EP146: The Revenue Pyramid – How To Structure Your Consulting Business

“When you work with a base of 5-10 clients long-term, you tend to get fantastic results so your clients will renew and send you a lot of referrals, which creates a self-perpetuating business.”

Traditional consulting businesses are mostly made up of one-off projects. That means you’re constantly on the hunt for new projects, which means you’re constantly on a revenue roller coaster. You know what I mean: it’s where your income fluctuates wildly from month to month, and you’re always stressed about whether it might dry up completely.

Consultants, you can share your gifts, talents, and skills without constantly chasing new clients when you structure your business according to my revenue pyramid. Learn how to build your consulting business model so you have peace (and get better results for your clients) in this episode of the Profitable Joyful Consulting podcast.

 

Key Areas Discussed:

  • Introduction 
  • The structure of traditional consulting businesses
  • What’s in my revenue pyramid (and why it’s the best way to grow your business)
  • The two things that happen when you structure your business using the revenue pyramid 
  • How the revenue pyramid grows itself 
  • What you can do when you don’t have to be on the hamster wheel of constantly getting new clients
  • Results my clients get when they use the revenue pyramid 
  • Why you don’t actually need a bunch of funnels, Facebook ads, and marketing flavors of the month
  • When one-offs and shorter engagements can work for you 
  • What I love about this model  

 

The hamster wheel and revenue roller coaster aren’t sustainable or joyful. Learn how to hop off and implement this really doable system in your business for more profit, joy, and yes – peace – in this episode on YouTube: https://youtu.be/LrPIrS4G-aY, or or your favorite podcast app: www.samanthahartley.com/blog-podcast.

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Ask questions, share insights, find colleagues. Click here to join

 

💡 Work with me to multiply your revenues without exhaustion.

 

Ready to add $150-750K to your business? Click here to book a 12-minute call with my Growth Strategist.

 

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The Revenue Pyramid – How To Structure Your Consulting Business

This is season thirteen. We’re talking about gifts and talents, skills and expertise. In this episode, I want to talk about a unique way to structure your consulting business so that you have peace, the capacity to share your gifts, talents, and skills, and you are not constantly chasing new clients. I call this the revenue pyramid. The way traditional consulting businesses are structured is it’s mostly made up of project work. You do a project for a client, that one ends, you look around for more clients and you do a project for a client. A lot of times, these are one-offs. Sometimes, they’ll be longer term. They may be three months and you may even sometimes be able to layer on the work. A lot of times, it’s a project and hunt.

That means a revenue roller coaster. It means a lot of stress and constantly looking for clients. That can be when you’re doing workshops or consulting engagements, no matter the variety of ways that you’re working. A lot of times, that’s a start-stop or highs and lows in the revenue flow, as is the case in traditional consulting. I looked at this a few years ago and remembered how the financial advisors I’d worked with had recommended that we lay out a portfolio. They had this idea of your pyramid. At the bottom, you wanted to have more stable investments like bonds and things like that. The middle was mutual funds, like mild risk, and the top could be your riskier investments.

The point was that you, as an investor, felt like you had some sense of peace of mind at the bottom of the pyramid, that you had a sense of stability there. That’s why I took this traditional consulting model and flipped it upside down so that all of the one-offs go at the top and the bottom of your pyramid is made up of long-term engagements. The transformational engagements that I teach on this show and teach in all my programs as the way to work with your clients are long-term transformational engagements. They’re at least a year and $100,000 a piece usually. That is the base of your pyramid.

If you think about the idea of the path to $2 million, that’s the name of my program and that’s what most of my clients are on. They want to be somewhere between $500,000 and $2 million in their businesses. What’s the best way to do that? If you try to do that with these one-offs, you are constantly on the revenue rollercoaster, stressed out, and constantly looking for new clients. To me, it’s not the best way to grow a business.

If you have instead 5 to 10 clients at the base of the pyramid valued between $50,000 on the low end, $250,000 can be more, have some clients who are charging more, but just that in general as a foundation for your business, then what happens? You end up feeling peaceful. You have a sense of steady revenue coming in and you can relax and not constantly be on the hunt for new clients.

