Busy, Booked—and Still Broke

There is a point in almost every consultant’s journey when being busy feels like proof that the business is working.

You have clients. Your calendar is full. Proposals are going out. Invoices are going out. Money is coming in.

So why does it still feel like you’re not making any money?

We see this often with consultants, particularly those who started their businesses as a side hustle. They figured out how to get clients before they figured out the financial side of running a business. And those are two very different things.

At some point, your side hustle grew up. Your pricing didn’t. You’re still charging what sounds reasonable. Or what you think the client can afford. Or what another consultant told you they charge. Maybe you took your old salary, divided it into an hourly rate and added a little extra.

Meanwhile, nobody is paying you for the hours you spend developing proposals, marketing, doing administrative work, following up on invoices, attending “quick” client calls or fixing the scope creep you agreed to three weeks ago.

Then there are taxes, insurance, software, professional development, subcontractors and all the other costs that quietly come with being in business. Suddenly, that $5,000 contract isn’t really a $5,000 contract.

Being Busy Is Not a Financial Strategy

One of the biggest mistakes consultants make is using revenue as the measure of whether the business is successful. “I made $100,000 last year.” Great.

How much did it cost you to make it?

And after those costs, how much did the business actually pay you?

Those are different numbers.

You can have a six-figure consulting business and still be underpaying yourself. You can have five clients and be less profitable than someone with three. You can increase revenue every year while quietly increasing the amount of unpaid labor required to earn it.

That’s why “I need more clients” isn't always the answer. Sometimes you need better pricing and/or better boundaries. Sometimes you need to understand what it actually costs to deliver the work. And sometimes you need to stop treating your business like the side hustle it stopped being three years ago.

Know Your Numbers Before You Name Your Price

Before you decide what to charge, you should know what the business needs to generate to sustain itself—and you. That means understanding your expenses, capacity, billable time, desired compensation and profit.

Your price shouldn't start with “What will the client pay?” It should start with “What does it actually cost me to do this work well and run a sustainable business?”

Because a booked calendar isn't the goal. A profitable, sustainable consulting practice is.

Over the next few weeks, we're going to spend more time Inside the Work talking about the financial side of consulting—the part many of us learned only after we were already in business.

And in October, we'll be sharing something I've been building specifically for consultants who are ready to get much clearer about their numbers.

Stay tuned...