The Self-Employment Wave
Who are the consultants coming to market, and how can you deal with the growing competition?
Self-employed people are those who define themselves as working for themselves or running a business, rather than receiving a wage or salary from an employer. And they’ve been on the rise.
Historically, independent work was more common. Looking back just 100 years 45% of people were self-employed in the US, and Europe also saw the same trajectory. As countries became wealthier, traditional jobs and salaries became the norm. But in the last years, several reports argue that this trend has started to reverse. We are seeing a steady growth of self-employment, and expect to continue to do so in the next years.
Their presence in the consulting industry is not recent news by any means. Take the UK as an example. During the whole last decade, UK’s gig economy has continued to boom. In 2020 there were more than 5 million self-employed people in the UK, up from 3.2 million in 2000. They outgrew the labor market, representing 15.3% of employment, up from 12% in 2000. The same trend can be found in the both US and most of Europe.
Not every independent consultant is the same, though. There are two major kinds of competitors entering the industry: freelancer consultants, and boutiques or specialist firms.
They have different propositions and strengths, but both put pressure on existing consultancies to review their business model and how they operate right now.
The Newcomers Are Not All The Same
The rapid growth of independent consultants was fulled by freelancer portals, which have also grown in number and now can support companies of different sizes and verticals. Upwork and PeoplePerHour, for example, serve SMBs who need operational support. Comatch and Talmix, on the other hand, have a stricter vetting process for applicants and closed partnerships to supply several Fortune 500s with expert consultants.
Online portals have effectively eliminated the need for intermediaries, which was a lucrative part of the business for many consultancies. Disintermediation, often referred to as “bypassing or cutting out the middleman,” is a reality not only in the consulting industry, but in entertainment, hospitality, finance, and any other that technology touches.
If your business model consisted mostly of moving talent from the market to match clients’ requirements, you better rethink it. There’s almost no value added to the activity, and competing against online networks to do the job is hopeless.
But freelancers are not the only form of competition to be on the rise. More boutiques and specialist consultancies are entering the market, and with a different characteristic and proposition. New players are leveraging new technologies that enable them to do more with less, and faster.
If you’re reading this report, you know the value of having a lean structure. More people means higher fixed costs and less flexibility. To avoid it, most niche consultancies focused on building a network of trusted partners and collaborators they could call for larger projects or when in need of specific expertise.
The new entrants also do that, but take it to a different level. They are digital-savvy and are constantly searching for tools and ways to automate internal processes, from research to delivery. They won’t hire a person if a robot can do the job. Operating without the same overheads, of course, means putting additional pressure on prices.
But we believe that shouldn’t be the main focus for existing consultancies. Every discussion on price is really a discussion around value, and value is personal and subjective.
Who decides what “better” is are your clients and prospects, and they can only judge your services once you create a comparison. If that comparison is too similar, then the only way to differentiate is through price. It is not a coincidence that “defining a competitive advantage” is among the main priorities for several boutique consultancies working with us.
Prospecting Insights And Ideas To Explore:
The best way to deal with growing competition is to play your own game. Escape competition with authenticity. Our team sees two ideas to explore: trading value as a trusted advisor, and differentiating your brand by building a personal monopoly.
1. Becoming a trusted advisor:
Trust is not built, but given. You can’t make people trust you — you have to first give them enough arguments to decide to trust you in the first place. But how do you do that? How do you show you’re trustworthy? You have to provide evidence of competence, honesty, and reliability. Let’s how each of these elements manifests in practice.
You demonstrate competence by trading value. Every time you reach out to a prospect you want to work with, you ask for a time commitment from his part. If your client doesn’t recognize the value in meeting with you, you make it easy for them to reject your request and do something else with their time. That is why you need to offer your dream clients benefits even if they never hire you. If you can trade insights, ideas, or interesting experiences that are relevant for them, there is value that justifies their time. When you pitch the great privilege of listening to you talk about you, your company, and your solutions, you show you are not qualified to understand and advise clients.
Honesty was the most valuable trait in sales, according to The 2020 Trust Outlook report. There are two simple keys to be perceived as honest. First, do not promise what you cannot deliver. Be upfront about what your service can or cannot do when talking to prospects. Second, follow through with your commitments. If you tell a prospect you will send them the information by Monday, do it. If you set up a call, don’t forget. It is really that simple.
Lastly, reliability. If a company never worked with you before, it will look for signs to evaluate how reliable you are before engaging. The 2 biggest ones are social proof and visual identity. You demonstrate social proof by showing you have a strong client portfolio and sharing case studies or testimonials from top brands in your segment. The visual identity of your website, social profiles, and content also plays a big role, since having a consistent design communicates your attention to deliver good results every time.
2. Building a “personal monopoly”:
In the past, the fastest way to demonstrate competence was to narrow down on a market segment and offer specialized services. Now, however, this is not enough — there’s no such thing as unexplored niches anymore. In an online and borderless world, you demonstrate expertise by building a personal monopoly.
A personal monopoly, which is a term coined by David Perell, is built by producing original content. Your unique intersection of skills, interests, and personality traits allows you to be known as the best thinker on a topic. The Internet rewards professionals with personal monopolies because it rewards differentiation.
But just as you compete in the marketplace against other consultancies, you also compete when creating content. This is an extensive topic, but let’s quickly mention what the two biggest challenges are.
The first one refers to the quality of your content: your ideas are competing against the ones from other experts, and they need to be relevant to the prospect. There’s only one way to do that, and that is to create content yourself and avoid outsourcing it by any means. If your personal monopoly reflects your innate interests and you’re truly fascinated by what you’re writing about, the content will stand out among the noise.
The second challenge is the battle for attention. To demonstrate competence your ideas need to be shared and consumed, and that is when outreach campaigns get to play their role. Waiting for people to find your content on their own puts you in a passive position, and organic reach is decreasing over time (something we will be covered in the third trend of this series).
One solution is to identify the people and companies you can add more value to (your ideal clients), and proactively share your expertise in a respectful and conversational way. Remember: You want to stand out and generate more opportunities while making competitors irrelevant.
