"Avoid confusing clients by using HR jargon that they dont understand. "
By Ruth Cornish, co-founder and director of HRi
A recent Telegraph article reported the rather unwelcome fact that 60% of new businesses will go-under within three years, and 20% will close their doors within just 12 months. This of course will be worrying reading for any HR Consultant looking to set up shop alone and may cause many to avoid making the jump altogether. But don’t give up on that dream just yet. In this article we will cover 10 of the main mistakes made when starting a HR consultancy and provide some helpful tips on how to avoid them.
Mistake one: Starting the business before it’s set up properly. When staring up a HR business the thing that most people get excited about is choosing a name, logo and building a brand. Certainly, this is important, but it’s critical to cover a number of other areas first. The key to knowing what order to do things in is by putting together a business plan. Only then can you know what you stand for, what your ethos is, what types of clients you want to work with and perhaps most importantly where you want to take the business longer term.
Mistake two: Miscommunicating with clients. Avoid confusing clients by using HR jargon that they don’t understand. The key here is to speak in plain English unless you are dealing directly with HR professionals. If a client does not understand what you are saying, they are unlikely to want to work with you. For example, an SME client may understand ‘pay and benefits’ better than ‘reward or remuneration’ but a professional services client may not.
Mistake three: Making the pitch all about what you do. When you meet a new prospect, it is tempting to create a slide deck and tell them all about you can do for them. This is a big mistake. Makes sure you listen more than you speak and instead focus in on what the customer requires.
Mistake four: Mishandling Requests for Proposals (RFP). Having a fixed format for RFPs can create a rabbit hole that you may fall down. A common mistake is trying to fit the client’s needs into your existing services template, rather than the other way around. By all means have a template you work from as a starting point, but make sure you really tailor this to the individual client, clearly articulating how you propose to respond to their needs. One of the benefits of working with an external HR Consultant is flexibility and innovation, rather than simply offering a one size fits all approach. Make sure you capitalise on this.
Mistake five: Offering retained services without any due diligence. It is always energising to be asked to quote for a retainer. But take care to ensure you know as much as possible about the potential client and ideally perform a full HR audit so you can shine a torch in every area of their business before you quote. Be very clear about your scope of services and understand what you are agreeing to do.
Mistake six: Confused or no pricing strategy. A common question for new HR Consultants is what should I charge? There are a few things to think about here. Firstly, what are your plans for your business? Do you want to build a business that you can sell or is it more of a lifestyle business? Are you positioning yourself as an Interim or a Consultant? The biggest decision you will make is whether to charge by the hour as you immediately limit your capacity unless you take on associates or staff. Also take time to consider what you are worth? If you charge a higher rate, clients will expect more of you. Can you deliver this?
Mistake seven: Trying to appeal to everyone. It’s tempting, but you’re not going to carve out your name or reputation by being everything to everyone. Consider what makes you different? Would you really want to work with everyone, and which brands would you prefer to avoid? The clearer you are in your own mind on this, the more likely you are to find that dream client.
Mistake eight: Not having a sales or marketing strategy. Most HR Consultants love working with clients, but feel uncomfortable about selling. Marketing is often a new area and seen as the great unknown. Be clear what you are selling and what you stand for. Know when to seek the advice of a professional, such as a PR Consultant or marketer. Remember you are great at what you do and bringing someone on (even if outsourced to a freelancer) will ensure you can continue to do your job whilst they can do what they’re good at; getting your name out there.
Mistake nine: Failure to leverage from your reputation. Your existing or dormant clients are key to new clients. Understand how to communicate to them about what you are doing and what you have done. Remember they are part of your tribe and are the ambassadors for you and your business.
Mistake ten: People buy people. Remember to work on your business as well as in it. Loving your clients, anticipating their needs, and solving problems they don’t know they have (and doing this with passion and drive) is all part of running a successful business. Your passion will be contagious to make sure it shines through.