The industry of Consulting has been around for thousands of years. In the 1890’s consulting companies emerged as firms launched by university professors. These firms typical specialized in the area of expertise that the professor was in.  In 1914, Booz Allen Hamilton launched a consulting firm that provided service to both private corporations and government. As the industry has evolved so have the types of consulting specializations; such as marketing consulting, financial consulting, HR consulting, IT consulting and many more. Consulting has even been able to drill down to have specialization in industries, such as financial consultants primarily for restaurants or healthcare. Today, consulting has become a $250 billion industry.

With the ever changing profession and demands on consultants, the industry has further evolved its consulting models. Let’s explore four primary consulting models. Each model has its own purpose and functionality. Each model will have a different growth pattern and end goal. Even though a consulting firm may begin with one model they may find that another model aligns better with their ultimate vision.

The four primary consulting models are, Leverage, Product-Based, Customized and Hybrid. Let’s take a deeper look at each one. Determine which consulting model your firm currently operates as and then determine if it is in alignment with your ultimate vision.

Leverage Model: This is where there are various consultants on staff to service the clients with a team focused approach. The entire firm operates under one business model and service delivery model. The consultants bill as a set rate for the work done and the owner/consulting firm is paid a set percentage of the bill rate. The firm will have one primary administrative team and operations support team who work for the firm, not the individual consultant. Consultants adhere to the policies, procedures and bill rates set forth by the consulting firm. The owners’ primary role is to focus on sales, marketing and operations. The team depends on the owner / consulting firm to bring in enough clients to keep their calendar full. This model requires a solid marketing strategy to bring in new clients and to attract qualified consultants. The model demands a larger number of consultants on staff than a traditional firm. Often times, consulting firms who have adopted the Leverage Model host large events or have large advertising budgets to capture more market share. This type of consulting firm is one that can be easily sold or acquired.

Product-Based Model: This model is the only one that does not tie income to time. The consultant packages their expertise and services into products for purchase. In this model the client does the actual work with the guidance of the consultant by way of the products. Packaging expertise can be done in courses, memberships or subscriptions for access to information, templates, systems and processes. Clients who are looking for roadmaps and guidance typical gravitate to these consulting models. Consultants who specialize in specific industries can package their services for their market. For example consultants who work with coaches, restaurant owners, cosmetologist, educators, speakers, authors and so on develop products specific to their target markets industry. Again, this model is more focused on moving products not moving services therefore time spent working with clients is not tied to income levels. Often times, consulting firms who have adopted the Product-Based Model have a strong product development team, marketing team and consistent advertising campaigns. This model requires very strong supply chain management and internal processes for streamlining. This type of consulting firm is one that can be easily sold or acquired.

Customized Model: This is the traditional consulting model that many if not all consultants start with. The Customized Model is where the owner is the primary consultant that is very hands on with every client and guides the service delivery for each client. Each client receives a customized plan therefore this model is where income is directly tied to time. Often times, this model is referred to the feast or famine model. If a few clients stop service, the consulting firm is affected financially. The owner is not only focused on bringing in new clients consistently but they are also focused on service delivery, operations and everything else needed to run a business. This model typical has an income ceiling and growth ceiling for the consultant. The primary consultant typical hires support team members to service the client; however the consultant remains the leader and face of the business. In order for this model to be financially successful, clear systems and processes are mandatory otherwise the consultant will suffer from burn out and income stagnation. Consulting firms who adopt and remain as a Customized Model must have strong business networking, stellar service delivery and loyal clients. This type of consulting firm is hard to sell or be acquired.

Hybrid Model: This is one that is more contemporary and offers the consultant and the firm more flexibility, revenue growth and opportunities to have the best of both worlds. This is the best option for consultants who enjoy being hands on, but don’t want their income to be 100% tied to time spent servicing clients. The Hybrid Model gives the consultant a healthier balance between marketing, advertising, product development, team size and client management. This consulting firm model is a blend of either Leverage or Customized with Product-Based. The consulting firm can choose which model will be primary and which will be secondary. Many consultants who launched as a Customized Model firm have adopted Product-Based easier than switching over to the Leverage Model. This type of consulting firm is not as hard as Customized to sell or be acquired. But it does have a unique feature to it, where a portion of the business can be sold or acquired instead of the whole business.

Through the evolution of consulting and the demands of the marketplace, consultants are now faced with so many options and opportunities today. Determine your current consulting firm model, evaluate your ultimate vision for the firm and then adopt or sharpen the model that is the best fit for you.

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