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Got an email over the weekend asking why I sell coaching and do ecommerce instead of just getting $100k+ clients like some of my students have done.
(He was specifically referring to James Jackson who I helped go from making $1700 per month to landing two contracts worth $750,000. I think it was James Schramko's Fast Web Formula 2 event where he got up upon stage and talked about this.)
Anyway, it's a good question and worthy of discussing here.
First, let's be clear:
$100k+ contracts are pretty rare. At least in the markets I play in. And I don't generally teach how to get this level of client because it's not where I play. And frankly, it's a different ball game to what most people reading this are interested in or ready for.
We're typically going after clients in the $1000-5000 per month range.
But that's not what I want to focus on today.
Right now I want to talk about the dark side of consulting, or...
Why consulting sucks.
You see, from day one of teaching consulting I've been telling my students to use consulting to fund other more passive income streams with bigger potential for scale and sale.
(By the time I released my first consulting course I'd already been working with clients for about 5 years and seen the good, the bad, and the ugly of the consulting business. And in my opinion it's an awesome cash-flow source but not usually the best long-term business model.)
Consulting is awesome because you can get started with just a few hundred dollars, the profit margins are huge, you get paid up front, it's a simple business model, and you can do it from anywhere in the world.
But it's not without it's faults.
A hundred grand client sounds great, but here are some things to consider:
- That 100k most likely isn't an up-front fee. It's a lengthy contract. Probably 12 months. Good because you've got recurring income, but a whole lot different to getting a hundred grand deposited in your bank in one go.
- That level of service very likely requires a team to deliver. So factor that into your profit and lifestyle design.
- You've got a lot of eggs in one basket that you don't control.
- Once you've got the skills, you can do 100k in a day in a more scalable business like ecommerce or supplements.
- We work with a 10x value proposition. In other words, if I charge someone $100k I want to provide a million dollars in value. The obvious question then becomes, why not just become your own client and create the million dollars for yourself?
(Of course, it's not quite as simple as that. Playing a bigger game typically requires more infrastructure, capital, skills, experience etc. For example, in one of our failed supplement experiments we were burning through $500 a day in ads that we never got profitable. Most people couldn't afford to do that. This is where the cash-flow from consulting comes in handy.)
I still remember the feeling I had after writing a big winner for one of my first copywriting clients...
Slogging it out for a month writing a salesletter for $4,000 and seeing the client make $30,000 in a few days while sitting on his butt. (It was a digital product that probably took a weekend to create.)
But it's not just the immediate income you need to think about. See, while I had spent my fee before I'd even finished the project, he had an asset (my salesletter) he could use for years to come. Each month's sales adding to the multiple he could eventually sell his business for.
So while consulting is an awesome model for anyone who wants to get started in business without much capital and with little risk, there are bigger games to play once you're ready.
That's why, while I I still run an agency and actively work with clients, my main focus is being my own client and building long-term value for my ecommerce and supplement businesses.
And this is exactly what I advise my clients to do as well.