When you’re just starting out, consulting can seem like a dream business. You can set your own hours, work on interesting projects, and earn more than you did in your full-time career. As a solo consultant, you have the chance to earn more while working on your own schedule.
As your business grows, you’re faced with a dilemma. You can hire additional consultants and grow a larger consulting firm, but if you do, you’ll have to give up much of the freedom that you gained when you set out on your own. That’s why many consultants decide to stay one-person shops.
There are tens of thousands of successful solo consultants in hundreds of different fields, some earning 7-figures per year. Whether they are million-dollar consultants or just earning enough to cover their basic expenses, after deciding to forgo extra staff every solo consultant faces the same question: what’s the right revenue mix for my business?
In recent articles, we’ve talked about how to grow a consulting business the right way, the best way to bill clients, and how to find more clients for your business. In this article, I want to talk about how to create the right revenue mix for your solo consultancy.
What Do We Mean by “Revenue Mix?”
As a consultant, there are a number of different ways to earn revenue. You can bill clients (by the hour or by the project), you can put clients on retainer (where you bill them monthly for access to your expertise), you can sell passive income products (such as e-books, webinars, and classes), and you can even earn revenue from your website through advertising and affiliate marketing.
Smart consultants start with one revenue stream, but quickly develop other revenue streams that work in tandem. By creating a diverse revenue mix for your business, you avoid the dangers of putting all of your eggs in one basket. If client work is slow, maybe your online course sales will be up, or you’ll find a new advertiser for your website.
Likewise, building a diverse revenue mix allows you to combine active and passive income streams, so that you earn income other ways than simply trading time for money.
Be Deliberate about Your Revenue Strategy
Most solo consultants don’t spend a lot of time deliberately creating their revenue mix. They simply launch their business, look for clients, and take any kind of work they can get. They work hard, constantly marketing themselves, and before they know it, they’re locked into a never-ending cycle of client work and finding new customers.
This is the wrong way to go about it. It’s very hard to create an optimal revenue mix if you simply fall into a business strategy. My best advice to you is to be deliberate and plan out your ideal revenue mix. Doing so will help you plan out your business activities so that as your business grows, you constantly move towards your ideal revenue flows.
My 1-2-3 Revenue Mix Strategy
While every solo consultant is different and has different goals for his or her business, I want to share my general revenue mix strategy with you, because I think it is ideal for many independent consultants and freelancers. I call it “The 1-2-3 Revenue Mix.” It works like this:
1 – I try to maintain a number of current project-based clients. These are clients where I am working directly with them on short-term or mid-term projects, with a set fee for each project.
2- I also like to maintain a number of clients on retainer. This helps smooth out the revenue from the project work, which tends to come in waves. These retainer clients pay a set monthly fee for access to my expertise and counsel.
3- Finally, I always try to have some evergreen passive income products that I can sell on my website and to my e-mail list. These e-books, webinars, and classes provide steady income where I only need to put in the work once, and can sell them over and over again.
As I said above, every solo consultant is different, but in my experience, having a diversified revenue mix that includes short-term projects, clients on retainer, and passive income products you can sell on your website enables you to leverage your efforts, smooth out your income, and provides protection in case any one revenue stream slows down for a few weeks or months.