Step 2: From Broad To Specific. From Solutions To Problems.
This is step 2 in building your consulting firm, as I learnt and applied from The Irresistible Consultant's Guide to Winning Clients.
Here we discuss how to identify your niche in consulting. Focus on urgent problems within competitive markets and connect with decision-makers. Define and address specific (not generic) business challenges.
Step 2 Identify Your Niche
Fish where the fish are. Identify problems that your prospective clients (“prospects”) already know are urgent. Aim to solve problems that are "known" to the prospects and need an immediate solution.
If the problem you're solving isn't a top 3 priority for a business, it won't get any money. Startup advisors also give this advice to product startups.
It's a good strategy to go where there's competition. Why? Because that's where the clients are.
Over the past 1.5 years, I spent a lot of time thinking about this step. I found it hard to identify my niche. This is a key step because consulting works best in a niche.
Who To Reach Out To
We continue within step 2. Start by reaching out to people you can easily contact. Then, approach the right people who are also easy to contact.
Focus on decision-makers who understand the urgency of the problem and have the authority to allocate funds. In companies with more than $100M revenue, these are usually not C-level executives, but mid-level decision-makers. Aim to connect with the lowest hierarchical level possible but who are decision-makers.
I reached out to my former colleagues who had moved to small B2B SaaS companies and were not in engineering roles. I also talked to former colleagues or classmates who had been in big consulting firms or had helped me in my career in the past.
Collect Problems Companies Face
We continue within step 2. Discuss this with people and collect a list of problems.
To understand the problems companies solve by hiring consultants like you, you can ask them:
What problems have you found so pressing and important that you’ve [actually spent money bringing in] brought in outside help to solve them over the past few years?
You can also learn By talking to other consultants. Ask them this question:
I’m a new consultant and I am inspired by your <personalize>. What are you seeing your clients buy the most? What is the greatest demand for you? What kind of projects do you get the most?
I got to speak to 40+ consultants and ask them questions like the above. You can read what I learned here: (section) What Projects Do You Work On?.
Synthesize The Problems Collected
We continue within step 2. You want to synthesize the information you’ve collected about the problems faced by businesses.
David calls this a ‘Problemeter’. To use the Problemeter effectively, follow these steps:
List: List all the problems without filtering them.
Pervasive: Rate each problem's pervasiveness as high, moderate, or low. This means assessing how often these issues occur across different companies. Decide on the rating yourself.
Urgency: Rate the urgency of each problem. Determine if it's high, moderate, or low urgency.
Expensive: Rate the expensiveness of each problem. This refers to the cost of leaving the problem unaddressed. For example, ignoring compliance issues can be very costly.
Filter: Sort and filter the problems. Focus on those that are rated high or very high in all three categories: pervasiveness, urgency, and expensiveness.
Skills: Connect the problems to your skills. For each of the 5-10 shortlisted problems, rate your ability to handle them as strong, moderate, or weak. This rating should be based on your skills relative to your prospects’ needs, not compared to other consultants.
Evaluate: Choose the right problem to address. Select one issue from your list. Only one. If necessary, improve your skills to better address this problem.
I earlier wrote about my approach to a Problemeter here. I’ve shared my example Problemeter from conversations with consultants below.
Define Your Niche
We continue within step 2. Conclude your research by writing down your niche. This is a 10-15 word statement that describes who you help and the problem you address for them.
Remember, this is not an elevator pitch. It's about identifying your target and their problem without including the solution.
Goals for your positioning statement:
Easy for you to remember
Easy for prospects to remember
Easy for a prospect to self-select
Easy for a prospect to repeat to others
"I assist IT companies struggling in the APAC region."
"I support B2B manufacturers fighting for market share."
Avoid this checklist of mistakes in your positioning statement:
No problem mentioned
broad problem. E.g. I help companies grow
many problems. E.g. “and … and … “
broad target. E.g. companies. Executives.
approach/solution oriented. “I do X by ….<approach>”
many credentials/justification. E.g. we have 20 years of X
I found April Dunford’s book ‘Obviously Awesome’ helpful. It taught me more about positioning.
Since it is hard to navigate within a long post with a table of contents, I split this into 5 articles, (about) one for each step. All posts in this series:
Step 5 and 6: Transforming Consulting Prospects Into Projects