Profitable business with minimal investment: conducting psychological games

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"The main investment in the consulting business is getting clients." Alexander Karpov, CEO of RiK and head of the bud-tech.ru project, shares his experience in launching a consulting company.

- Alexander, tell us a little about your company.

Our company was founded in 2003 by a group of consultants who have been in the consulting business since 1995. Our topics are budgeting, management accounting, strategic management and organizational design.

During this time, a large number of consulting projects have been completed on the restructuring of enterprises and groups, the introduction of strategic management, budgeting and management accounting.

Our company has 5 product lines: books, electronic methods, software products, workshops and management consulting.

Many people think about starting their own business, but not everyone ends up opening it. Was it easy for you to decide to become an entrepreneur?

I think I'm late with this decision. I worked at my previous job for 7 years. Now I believe that 3-4 years was enough. Although there is also an age factor. I started my own business at the age of 27. For many types of businesses, you can say that this is a decent age, but for the consulting business, the opposite is true. A young consultant is very poorly perceived. Therefore, if I started 3-4 years earlier, then I might simply not be perceived properly. Although at the previous work in this regard there were no particular problems. True, I had to wear a beard to look older.

I can say that the decision to start my own business was quite easy for me. It happened somewhat gradually, as my dissatisfaction with the way the consulting company I worked for grew. I increasingly disagreed with the technology of work. In the projects that I carried out, I followed other, as it seemed to me, more correct approaches in terms of benefit for the client. Once, during another dispute with the CEO, he told me something like this: “In my company, we will do this. If you think that this is not right, then you can do as you like, but only in your own company.

And then I thought: why not? Of course, I did not make the decision to create my own company the next day, but this idea was very firmly planted in my head. And after a while, I made up my mind. In addition, I had certain financial savings that would allow me, in case of failure, to live for about a year. During this time, I could either start a new business or get a new job.

- Why management consulting?

First, I love this activity. And secondly, I have accumulated decent experience (7 years of work).

- What difficulties did you encounter at the initial stages of doing business?

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To be honest, I do not remember any significant problems, probably because I already had sufficient experience in this business. It's just that when I worked as a management consultant, I was mainly engaged in consulting work, and now I had to do everything myself. This, in general, is a common occurrence for small businesses.

I can say that I was a little disappointed that I had to do, among other things, “uninteresting” work for me. But over time, I realized that you can not perform only those functions that you like. If you want a business to work, you need to do everything necessary for this, and it doesn’t matter if you like it or not.

According to your estimates, what is the minimum amount with which you can start a consulting business today and what is required for this?

If we are talking about the prospects for opening a consulting business in our time, then I would recommend that you approach this decision very carefully.

If you have potential clients, you can start your consulting business right away. You don't even need an office for this. All you need is a computer with Internet access and a printer. If there are no potential customers, then it seems to me that it is better not to risk it. If it seems to someone that the consulting business does not require serious investments, then this is not entirely true.

The main investment in the consulting business is just related to getting clients. These can be advertising costs or investments in some other distribution channels: creating your own marketing and sales service, for example, or creating and promoting a website, etc.

Therefore, if there are no potential clients, then it is better not to create your own business yet, but to get a job as a consultant in an already existing consulting company. This is especially true if you have no experience in consulting. This strategy will allow you to:

avoid unnecessary financial losses when starting your own business;

gain experience as a consultant;

study the model of work of a consulting company (the most important thing is how to get clients + naturally the production process)

make connections.

After you have worked for some time (for example, a year) as a consultant, you will be able to understand whether you should even create such a business.

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So, if there are potential clients, then the investment can be zero if you already have a computer with Internet access and a printer. If not, it's easy to calculate how much it might cost. One-time costs (computer and printer) can be about 30 thousand rubles. And monthly (Internet, paper, cartridges, etc.) somewhere on average 3 thousand rubles.

If there are no potential customers, then the costs depend on the chosen customer acquisition strategy.

Possible promotion channels:

creation and promotion of the site;

creation and organization of the work of the department (or group) of marketing and sales;

writing and publishing books in the areas in which it is planned to provide consulting services, etc.

Obviously, it is difficult to name even approximate amounts for each of these positions. For example, you can make a website yourself from ready-made templates, and free ones. Then it will cost nothing at all (except for the time spent). Website development can be ordered. Again, depending on the functionality of the site, the spread can be very large: from 5 thousand rubles. up to 300 thousand rubles and more.

But here I would like to warn against unnecessary spending. The problem is that most of these offers are, in fact, one of the relatively honest ways to steal money. I even wrote an article about this: “How customers are promoted when promoting sites. Three main promotion methods. Non-professional for non-professionals. Perhaps my experience will be useful for those who are going to seriously engage in the promotion of their site with the involvement of specialized companies.

As for the creation of a marketing and sales department, again, the costs here can vary greatly depending on the number of employees and the functions that they will perform. Of course, at the very beginning, the creator of the business can perform these functions, but over time, these functions will be transfer to other employees. If there is at least one person in the department, then at least an equipped workplace will be required for him (these are one-time costs).

Of the recurring costs, the main part will be wages. The next significant item may be the cost of long-distance telephone calls (if the company does not plan to limit itself to working in its region). If the idea arises to create a call center, then this will require special software. You can work without it, but with a large volume of calls and contacts, keeping everything in your head or in Excel is not very convenient.

