Many consulting firms start out with a clear picture of who their clients are based on the skilled services that they provide. As a result, they focus a great deal of time, energy and capital focusing on their B2C marketing (Business-to-Consumer), trying to sell their services directly to potential clients.
In the early years of your business, however, many consulting practices can reap significant financial benefits from cultivating B2B relationships (business-to-business) where the early practitioner can ‘piggy-back’ on the success of another long-established consulting firm in a different field of practice. For instance, a new landscape architecture firm may cultivate relationships with other architecture, engineering or planning firms who have an existing client stream and a respected reputation. These established firms have already cultured strong B2C relationships and are often receptive to other firms in different fields of practice that will provide new and better services to them and their existing clients.
Over time, as your project scale and complexity increases, you will need multi-disciplinary teams to win competitive RFP driven projects. These early B2B relationships could last throughout your career. In some cases, your firm will lead (you will be ‘prime’) and they will ‘sub’ (sub-consult) to you as the prime. In other cases, you will sub to them and they will lead the proposal, depending on who has the largest stake in the project. The prime usually invoices on behalf of their subs, and the subs will usually invoice directly to the prime.
Generally, over time, your amount of B2B work will decline as a percentage of your revenue as you forge your own direct relationships with long-term clients (B2C), but for most firms, those early relationships will provide a long-term source of revenue. It usually takes anywhere from 5-10 years to become established as a consultant in a local market and during that time, these B2B relationships can help reduce the length of time it takes for you to establish your B2C relationships while providing important revenue to grow your firm. In some fields of practice, these B2B relationships can stay constant as a main source of revenue (for example, some landscape architecture firms maintain a significant portion of their revenue from partnering architecture firms).
B2B Assistance in GroupThinq
While GroupThinq can’t help you establish those important B2B relationships, it can help you develop the business skills to work in a B2B environment. Here’s 2 scenarios; the first with you as the prime and them as your sub (B2C), and the second with you as the sub, and them as your prime (B2B).
B2C with you as the prime, and them as your sub.
If you are ‘priming’ a project, with your partner firm as a Sub, you start by agreeing on their fee (usually at the proposal stage), and then you provide them with a Purchase Order (PO) for the work. The PO should set out the terms of payment, and the anticipated deliverables of work that they will provide. Think of the PO as a reverse proposal you writing to your sub which tells them what and when they will deliver to you, and when they will be paid for their work. A strong PO, like a strong proposal, is a contract that protects both the prime firm and the sub from misunderstandings which could jeopardize the relationship or the project.
When your sub invoices you, they should include the PO number on their invoice so you and your accounting team know which job the invoice is associated with. Once you receive the invoice, it becomes a ‘bill’ to your firm. The project manager usually needs to review the invoice to ensure that the work being invoiced is completed. Bills are usually received from your accounting department and are communicated to the project manager (PM) through GroupThinq. GroupThinq allows the PM to see how much the client has paid to date and what invoices may have come in from the subs. If the sub has delivered what was promised (and if you’ve been paid from the client), then the PM can approve or reject the bill with some description back to your accounting staff. In this way, if the Sub calls your accounting department about the status of their PO, there will be an explanation from the PM.
B2B with you as the Sub and them as the Lead
In many cases you will be the sub to another firm and as such, you will invoice the lead firm, and they will invoice the client on both your behalf. In this case, you will need a PO from the lead firm and it should also have the payment terms and deliverables you are to provide. It is exceedingly important that you know and agree upon the payment terms in advance or you could be stuck with long receivables (waiting a long time for them to pay your invoice). For instance, many firms will bill on a monthly cycle at the end of every month. If you miss sending the lead firm your invoice by even a day or two, that means your invoice won’t be added to their invoice until 30 days later. So, instead of 30 days terms of payment, you are automatically looking at 60 or more days of payment because your partner didn’t add your invoice to their invoice. Remember, cash-flow makes or breaks consulting businesses.
In GroupThinq, you set up your B2B project with the PO provided by the lead consultant. This setting is found in the project financial section of GroupThinq (see Fig 2). GroupThinq will add this PO number to the top of every invoice so that the lead consultant knows what project is being billed and so your invoice can be directed to the right PM for approval.
The B2B relationship is one of the most important sources of revenue in consulting, and fostering a healthy business relationship requires the right businesses tools to allow both firms to communicate together on the financial objectives of the project. If you are new to consulting, focus time and energy on cultivating these B2B relationships rather than focusing purely on the B2C relationships.
GroupThinq allows you to lead as a prime consultant, providing your subs with PO’s and PO numbers for their work and the tools to manage and approve incoming bills from them as they arrive. It also allows you to coordinate as a sub to your prime partner, ensuring that you have a purchase order and a well-defined scope so that all your invoices to them can be tracked and paid on time. Being a good B2B partner means being an astute business partner. GroupThinq fosters intelligent and responsible business leaders and connects your project teams to your accounting teams.