Given the challenge of maintaining a healthy cash flow, it's always useful to be thinking of new revenue streams. For many small business owners, offering a consultancy service makes sense. On your journey, you're likely to have had an education in various facets of running a business, from marketing to supply chain management and content creation. Or you might simply have specialist expertise in a specific area that you can share with others.
In the creative sector, in particular, this has been a secret of many business owners, as they quietly provide large commercial clients with design, styling or art direction consultancy, so they can fund their niche, low-margin businesses. But now founders are becoming more intentional about setting up consultancy arms. They see it as a means of networking, upskilling and diversifying.
Tips for best practice
Serena Guen is founder of travel publication Suitcase, which offers consultancy in the form of written, photographic and video content on travel and lifestyle. It's something she sees as ‘an extremely helpful revenue stream’, but it also offers her the chance to learn from other forward-thinking businesses.
According to Serena, setting up a consulting arm in your business can simply start with a few conversations. ‘List consultancy as a service on your website and drop it into conversations,’ she says. ‘When the time is right, someone will ask for pricing – and off you go.’ But there are plenty of things to consider when it comes to time management, contracts and meeting other people's objectives. Here, Serena shares some of her tips.
1. ‘Consultancy can distract from your mission and could mean that you take longer to reach profitability with your core business. Make sure you only take on a few key projects at a time, so your team can maintain a clear picture of priorities and ensure you're making enough of a margin to make it worthwhile. I'd also recommend getting everyone who's working on the projects to log their time – we weren't very good at this at first, and we ended up losing money on several projects.’
2. ‘Your offering should be simple. Just because you're good at doing something for yourself doesn't mean you can do it for someone else, or can make enough of a margin. One example of a service that we no longer offer is social media management: although we're confident we can create good content, we found it extremely time-consuming and difficult to scale.’
3. ‘Get a lawyer involved to check draft contracts and ensure there's a solid payment schedule where you're paid up front at every stage, if possible.’
4. ‘For time management, clearly state the anticipated number of check-ins per week or per month, and how the client would like to communicate and share files. We try to steer clear of WhatsApp because it can bleed into out-of-office hours, especially with international clients. However, it'll never be perfect, and an agency is a service-oriented business so, at the end of the day, we end up doing what works best for the client.’
Using consultancy to embrace creativity
For New York-based vegan scent and skincare business Redoux, offering consulting services was another way of pursuing collaborations and keeping an open dialog with fellow creatives.
It took Redoux founder Asia Grant about one year after the brand's launch to become fully comfortable with the creative processes she'd laid out for the company. At that point, she felt ready to start creating scents for external clients, as well as helping them bring those scents to market with product development, art direction and scent-marketing consultancy services.
‘We decided to focus on what we already do very well in the business,’ says Asia. ‘Storytelling is a core strength and skill that we always try to develop internally. We don't just say, “Here's your scent.” Along with the scent development, we can create an entire brand identity and a story around why that scent should exist.’
Learning from other creatives
To date, Redoux has created custom scents for chefs' dinner parties, fashion brands' runway shows and wellness companies' product launches. More recently, it also created a room spray for design studio Yowie, which offered the opportunity for the business to trial a new category.
‘We're mainly working with other creatives,’ says Asia. ‘We learn a lot from their creative process and how they apply it to their business models. We would never have produced a room spray if it wasn't for Yowie, but testing it out and seeing how much people liked it gave us the confidence that we could potentially move into this space in the future.’
When working with large-scale productions, Asia has learned to set clear business goals before embarking on any project. ‘At the end of the day, someone is going to have to produce this and, normally, it's us, so it needs to make business sense,’ she says. ‘Producing 100 units wouldn't make any sense for the amount of work that we'd need to put in. So you quickly learn the questions that you have to ask in the beginning, which are usually: what's your budget and how much money do you want to make? We need to agree on what the revenue model is, how we are going to make money and what the profit sharing looks like.’