The COVID-19 pandemic has rapidly transformed the world of IT consulting. Economic uncertainty, paired with an increased amount of freelance and small specialized consultancies, has resulted in a highly competitive environment. The good news for IT consultants is that their specific services are still in high demand. However, in an increasingly competitive landscape, it’s essential that IT consultants consolidate an in-depth business plan before launching. A well-structured plan must include growth, pay rates, expenses, marketing, equipment costs, training and qualifications, and technology. Like all businesses, you need to get started on the right foot. Here’s how!
How to Write an IT Consulting Business Plan
Typically, business plans need to be written with banks and investors at top-of-mind, and small businesses generally need start-up funding to get up and running. When writing a business plan for your consultancy, you want to land on something in the middle.
Although consultants setting up their own business might not need much funding, it’s still essential to include in-depth financial components in your business plan – not only to clarify your business’s finances but also to help you understand your business’s potential risks and rewards.
A good business plan will combine elements of both finance and strategy. You may not necessarily need funding for capital equipment expenses or office rent, but you might need a loan to tide you over for the first few months until you have a regular cash flow. You may also decide that you want to make more of an impression by hiring office space, perhaps in a shared office environment. Or you might require funds to spend on marketing and advertising – which is particularly important in the highly competitive IT space. Whether you intend to apply for a bank loan, look for grants, or crowdfunding, it’s important your chosen method includes a solid estimation of what you need to grow strategically.
1. Identify the target market and sector analysis for your consulting businsess
A target market is the pool of customers to whom you want to sell your services, and it’s only made up of the people who are a good fit for your business. Basically, you want to figure out which fish in the ocean you will focus on catching. Establishing a target market will help you realize that you can’t market to everyone, and you shouldn’t waste your time, money, or resources trying to do so. There’s a famous marketing quote by Seth Godin, “When you speak to everyone, you speak to no one”. Make sure you are speaking to the right people.
Take time to assess your new target market analysis while deciding on your consultancy pricing ranges. You could use the market data to adjust your consultancy price points to suit your potential customers better. You will also need to distinguish who your customers are and where to find them – in the form of target market segmentation. Once you’ve gathered all the relevant information you can about your customers, you can then make a plan to market to them.
2. Define your consulting business objectives and USP (unique selling proposition)
A USP (unique selling proposition) summarizes what makes your business unique and valuable to your target market. It answers the question: How do your business services benefit your clients better than anyone else can? A USP can provide a great deal of clarity to your business plan, defining your most important business goals in one powerful sentence. Also, be sure to outline your business objectives – specific steps you need to take to fulfill your goals.
3. Estimate and plan startup expenses and assets, including equipment
Like your business plan, estimating your startup costs is part of building a roadmap for your business. Having even a rough estimate can help you avoid unnecessary risks and stay on track during more volatile months. Consider your start-up expenses and assets. Depending on whether you are setting up a remote or in-person consulting business, you will need to take into account the expense.
Expense considerations when starting a Consulting Business
- FF & E (Furniture Fixtures and Equipment)
- Leasehold Improvements
- Initial Marketing Plan/launch
- Legal / Consulting
4. Forecast overheads and fixed costs
Fixed costs are fairly predictable and fixed overhead costs are necessary to keep a company operating smoothly. Profit margins should reflect the costs of fixed overhead, which can include:
- Office rental
- Licenses for software and technology
5. Develop a marketing strategy and budget
Establishing a cohesive marketing strategy is an important component of launching your consulting business. This includes establishing your brand, determining your target audience, creating a professional website, investing in social media marketing, search marketing, and developing a strong professional network. Many businesses make basic mistakes when budgeting for marketing that lead to wasted money and missed opportunities, so it’s important to strategically determine your marketing spend, funding requirements, loan collateral and cost of interest.
Lenders want to understand the roadmap you have in place for your business. You’ll need to be ready to answer questions about your business model, sources of revenue, growth forecasts, and initial startup costs. They need to see that your business is viable and that you’ve thoroughly explored what it will take to start, operate and grow.
Having realistic startup costs laid out is a necessity in this case. And being able to show how you believe expenses will change or remain similar over time will give them a better idea of how you intend to manage your business.
6. Include pay rates, revenue and cash flow projections
Ignoring the books makes you susceptible to cash deficits. To prevent this from occurring, pay attention to your balance sheet, which lets you know how much you own and what you owe. On the assets side are your short-term or “current” assets plus long-term or “fixed” assets. Also be sure to pay attention to your shareholders’ equity which represents the amount of money shareholders have invested into the business through investments and the cumulative profits you have reinvested in your business via retained earnings. Cash flow projections are another important area of finances that you will need to pay attention to. They are a great way of predicting future cash flows (and cash stagnations). With projections, you can plan ahead to avoid any future stunts in cash flow, and help you time your spending decisions.
7. Forecast sales in monthly intervals
Sales forecasts in monthly intervals will help you understand the future needs of your business – and allow you to fine-tune predictions accordingly. Monthly forecasts may come in the form of production forecasts, profit forecasts, balance sheet forecasts or sales forecasts for a 30-day period, in which you predict performance data for your business for the next month, or any future months. Services businesses can be particularly susceptible to revenue swings. The more predictable you can make your revenue the better.
8. Include growth projections and strategy
A concrete growth strategy is crucial to the future success of your consulting business. Without one, you are susceptible to the perils of a constantly changing consumer base and unpredictable market fluctuations. Execute on the following to determine your strategy:
- Choose your targeted area of growth
- Invest in, or conduct market and industry research
- Set growth goals, plan your course of action
- Determine your growth tools and requirements
- Execute on your plan
Set your consulting business up for success with a great USP, the right technology and a bulletproof business plan
With the increased acceleration of digital disruption in 2021, your IT consulting business plan should show that you are up-to-date with technological developments and digitalization. With virtually every consulting firm incorporating a digital layer in its offering, it’s essential that you weave your digital offerings into both your objectives and USP. Providing digital offerings will also bolster your chance of receiving adequate funding.
Alongside a killer business plan, it’s essential that consultants also include the best digital transformation tools in their arsenal – to ensure future success. Technology like Olive, can be a vital differentiator in an often crowded market.
To remain competitive, consultants must develop coping skills to deal with and adapt to the fast-evolving digital and technology market. Today’s business strategy is technology-enabled, consultants need to leverage technology to inform strategy instead of the reverse. When technology is used correctly, it can help consultants achieve their business goals and plan for future success.
For consultants, leveraging the benefits of digital transformation requires creating a strategy, getting the input of stakeholders, and deeply understanding business needs. Consultants with the right tools will deliver more with less effort and will see their clients reap the benefits. Olive aims to help consultants digitize their process and release time to build a successful business.
A tool created to help consultants manage and automate the software selection process, Olive allows IT, consultants, to streamline the technology evaluation process and facilitates agile collaboration with key stakeholders. Olive gives consultants an easy way to collect data and requirements from stakeholders. By offering end-to-end digital transformation services with Olive, you can take on more clients and capitalize on digital transformation trends.
Writing – and successfully executing a consulting business plan – is no easy feat. However, with planning, strategy, and foresight – you will have a clear advantage over less-prepared competitors. Utilizing the right automation technology alongside a strategic business plan offers a guaranteed avenue to success – and a better likelihood of building a business ready for a post-pandemic world.