, I had been one of the lucky ones. Many others — who might have had more value to add, and whose work might even have had industry-shaking impact — hadn’t. 

That feels wrong, and it’s something that needs to change.

So I intend to change it.

It’s time for a rebellion

A rebellion against the idea that independent consultancy should be a lonely struggle where the odds are stacked against success.

A rebellion against the delusion that small firms are at the mercy of far bigger clients, their budgets and their occasionally terrible behaviour.

And a rebellion against the idea that to succeed there is a formula that you need to learn, then emulate. None of this is true. Indeed, as we’ll see, it’s beliefs like this that actually prime independent consultancies to fail.

Interested in joining our rebellion? Check out The Consultancy Business Podcast.

What to take from this article

The fact that most independent consultancies don’t make it isn’t a reflection of their value. It is because of the unevenly distributed nature of support in the marketplace.

Explore more