Starting a consultancy is six decisions, and the company number is not one of them. Before the first client you decide what your firm is not, which pain you will specialise (specialize) in solving, what a day of your work costs and therefore sells for, who the first client is and how you reach them, what the business will announce in three years’ time, and how many months of cash sit between you and the ceiling on your revenue. Every page in this cluster is about one of those decisions. The newsletter post We thought we could build something tells the story of how my co-founder Steve Thair and I made them in 2013, with a blog, an argument and no customers. This page is the method drawn from that story: the numbers and the decisions, in the order they came.
What this cluster covers
The cluster starts with positioning, because everything else prices off it. The playbook on choosing a consulting niche by stating what you are not is the method behind the glossary entry on positioning: write down the sentence that says what your category is not, publish it under your own name, and see which competent people disagree. That sentence gives the pain questionnaire something to test. Ten pains, ten conversations and a scoring rule turn a founder’s guesses about what hurts into a ranked list, and the guide on market research for a services business is the same method written for someone who has never run a discovery conversation.
The rate card with no billing history comes next, and it is the point where most new firms guess. The consultant day rate guide works the number back from cost base, honest billable days and the margin you need; the playbook grades that number into a ladder a buyer can pick a rung on; the fixed price against time and materials comparison decides who carries the risk when the effort runs over. The guides on becoming a consultant and working as an independent consultant cover the first client: who to talk to, what to say, and why the first engagement should be sold at the card rate rather than a favour.
Then the two pages that usually get written last and should be written first. The consulting business plan guide treats the plan as a working-backwards brief, a dated future announcement with an FAQ, and the playbook on writing a three year plan adds the review structured so it can say no. The cash flow forecast for a services business guide and the pipeline coverage ratio playbook are about cash: the months between you and the ceiling, the sustainable ceiling on your revenue, the cost lines it sits against, and the two questions hiding inside one coverage percentage.
The order to read it in
| Step | Read | The decision it settles |
|---|---|---|
| 1 | Positioning and the niche playbook | What the firm is not, in one sentence you will publish. |
| 2 | Market research for a services business and the pain questionnaire | Which pain is real, shared and measurable. |
| 3 | Consultant day rate, then the rate card playbook | What a day sells for, graded. The rate card calculator does the arithmetic. |
| 4 | How to become a consultant or independent consultant | Who the first client is, and the terms of the first engagement. |
| 5 | Consulting business plan and the three year plan playbook | What the business announces in three years, and what has to be true first. |
| 6 | Cash flow forecast for a services business and pipeline coverage ratio | The ceiling, the cost lines and the number to know every month. |
Steps one to four are enough to sell the first engagement. Steps five and six are what stop the second year being a surprise. Once the first work is billed, the pricing hub takes over the rate card and the metrics hub takes over the monthly numbers.
The house position, in five sentences
Sell what you already know how to do, because a consultancy with no delivered work has nothing else a buyer can price. Set the rate from your cost base and the days you can honestly bill, not from what a competitor charges or what feels polite. Publish your position before you incorporate; a company number is an afternoon’s work and a point of view takes months to earn. When a buyer says the price is too high, hold the rate and flex the effort, because a discount teaches the client that the number was never real. Know the number every month, the cash and the ceiling, from the first month there is one.
The story and the method
Steve and I started the business that became DevOpsGroup, a services company helping other businesses build and run software, in 2013. We began with a blog and an argument about what our category was not, borrowed a rate card because we had no history to build one from, and used what we wrote as the way into the first conversations. Eight years later, in 2021, the business sold for over $30m. More recently I started again with Critical Cloud, a services business that helps companies keep their software and cloud systems running reliably, and the second start went through the same six decisions, this time knowing what they were.
The newsletter tells those two starts as stories, drawn from my notes, diaries and recollections. This cluster is the method: what we would decide, in what order, if we were doing it a third time. The playbooks are in development, and each page carries a waitlist.
Playbooks and tools
- How to choose a consulting niche by stating what you are not: Publishing a point of view before you have a company, and finding out within two weeks whether anyone competent disagrees.
- Customer discovery questions for a new consulting business: The cheapest market research a founder can run: ten questions, ten conversations, and a ranked list of what actually hurts.
- How to build a consulting rate card with no billing history: How to set a defensible published rate card with no billing history, instead of one guessed day rate you spend two years defending.
- Pipeline coverage ratio and the cash cliff in a services business: Separate your sustainable ceiling from your best month, and read your pipeline as two questions instead of one reassuring percentage.
- How to write a three year plan for a consulting business: Asked for a three year plan and about to write an ambition instead: a dated future announcement, an FAQ, and a review structured so it can produce a no.
Guides
- Cash flow forecast for a services business: billable days, pipeline coverage and the ceiling you cannot see: A services forecast is people times days times rate, minus the bench. The month you can repeat matters more than the month you are proudest of.
- Consultant day rate in the UK: how to set one you can defend: A day rate you can defend is worked back from what the firm costs to run and how many days it can honestly bill, then graded, so that a buyer picks a rung rather than argues with a number.
- Consulting business plan: the working-backwards brief, with the sections a lender or partner expects: Most business plan templates are written for companies that sell a product many times; a consulting firm sells skilled people's time, so its plan should start from who will pay, at what rate, for how many days, and what that leaves once the people are paid.
- How to become a consultant: the honest version from someone who did it twice: You need a problem you have solved repeatedly for an employer, one person willing to pay you to solve it for them, and a price you can explain; the company, the website and the business cards can all wait.
- Independent consultant: how to set up, price your work and win the first client: Setting up takes a week. What you charge and who you talk to in the first month decide whether you earn anything, so do those in the right order.
- Market research to start a services business: ten questions, ten conversations, and a ranked list of what hurts: A services business needs one buyer, not a market size. The cheapest research a founder can run is a short list of pains, ten conversations and a scoring rule.
Comparisons
- Fixed price vs time and materials for consulting work: hold the rate, flex the effort: For consulting work, hold one defensible rate under both models and move the scope instead: quote fixed price where you can specify the result and its acceptance, time and materials where the work discovers its own scope, and never discount the rate to make either one fit.
Definitions
- consultancy: A consultancy is a business that sells the judgement and skilled time of its people to solve a client's problem, priced by the day or by the engagement. Agencies, MSPs and contractors differ in what they sell and how they are valued.
- positioning: Positioning is the decision about which clients, problems and competitors a firm wants to be compared with, stated so plainly that a buyer can place it in a sentence. For a services firm, the quickest route is negation: say what you are not, then publish it.
- rate card: A rate card is the published list of what a consultancy, agency or managed service provider charges for its people's time: one price per grade per unit, usually a day, with the commercial terms that travel with the price attached.
- services business: A services business (service business, professional services firm) earns its revenue by selling the time and expertise of people rather than copies of a product. Revenue is bounded by headcount, rate and utilisation, which is why product-company advice misleads its founders.