Recent posts have dealt with entrepreneurs and their consultants planning the endgame of the entrepreneur’s company.  Now let’s consider how consulting practices survive during downturns.

A consulting practice is itself, of course, an entrepreneurial venture. As a service business, it has different market pressures and costs, but other issues remain in common with product businesses.  And consulting practices fail just like other businesses.

Many issues are critical to maintaining a successful consultancy:  a reputation that you deliver what you promise; integrity known to your marketplace; extensive marketing and networking even while you are busy with a full schedule; glowing testimonials from previous clients, and so on.

The deepest secrets of survival for your consulting practice during a long downturn are these: cash, adaptation and setting boundaries.

Cash is the way you multiply your options.   It allows you to turn down work which doesn’t suit your skills or which doesn’t interest you.  It allows you to carry your clients through hard times without pay, and to wait for your arrears (if you make this choice).  It allows you to be without revenue for months and months, and emerge on the other side of the downturn intact, ready for your next clients.

Adaptation is the way you meet changing market demands.  You must be constantly monitoring what your market sector needs, how it is responding to changes in new technologies and revenue models, in the larger economy, and in new emerging standards.

Having identified what your market needs, you must move quickly to gain the expertise to supply that need, test your new knowledge, gain a track record in providing that expertise, and then market like mad to attract new clients and to provide this new skill to existing and former clients.  

Setting boundaries is the way you maximize your time and priorities.   

You must balance ~ 

• gaining your new expertise (and refining its pricing and revenue model for your practice)
• satisfying  your existing clients — the ones who are paying and the ones demanding your attention even when they cannot pay you
• marketing and networking relentlessly.

To do this, you must set boundaries ~

• on those who will try to take your time away from these essentials for non-revenue-generating efforts, and
• on yourself to ensure your own discipline during these trying times.
• One home-business client once wailed at me, “What!? No Oprah?”

Here is a list of strategies to protect your consulting practice from bad times:

•  Save money.  Put away as much as you can during the good times, preferably enough to cover 12 months of your total overhead (remember to include your own salary). 
• Keep these savings liquid (at least 6 months of your savings), invested so that cash can be transferred within 3 days to your corporate bank account.
• Stay the course with failing clients, and continuously assess what return these efforts will bring you, and set boundaries on how much time you will commit.
• Re-constitute your offerings for the current times.  Find what your market needs and provide it. 
• Move to adjacent market spaces.   It may be that your core skills or new skills are more in demand in market spaces you do not currently address.  Find those spaces and sell into them.  Go where you’ve never gone before.  Expand.  Take a risk.
• Network network, network.  Stay in touch with your clients, former clients, and referral sources, even when you are busy.  Reach out to trusted colleagues who work in adjacent markets to introduce you there.  Reconnect with organizations that address your markets.
• Market aggressively.  Get out and be seen.  Make presentations, especially about your new expertise. Publish and blog and be visible.
• Don’t panic.  Don’t stop.  Keep your energy up. Keep moving, networking, and marketing. Learn new things.  Do not give in to dread.  Do not blame yourself for what you didn’t do or couldn’t prevent.  All downturns end.

The current 2009 economic downturn is my 5^th, between technology sector crashes and general economic recessions.  I have survived all of them.  During the first, I didn’t know what was happening.  During the 2^nd and 3^rd I moved my expertise to international markets (Europe, then China).  During the 4^th, I went sailing for 16 months. 

And now we have another.  The same strategies apply each time.  Good luck.