By Dr. Chris Downs

The majority of consulting businesses don’t last six years. In fact, over half of consulting businesses fail before their 6thyear anniversary.

Of course, success rates vary by business niche, marketplace shifts, client churn, competitors, technological advances, the temperament and personality of the consultant, and so on. But in general, the Bureau of Labor Standards (2022) says that only 55% of businesses are open after 5 years. The numbers drop to 35% by 10 years, and 25% by 15 years.

Ronald Scott was my dear mentor for many years. When I was considering opening a consulting business in 2008, he told me that the key to keeping a consulting practice open on the long term was Preparedness. I took notes of what he said over lunch that day.

“There are many potholes consultants should know in advance. Some of these potholes concern the market, economy, clientele, technological change and competitors. But many potholes are deficits we carry ourselves, such as a flawed marketing strategy or an ineffective communication style. It’s our job to anticipate these potholes well in advance, look out for them on a regular basis, and steer clear of them when they appear in the road in front of us.”

— Ronald G. Scott

Ron emphasized that while most potholes are pretty obvious, many consultants don’t do the work to discover what they are and how they show up. Other consultants ignore them altogether.

In my opinion, the biggest potholes that consultants, especially new consultants, must anticipate are these:

· The Consultant. I’m convinced that the #1 reason why consulting practices fail are the characteristics of the consultant her- or himself. These can be caused by a long list of things such as a lack of honest and regular self-evaluation, poor communication skills, flawed marketing strategies, or lack of emotional “grit.”

· Competitors. Let’s face it. Some competitors will beat you every time. Some will out-market or out-perform you. Others may intimidate you or fuel your sense of Imposter Syndrome. (Need to know more about the Imposter Syndrome? See Chapter 19 on Competitors in Solo Consulting: Insider Tips for Success!).

· Vendors or Subcontractors. People who work for you or with you can underperform, give bad advice, misrepresent you or your company, even cut you out of work and claim it as their own.

· Clients. There are many factors related to clients that can harm your company. Some waste your time or are a poor fit for you or your skills. Some gobble up too much of your time or overall roster of clients. Some clients behave inappropriately. Some are bullies. There are some clients who can’t or won’t afford you or won’t pay for your services.

· Contracts. Some contracts are confusing. Occasionally a client will flat-out violate a contract they signed with you.

· Money and Revenues. There are many aspects of billing, invoicing, pricing and payments that revolve around money and will affect your success.

If Ron Scott were alive today and read this list, he would very likely write “THE CONSULTANT’S LACK OF A SENSE OF HUMOR” in capital letters. Ron was the most successful consultant I ever met and made large amounts of money over many years.

Ron’s most distinguishing characteristic was his ability, and willingness, to laugh at situations, circumstances, and himself. I observed him with his clients many times and was struck by his use of easy-going humor to defuse tense situations, enhance connections with clients, and bring a positive spirit to meetings.

The odds for success for a new consulting business are poor. Careful study, awareness and vigilance of the prominent potholes that wreck consulting practices can improve chances for long-term success.

Are you prepared for the likely potholes in the road ahead?

If you’d like to learn more about the challenges many solo consulting practices run into please check out my book, Solo Consulting: Insider Tips for Success.

Notice: This blog wholly reflects the views and suggestions of Dr. Chris Downs. Readers’ use of his views or suggestions are wholly the responsibility of the reader as reflected by their actions, reactions thoughts, statements, and behaviors. Dr. Downs accepts no responsibility for readers’ use of his words. Further, this blog contains no intentional or structured therapeutic intent nor is the content designed to harm or improve the psychological state of the reader. Readers are responsible for their own reactions to and/or use of any and all suggestions or advice.