My Journey Through Management Consulting as an Independent Consultant - 2

Acquiring Clients – The Early Years

Getting clients and getting paid for services are the two most important aspects of doing any business, and Management Consulting is no exception. But when you start for the first time this looks like a daunting task. And no doubt it is not a simple task either. When I look back at how it all happened, I realise that three things helped us to get introduced to prospective clients, and our Value Pricing approach ensured that we could start work quickly once the prospect was convinced. And eventually we always got paid. Officially, we started our business on September 1, 1982.

The first thing that worked for me was my personal contacts. The moment I left ASCI and was planning to start my new life as an Independent Consultant, I just went around telling everyone I knew. In the process, I met a friend who was the husband of my colleague from ASCI, a Chartered Accountant by profession, who was also running a printing press along with another partner. When I shared my plans with him, he said he would like to hire me and be my first client. He was thinking of diversifying his business to make cardboard cartons for packaging, for which he felt there was good demand around Hyderabad. Would I be able to help him identify prospective clients in the pharma industry which had proliferated around Hyderabad, and guide him how to enter that market? Without even blinking my eyes, I said “Yes!” and asked him to give me a letter which I could use to meet prospective clients for his new venture. I didn’t bother to discuss any terms of a contract and such other niceties. 

In a week’s time, I gave him a list of persons in various companies whom I had met, and who had shown interest in his offering and would like to meet him. I went along with him in the next round to introduce him to some of these prospects and then left it to him to finalise the deals with them. I just simply moved on after a few days, looking for the next client, when he sent word through his wife asking me to meet him to take payment for my services. I told him to pay whatever he felt like paying and he was very generous. Today he has moved on to start and grow a large Financial Services business with a national presence, but he continues to remain a good friend, who also was my first client.

The second client was referred by one of my course participants when I was in ASCI. This happened towards the end of October 1982. I was the course director along with another colleague for Indenting Agents of a large chemical products company which wanted its agents to get trained in modern marketing approaches in a changing competitive environment. One of them was from Hyderabad and I had informed him that I had left ASCI and was working as an Independent Consultant. Being a businessman himself, I asked if he could refer me to anyone who could benefit from my services. One evening, he landed up with another businessman who was a semi-wholesaler in sarees. The person was one of his customers who owed money to him as he was facing financial difficulties. Could I help him get out of this situation? Without hesitating a bit, I said of course I would and set up a meeting at the office of the textile dealer the next day. The address I was given turned out to be a small shop located in a nearby textile market from where the dealer was doing his business as a semi-wholesaler. No discussion on fees and contracts; I just started listening to his problems. I realised that I needed to spend time understanding his business first, and only then could I come up with ideas for solving his problem. We agreed that I would spend two hours at his shop every evening for the next few weeks. I also told him I may need to go into his books of accounts and other operational information including his financial details, which he should share without hiding anything from me. He agreed to cooperate fully and kept saying that he was on the verge of bankruptcy unless I helped him out. 

Then he also said something which made a big difference to my approach with small businessmen. He said whatever advice I came up with I would have to hand hold him to implement, since he had no one to do so. Thus I embarked on an assignment for which I was neither formally trained by education nor had I any clue how I was going to do it, except by just diving into his problems as my own, and finding ways to help him address them. Needless to say, it took me one year to get his operations from heavy losses to breakeven, at which point he decided that he was in a position to carry on without my physical presence every day. In the process, I also learnt quite a lot about trading businesses and the approach to earning money on a daily basis followed by his business community. 

The third advantage I had was having a good mentor and well-wisher who went out of his way to help me get clients. This was my friend, GVS Murthy, who had been closely interacting with me since my days in ASCI, as he was interested in my work in management education. He took it upon himself to hand hold us to get new clients, sometimes literally dragging us to meet some of his business friends and telling them to hire us with strong recommendations on our behalf. We got quite a few assignments through him over the next couple of years and made a big breakthrough in the Hyderabad market. Mr Murthy was like a Guru who also guided us how to deal with many tricky situations in our client engagements, and I owe a lot to him in getting a sound foundation as a Management Consultant.

Apart from the above three approaches, we also got work from the small business services group of a large public sector bank. My Chennai colleague’s sister referred us to her friend, who was heading the small business services unit of the bank. So we went and met her and talked about our new venture. When she saw our profiles, she felt that  banks could use our services in doing stock audits and diagnostic studies of incipient sick small units they had funded. On her reference, one of the local branches of a bank hired us to do a stock audit of a small engineering company which had never repaid its loans over the previous several years.

Normally stock audits are done by Chartered Accountants who have no knowledge of the engineering-related aspects of the stocks. Being engineers, we brought in this insight and showed to the bank in our audit report that the owner of the unit was over-stating the stocks to the extent of his margin money. This revelation pleased the bank officials since they got a  better understanding of the situation, and we got recommended to other branches to use our services not only for stock audits but also for diagnostic studies of sick units which in their opinion could be revived. 

During the early days of our work, we had an assignment from a government industry-promotion organisation in Chennai for doing a study on small business development. The assignment took me to Bangalore in January 1983, where I was introduced to one more person who was freelancing as a Management Consultant doing market research and project reports. He was from IIT Bombay and IIM Calcutta, and remembered me from our IITB days. He agreed to join us and cover the Bangalore market and merge his existing business with ours from April 1, 1983. He was independently getting work from Bangalore-based clients and this led to our business booming from the second year onwards. 

We also converted our business structure into a private limited company registered in Chennai so that we could show a professional face to the market. All three of us became founder directors. 

To summarize, the key takeaways from the early days were:

1. Focus on demonstrating value and do not bother about financial returns; 

2. Get involved and learn the client’s business so that you can offer assistance of practical value; and 

3. Have a good Mentor from the beginning.

As we progressed, we started getting references to new prospects from these early clients. But we also noticed that our yield per client was not very large and we needed to handle more assignments to develop good top line growth. This required us to hire people to work for us, which added to our overheads. I will discuss later the issues that we had to address because of this, since the overheads were a fixed cost which had to be borne every month while our new business acquisition rate was not fast enough to cover the idle time cost of these overheads. 

In the next post, I will discuss the market environment and the kinds of business opportunities we could see and the new clients we could acquire in the mid-1980s.