The second thing that happens is when you work with clients longer term, you’ve heard me say this before about transformational engagements, you tend to get fantastic results because you have the capacity and time to dig in and do great work that helps them to get great results. When clients get great results, what happens? A lot of times, they’ll renew. These clients that are one-year engagements go on to work with you on and on. I’ve had clients who’ve been working with me for 6 to 10 years, on and on. That means that, again, you’re able to dig in and do better, ever deeper work with them. You get a lot of referrals because these happy clients are going to know others.

 

When you work with clients long-term, you tend to get fantastic results because you have the capacity and the time to dig in and do great work that helps them get great results.

 

Sometimes, it’s just a self-perpetuating business. From this base of 5 to 10, you generate enough new clients who come in and replace anyone who stops working with you for any reason. If you lose one, they’re easily replaced by either a referral or someone who comes in. When you’re working this way, how many clients do you need to add? Interestingly, I’ve always asked new consultants when they come to me and say, “I want to add $150,000,” or, “What’s your goal? 500,000, I want to add that to my business.”

I’ll always ask, “Can you add that in a single client?” Sometimes they’ll say, “$150,000, I think I could,” or “$500,000? No, that seems too much.” “Could you do it in two times $250,000? Could you get two clients at $250,000 a piece?” “That still seems high.” “How about four times $145,000?” “Four clients at $125,000 a piece? I think we could do that.” Instead of thinking like, “I need to go get clients. I need to add $500,000 to my business,” $500,000 times one, that’s a lot. No, what you need are four clients.

For most of us consultants, what you need are 5 to 10 clients. You probably already have some right now. If you think about how many you need to add, it’s usually not that many. It’s usually 4. Can you add four clients over the course of the year? I’ll bet you can. It’s a different way of thinking about marketing a business. Most business owners out there are thinking about marketing their small businesses because you’re building something that is $500,000 to $2 million. You’re building a base of clients you’re going to work with for a year. Not 37 at a time, just 5 to 10.

We can talk about who goes into the middle and the top of the pyramid in just a moment. What I love about the revenue pyramid is that it gives you this sense of spaciousness in your marketing. You’re not on a hamster wheel. What can you do? You can build your brand. You can use thought leadership. Put your ideas out there and have them discovered, make a difference in your industry, and have those clients come to you because you don’t need 40 a month to come to you. You just need maybe 1 to 2.

 Profitable Joyful Consulting | Structure Your Consulting Business

Structure Your Consulting Business: What’s to love about the revenue pyramid is that it gives you this sense of spaciousness in your marketing. You’re not on a hamster wheel, so you can do so much more.

 

Honestly, most of my clients have to be considerate about how many new clients they take on because the onboarding can be heavy. If you have 5 to 10, you have to budget how many you can add. Most of my clients only need to add 1 to 2 clients per quarter. How doable is 1 to 2? 1 to 2 clients per quarter is doable.

This business is for you if you’re excited about long-term work or transformational engagements. I’m not being facetious when I say that because some of my clients will say, “I’m not clear on what that long-term engagement would be, but I like that idea.” That’s something that I can help them with. I also have other clients like me. When I was younger, I didn’t want to work with a client for a long time because I wasn’t as good at choosing who was a perfect client. I didn’t want to get into a situation where I was unhappy with a client that I’d chosen, and I was stuck.

If you are good at selecting who’s a good client for you and you want to do that long-term work, then this is the right model for you. It’s also for you if you get amazing results that tend to lead to referrals or if that is something that you could cultivate. The other thing is if the path to $2 million is the business that you want to have. You want to earn somewhere between $500,000 to $2 million in your business. I’m not saying you can’t want to earn more. As I’ve mentioned before, I have clients who want to earn $30 million, sell the business, and go beyond an island.

