A guide to building a resilient consulting business
When the economy slows down, one can sense the clouds of recession in the air. The second half of 2022 is witnessing a massive surge in layoffs by the biggest corporate giants in the world. According to a Goldman Sachs Report, the likelihood of a recession in the next year is predicted to be around 30%, 40%, and 45% in the US, Europe, and the UK, respectively. Lurking behind these figures is the threat of a recession.
The potential effect of a turbulent economy or crises like a pandemic on the freelancing industry is uncertain. Some companies might lay off in-house employees to save the payroll expenditure. They might allocate a fragment of those funds to hire freelancers to save on employee benefit expenses like insurance, taxes, and pension. On the contrary, companies might indulge in cost-cutting at the collective level, committing to regular expenses such as payroll. In that case, they will rely entirely on full-time staff, eliminating the need to outsource projects to freelancers.
As an independent consultant, your livelihood depends on your capacity to engage and retain clients who pay for your services. During a recessive economy, clients tend to shrink budgets. In the worst scenario, your consultancy services could be at the top of the company’s cost-cutting list. Even the thought of being incomeless is enough to keep the highly-experienced consultants sleepless at night.
But what if there is a way to make your freelancing business more resilient against an economic slowdown? It is high time to think proactively to modify your business strategy during a recession. If you are wondering how to get started, scroll down the space below.
8 Ideas for Independent Consultants to Shield Their Business Against Recession
Some businesses barely survive when the economy slows down, whereas others thrive. The difference lies in their client-oriented strategies adaptable as per the dynamic scenarios. Here are the eight practical ideas for a recession-proof business that every independent consultant must try!
Embrace Flexibility and Digitization
It is crucial to adopt flexibility and sculpt your solutions as per your niche industry’s dynamic realities. Adaptability is the foundation stone of every recession-proof online business. During the Pandemic, many companies digitise their routine business operations. According to a survey by Mckinsey comprising over 800 executives around the world, 83% and 70% of executives from the United States and India, respectively, reported more rapid adoption of automation in their businesses.
Independent consultants can use AI tools to improve productivity and efficiency by automating the process of data collection, analysis, and reporting. They facilitate predictive analytics and machine learning to provide insights into future trends
Another viable option is to adopt flexibility to cope with dynamic market conditions. As an independent consultant, you should be efficient in pivoting your way out of a challenging situation and changing your business model when needed. This can be done by developing different skill sets to stay relevant in the market.
For example, if you are an IT consultant whose standard services include technology planning & implementation and IT infrastructure management, upskill yourself and expand your expertise domain. You can offer services in other in-demand fields like business development, web design, content marketing, personal branding, and social media marketing.
Practical Budget Optimisation
An effective way to pivot during a recession is by cutting back on avoidable spending. Yet, whatever you decide to cut must be undetectable to your clients. For an independent consultant, knowing the difference between investment and cost-cutting is crucial.
Create an excel sheet and record all your monthly expenses, whether big or small, to keep track. To make things easier, classify the spending into the following category:
- Essentials: Vital for one’s survival and perceived as critical to well-being.
- Treats: Indulgences whose instantaneous purchase is considered reasonable.
- Postponables: The desired accessories/items whose purchase can be rationally put off.
- Expendables: Items that are unnecessary at the moment and whose immediate procurement is not justifiable.
If there are any subscriptions, memberships, or services that you can survive without for a while, cut them down. On the other hand, continue investing in services directly associated with your productivity and upskilling. Funnel money into resources such as books, courses, and anything that broadens your scope of expertise and instils value in your business.
Remember one golden rule: any expense that helps you stay efficient at your job should be retained, while the avoidable luxuries can take a backseat for some time
Create an Action Plan Beforehand
Indulge in scenario planning and craft thoughtful action plans before the crisis hits. It will help your business stay afloat even when the tides are rough. Do not wait for opportunities to come knocking on on your doors but instead create opportunities for yourself in the following ways:
- Learn and diversify skillsets that are relevant to your field.
- If you have an extensive network of contacts that can provide work for you, get back in touch with them and find out what opportunities they might have for you.
- Consider looking for new opportunities on social media or other platforms.
- Keep up with industry trends and technology changes.
- Update your social media content to maintain the pace of personal branding.
- Focus on building your portfolio to stay in demand even when the economy slows down.
- Create a budget for expenses such as marketing and advertising campaigns
Contribute to Your Client’s Growth
As the recession hits, take the plunge and help your clients utilize their resources optimally. Think about what additional value you can bring to the table. In such a situation, the principle of the Law of Value by Bob Burg’s Go Giver is an excellent inspiration.
“Your true worth is determined by how much more you give in value than what you take in payment.”- Bob Burg.
Implement this principle in your services by providing value-based pricing models. Let us assume that you are working as a marketing consultant. Consider what additional services you can offer to your client, which are usually not included in your standard package. These services can include PR campaigning, SEO, social media management, and reputation management strategies. The goal is to put your client’s progress first, which is also proportional to your employment stability during a recession.
Be Specific with Your Services and Save Time
Instead of spending hours creating customised solutions for clients, adopt a productised consulting model to save your valuable time and energy. As a consultant, you can develop a customer journey map that outlines the process of how clients go about achieving their goals with your service. When freelancers precisely plan what their clients will get and at what pricing, they can market and sell the same model countless times.
You can also give discounts on your pricing model. This strategy works best as, during recessions, discounted services are in huge demand as the clients try to implement cost-cutting wherever they can
Keep the Marketing Going
Always continue marketing your services, irrespective of how the economy performs. Incorporate the following measures to streamline your marketing campaigns:
- Monitor your marketing KPIs to track your ROI and cut down on those performing poorly.
- Post consistently on your social media and blog, delivering informational content on your niche industry.
- Send cold emails to prospective clients and take follow-ups with past ones.
- Focus on ad campaigning online to create awareness about your services and attract more clients.
It is a business model deployed particularly by online software and apps. The idea is to provide a basic service or product for free but charge for extra features and services. During the 2008 recession, Mailchimp decided to give away a fragment of its offerings as complimentary services but charged for additional features. Being a new concept at that time, this strategy did wonders for Mailchimp, growing its user base from 85,000 to 4,50,000 during the recession.
Though freemium is more prevalent amongst subscription-based platforms, it can be implemented seamlessly by freelancers as well. For instance, if you are a strategy consultant, use the freemium model and offer a limited number of hours for free to your clients with the option of paying for more hours.
Stay Prepared for Inevitable Downturns
No economic slowdown lasts indefinitely, hence keep an action plan ready for wealth management and risk mitigation. Keep an emergency cash reserve of up to six months to avoid getting into debt or financial ruin during difficult times. Diversify your revenue streams to reduce dependability on a single source of income through SIPs. Invest in essentials such as health insurance policies or retirement plans to enrich financial soundness.
As the world experiences a significant decline in economic activity, your business is also likely to feel the pitch. However, a little smart work can make your services bloom during the crisis as well. Follow the eight strategies mentioned above to safeguard your business during a recession and come out stronger.