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Why subscription based consulting model works for small businesses?

September 26, 2019

Small businesses, enterprises and startups are filled with the desire to achieve a lot, but are cash 💰 strapped and need to make their choices in accordance to that. In this post, we wanted to see if there was a possible way that experts in a domain could align themselves as consultants in a subscription based model (like we do).

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What is a small business and what do they do?

Small business owners are the primary drivers of the economy.

Small businesses are privately owned corporations, partnerships, or sole proprietorships that have fewer employees and/or less annual revenue than a regular-sized business or corporation

(thanks wiki!)😆

small business

But, small businesses have their own set of problems to deal with.

Cash strapped

Over 96 percent of companies are SMBs - with less than 50 employees; of these most of the companies are small SMBs, with less than 10 employees.

number of firms

By the sheer numbers of SMEs and SMBs it seems that they collectively might be making more than the larger few corporations, but the story is completely different in terms of who has more revenue share.

distribution

If you co-relate the number of firms and the distribution of revenue based on the firm size.

964 firms of size of 1000+ make 35% of the revenue

That might not shock you as much as probably as this might

Roughly 5, 450, 000 small businesses collectively make up only 18.94% of the revenue

Everyone: How are large firms are able to capture such a large revenue share despite their smaller numbers?

Well, large firms spend a lot of time and money in optimizing their operations, tools, automation and equipping their employees with the right knowledge to deliver sooner with a better quality. In other words, they reinvest in their assets and build upon them.

While small businesses are struggling to make ends meet, and don’t have the cash flow like large firms have. This makes it difficult for them to reinvest and so they never get around to building the assets unlike large corporations.

Recruiting and retaining talent

Firms which are smaller in size, usually have the owners doing most of the work. Most of the time owners end up doing everything from building the website to marketing it.

work alone

On the other hand, large firms are focused on attracting and retaining great talent. Something which small business owners don’t really have a time or the money to focus on.

hired

According to a CNBC report,

About three-quarters of people who are currently employed full-time work for large corporations, while just a quarter work for small businesses, according to the survey. A much higher percentage of part-time workers, nearly half, work for small businesses.

Small businesses have a tough time finding great talent and delegating

These two problems are related to the growth of a business i.e., they have a valid market demand and something of value that they can offer, but they have problems scaling their operation.

Who are consultants and what do they do?

Consultants are experts who advise professionally. They have prior experience in their field, and spend time working on those problems on a day to day basis.

experts

What are the problems that consultants have?

Attracting and developing new clients

The time for a sale with big clients are just too long, since they have a hierarchy and the decision maker is usually not the one consultants get to discuss initially.

Consultants usually bill hourly (sometimes value based too), which is affordable by only big clients.

SMEs and SMBs can’t afford hourly as it gets too expensive for them, so the only possible way for consultants is to work with large clients.

Dealing with economy/competitive marketplace

Consultants similar to small businesses have trouble dealing with an economic slowdown, finding clients gets tough for consultants as well.

Why are consultants and small businesses a good fit?

So far, it seems small businesses have a tough time to grow and pay for great talent. While consultants have a hard time attracting new clients as they usually charge hourly/value based which is easier for large firms, but small businesses can’t afford it.

Solution?

Consulting on a subscription basis for small businesses.

Feasibility

Everyone: Is it feasible for small businesses?

Yes. This way, smaller businesses who couldn’t afford consultants on an hourly/value based pricing can now use their services.

There are clearly millions of SMEs and SMBs who have a tough time scaling up their operation and finding/retaining great talent. A subscription based consultancy provides them the value of great talent, while also making sure it isn’t too hard on their pockets.

Everyone: But, is it feasible for consultants?

Consultants might have some hiccups initially as their initial business model helps them get a lump sum of amount. While, this model ensures a long term relationship with clients and not something which is a one off project.

It’s definitely a loss in the short term, but in the long term there are more clients and good work bandwidth which should ensure long term sustainability.

Time and location

SME owners are busy people, anytime they find is usually spent working, and they don’t need to see you in their offices, except for meetings regarding the progress which can be done over Slack and video calling tools like Zoom or even email.

Finding SME owners

This is probably a problem faced by consultants, so some possible solutions to this would be:

  1. Check your local network: Send an email to all your friends and business contacts and tell them about the subscription based services that you offer.
  2. Setup a website and blogging (like we are 😅) for other people to find out. Post these blogs on social media.
  3. If you know who would be a good fit for this service, you can also use targeted fb and google ads to get more visibility.

Finding consultants

Time for shameless plug!

If you are looking for React consultants we have the best React consultants to help you. You can check out Quicklyreact or contact our support 👉.

Some other references include:

  • Arjan Yspreet: An independent digital marketing consultant for small businesses. He too has a subscription based model for consulting.
  • Productized Services: Productized services are a done for you service for a fixed price for eg; unlimited graphic design by designers.

Conclusion

  • Small business owners are cash strapped and have a hard time scaling their operations and acquiring/retaining great talent.
  • Consultants have a hard time finding clients, since they bill hourly/value based which is something large firms are capable of accepting, but the downside is the long cycle to close sales.
  • A subscription model allows small businesses to afford consultants and consultants can get enough clients and in the long term achieve sustainability.