One of the biggest weaknesses in the traditional consulting business model is surprisingly simple, too much of the revenue is project based.

A firm can acquire an excellent client, deliver an outstanding engagement, and create significant value. However, the moment the engagement ends, that revenue disappears. Another project has to be sold to replace that revenue. Even successful consulting firms can find themselves continually rebuilding their revenue base.

This is the familiar feast-or-famine cycle. Strong periods of client activity can be followed by renewed demands on partners to generate the next round of engagements. The natural response is to focus on selling more projects. Selling more projects helps, it does not address the underlying weakness in the business model.

Recurring Revenue Requires More Than a Retainer

Building recurring revenue does not mean finding ways to keep clients on retainers after the original work has been completed. A recurring relationship is sustainable only when the client continues to receive meaningful value.

For many consulting firms, that opportunity already exists within the work they perform. The initial engagement may diagnose an important problem and establish priorities. However, the client's challenge rarely ends with the delivery of a report or plan. Results ultimately depend on execution, measurement, adjustment, and continued improvement.

A consulting firm that can add value during those stages has the opportunity to build a fundamentally different client relationship. Strategic reviews, performance monitoring, implementation support, and periodic reassessment can become natural extensions of the original work when they address legitimate ongoing needs.

Building a More Predictable Business

The economic benefits extend well beyond the additional revenue. Longer client relationships can increase lifetime value, improve revenue visibility, make professional utilization easier to manage, and reduce the pressure to continually replace completed projects with new ones.

This also changes the role of business development. Instead of depending almost entirely on new engagements, the firm can deepen existing relationships and recurring revenue streams with those clients that already know, like, and trust the firm.

The firms that accomplish this can begin moving away from the feast-or-famine economics of traditional project consulting toward something much more attractive, a business with deeper client relationships, greater recurring revenue, and significantly more predictable growth.

STAR was designed to drive the type of value that generates recurring advisory fees that clients are happy to pay. As quarters pass and value grows, the consultant morphs from the outside consultant to the most trusted business advisor. To schedule a demo, email me at bkerrigan@excelerating.com.