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Another of the aforementioned ways of promotion is the publication of their own books on certain topics of management. By the way, I originally chose this strategy. It must be said that it is very costly both in terms of time and money, but these investments can be said to be “long-term”. Until now, this distribution channel is one of the main ones.

First, it is much easier to persuade clients to buy books for little money first than to try to sell a consulting project right away. Secondly, the presence of books raises the credibility of consultants in the eyes of potential clients. In order to publish now one book with a circulation of, say, 1 thousand copies, 60-100 thousand rubles will be required, depending on the number of pages, paper, type of binding, etc.

Thus, the initial costs for the promotion of this business can vary significantly depending on the chosen strategy for promoting products and services.

Are there any additional administrative requirements (for premises, experience of specialists, etc.)?

Regarding the premises, there are polar points of view. Someone believes that the premises in this business do not matter at all. After all, clients pay for the experience, skills and brains of consultants. And some believe that the office of a consulting company should be class "A" and located in the city center. Indeed, in this case, the company will look more solid and it will be easier to conclude a major contract. I think you can start without an office at all. Meetings with the client can be held on its territory. It’s even convenient for customers – they don’t need to go anywhere themselves.

What can you save on and what should you not save on?

It seems to me that in the beginning it is possible to save money on the office. Or even without an office at all, or, it’s easier to rent an office. Don't skimp on the quality of service. In particular, it is better to select a professional team of consultants. Yes, professionals will cost more, but the cost of their services is higher.

- How long did it take you to pay back the initial investment?

The initial investments in our case were: the publication of the first book with a circulation of 2 thousand copies and the creation of a website. It cost us about 170 thousand rubles (160 thousand for the publication of the book and 10 thousand for the creation of the site).

The books themselves paid off only after about a year. But since the books were a channel for promoting our other products and services, the initial investment paid off in about 3-4 months.

The first version of the site cost us relatively cheap - only 10 thousand. Over a year ago we launched a new version of the site. We have already invested more than 300 thousand rubles in this site. This cost is due to the fact that the functionality of our new site is much more than the old one.

The new version of our site allows users to subscribe to free e-courses, download free e-books and demo versions of software products, take part in competitions (prizes: software products and free participation in seminars + additional discounts), blog, chat on the forum, place orders in the online store, post your resume, select managers and specialists (in the areas of economics, finance, accounting), take part in research, receive research results, publish your articles, etc.

- Is there seasonality in your business?

Yes, there is. The traditional decline in the summer months. January is a dead month. If the January holidays are further extended, I'm afraid that February will also become a "dead" month for consulting.

- What kind of specialists should you pay special attention to? How did you select key employees?

The key people in consulting are those who sell and those who do the work. Variants are possible when these functions (sales and production) are performed by the same people (consultants). The backbone of our team is already proven people with whom I have done more than one consulting project. But recruiting new consultants is a really difficult task.

And there are two options: to select ready-made specialists or to train students.

Each option has its pros and cons: Students know almost nothing, but they can be molded into what they need. Although recently students have become a very ungrateful public. They do not understand that they come to the company with complete zeros. They are trained and paid them for this salary. That is, for the money of the company they are made by specialists.

Students learn quickly enough and they start star disease. About 15-20 years ago, students behaved differently. For example, when I came to a consulting company in my 3rd year, I understood that I was being trained in an interesting profession and did not turn up my nose. There is another problem with ready-made specialists. It is very difficult to evaluate a person. There were many cases when people were able to present themselves very well, but in reality they turned out to be chatterboxes. I came to the conclusion that it is possible to test a consultant only in "combat" conditions.

Obviously, during your work you have tried various ways of advertising. Which advertising media proved to be effective, and which ones did you eventually abandon?

During our work, we really tried almost everything except television advertising. After trying various ways of active promotion, we came to the conclusion that in our case, advertising is a waste of money, and a lot of money. Contextual advertising in search engines may not be as costly as in offline media, but it also turned out to be ineffective.

We came to the conclusion that in our case, the most effective of the active methods of promotion is phone calls. Therefore, the idea arose to create our own call-center. To automate the activities of this department, we have developed and created a special CRM software module (this is a separate module of INTEGRAL). We have developed all the necessary regulations and work technology for the call center employees.

But we were not lucky. The project was launched at the very beginning of the crisis. All potential customers began to panic. They began to stupidly cut all the costs. It is clear that the consulting industry is one of the most affected by the crisis, because. the cost of consulting (in various formats) began to reduce in the first place. Therefore, almost all calls to customers were no more than 10 seconds long.

All clients uttered approximately the same phrase: "Global crisis, we have no money, goodbye." Therefore, we had to freeze this project. Maybe it's time to resuscitate him. Although now this promotion channel is used in many companies, and everyone is already tired of intrusive calls.

Of the passive methods of promotion, in our opinion, the most effective is your own Internet resource. It is necessary to invest in the creation and development of the site (if not money, then time) from the very beginning. Unfortunately, it takes a lot of time to promote the site, but it's worth it.

- What can you say about the competition in your business?

Now it is a very competitive business. But this did not prevent the fact that every year (at least before the crisis) a lot of consulting companies appeared. Now, of course, the situation has changed significantly. Although, perhaps, during the crisis there will be fewer consulting companies, which means that competition may decrease.

How do you see the prospects for further development? Do you plan to expand or open related areas?

At the current time, we do not plan any significant expansion, because the consulting market has just begun to recover. We will look for new promotion channels and improve the efficiency of existing ones.

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