One of the most lucrative opportunities available to an entrepreneur is a consulting business. It typically has a low barrier to entry in terms of investment and manpower. You can start with just one person--yourself.
It is also one of the most competitive spaces to be in: It's tough to differentiate and define a niche and at the same time, be able to scale and grow the company.
But there are those who have found tremendous success running a consulting business, despite the ups and downs. I spoke to one such entrepreneur, Matt Weinberg of Vector Media Group, who started the company with his high school buddy Lee Goldberg. Vector hit the Inc. 5000 fastest-growing company list by the time the founders were all of 27.
Matt shared the secrets to his success and how any entrepreneur in the consulting space can build and run a successful business.
Success doesn't come overnight
Success doesn't just happen in a consulting business. Matt and Lee ran their company in high school and college, on nights and weekends. They had good clients, but worked day jobs for two years after college so they could save money as they grew the business.
They quit their day jobs when Vector revenue was about $400,000 per year. A significant portion of that was being paid out to contractors since Matt and Lee had other jobs during the day, and so couldn't execute all the work themselves. They soon realized they could do what they loved and dramatically reduce expenses by just working on their company full time!
And so, in 2011, after their first year of working only on Vector, Matt and Lee brought in $1.2 million in revenue with just 7 people on their team. Last year, there were more than 30 employees and over $6.5 million in revenue.
Keep existing clients happy
Vector's primary channel for customer acquisition is referrals from existing customers. Some business comes from being well-known in various CMS communities, such as for the ExpressionEngine and Craft CMSes. And the company has a popular e-commerce platform called CartThrob, which drives business in implementations and custom enhancements. However, Vector's key source of customers remains referrals. That's why it works so hard to keep its clients happy!
Build a personal brand
In 2010, Matt gave a talk at the ExpressionEngine/CodeIgniter Conference in San Francisco about e-commerce, PCI compliance, credit card security, and the various providers involved in processing credit cards online. It was well received, and he was immediately asked to present on a similar topic later that year in the Netherlands.
The talk also gave Matt and his agency a presence as e-commerce experts, and led to an increase in e-commerce projects and the eventual acquisition of the company's e-commerce platform, CartThrob.
If you want to build a personal brand, here's what Matt suggests you do, "Get deep knowledge on something and share that knowledge," he says. "There are thousands of topics out there, and people who know a lot about something often think that their knowledge is either very common or very easy to obtain. But that's not true--I find that technologists especially often underestimate the value of their unique experience with something. Write blog posts, submit to speak at conferences, and make some case studies. Go deep on a single topic and become well known in that niche."
Always add value
Everything's fine when you're going through good times. But there are going to be bad times, and worse. What you do in times of adversity is what defines you as a person and as a business.
"There are weeks you feel like you're going to take over the world, and week where you're convinced you're going out of business," Matt says. "But we've acted ethically, always treated our team well, and gave our clients honest advice even if it meant a little less short-term business for us. Doing that has helped build a good name and reputation and more than paid for itself, as it builds great trust with our clients."
Always be adding value.