This is still the best way for consulting businesses. It’s on that path to create a firm foundation. They have that expansion, the expansiveness, and the capacity to be able to do amazing work without having to worry about the bottom line and without tons of marketing. My favorite part of this is that you’re not on that hamster wheel because it’s so manageable. I’m not going to say it’s easy. I’m not even going to say it’s simple, but it’s doable for you to add five clients in a year. For you to have 5 to 10 clients as the base of your business.

What about funnels? From time to time, I’ll have a client come to me and say, “So-and-so says that I need to have a sales funnel.” “Okay, what else did they say?” “I need to have my YouTube channel and I need to be doing Facebook ads. Also, I’ve heard about automated webinars. I feel like I should be doing automated webinars.” I’m like, “Marketing flavor of the month, what’s next?” That’s not how you get business. That’s not how this business model works. If you are working with a revenue pyramid, you don’t need to do all those things. You can do anything you choose, but that’s not how clients come to you.

Clients are going to come to you because they are already working with you, so you’re going to get referrals and new clients through networking, speaking, and being seen. You’re going to get new clients because you’re building a brand publicly and you’re going to attract people to you. Those are some of the ways. If you want to know more, I speak specifically about how to grow this business on this show, so just look for any episode about strategic visibility and pipeline and how to get clients. I’ll speak to that.

 

You’re going to get referrals. You’re going to get new clients through networking, speaking, and being seen. You’re going to get new clients because you’re building a brand publicly and attracting people to you.

 

It’s unique for this business and not the same as internet marketers want to sell you on. Your business is so simple. You don’t need to build a funnel. You don’t need all of that structure. I’m not saying don’t have a lead magnet on your website, an email capture, and do an email newsletter. I’m just saying all of this complicated construction and mapping. The maps that I’ve seen of the client go here and then they click on this and then they go to this thing. You need ten. Keep it simple.

I mentioned earlier the middle and the top of the pyramid. If we’re turning those traditional businesses upside down, then what goes at the bottom? The bottom is a classic place for one-offs. Sometimes there are one-offs that we’re like, “Cool.” The thing about a one-off is that it might happen and it might not. You want to put the revenue that may come in at the top of your pyramid, but it may not be like a speaking engagement or somebody deciding to sponsor one of your events. Revenues are great if they come in, but we’re not depending on them.

The middle of the pyramid is a great place for testing ground. It’s where you put engagements where you’re not quite sure about the client, so you didn’t do a 12-month but wanted to try out a 6 or 3-month. You’re just testing if this is a client that you want to work with, or maybe they wouldn’t go for a 12-month and you’re both trying things out on a 3-month paid assessment or a short-term engagement. That’s great for the middle of the pyramid because the middle of the pyramid is revenue that might come in and might not. That can be steadier work but not necessarily anything you want to count on.

If you have ongoing training that you do, a short burst, a 6-week, or 12-week, any of your shorter-term things that aren’t a year-long are good to put in the middle of the pyramid. It’s not the base. Even if you only have two transformational engagements at the bottom of your pyramid, you’re going to feel the comfort and steadiness of having that revenue down there while the rest of your revenue in the middle of the pyramid comes and goes.

Once again, what I love about this model is that you build this foundation and have peace of mind, steady revenue flow, and amazing results that you’re getting for those 5 to 10 clients at the bottom. It’s a much simpler way to run your business because you’re not constantly marketing like the new clients will very often just come to you naturally, just through you being visible at all or the referrals of existing clients. That is such a profitable and joyful model.

Profitable Joyful Consulting | Structure Your Consulting Business

Structure Your Consulting Business: The revenue pyramid allows you to have a foundation. You have peace of mind. You have a steady revenue flow and amazing results that you’re getting for those five to ten clients at the bottom.

 

If you would like more information about building this business, or if you want to figure out the best next steps for you on your path to $2 million, I highly recommend you download and take my self-assessment. It’s free, it’s at SamanthaHartley.com/super, and it’ll help you evaluate where you are on the path and what your next steps might look like. With that, I wish you a profitable and joyful consulting business.

 

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