CXO

Closing a consultancy shop the right way

It may sound easy, but if you shut down your consultancy doors too quickly and without enough thought, you're not only hurting future career opportunities but your staff and clients as well. Here's a best practices approach.


While it's clearly easier than trying to establish a consultancy, shutting the doors isn't as easy as many consultants might think. A slew of personal, professional, and business considerations require attention before taking any action. For those of you who are or have considered closing down a consultancy business, I'll offer the best practices I learned when it came time for me to make this determination.

Analyzing economic impact
When it became apparent that I would need to shut down my consultancy, my initial concern was how it would affect my family. They had taken a great deal of pride in my ability to develop a business that was providing well for our needs, and I certainly didn't relish the thought of admitting any sort of defeat. They would have concerns about the future and the changes that were soon to unfold.

After digesting my thoughts on this for nearly a week, I decided that a private family outing in the form of a hike around some beautiful countryside would be a great background for discussing the upcoming changes. The scenery was outstanding, and we all felt comfortable in expressing concerns and thoughts about what was going to happen.

In the end, we had developed a good battle plan for all and enjoyed a wonderful day. A defeat had been turned into a positive picture for change. My family was in good shape and ready to move on with me to my next career step.

Setting client expectations
The next order of business was taking care of my existing client base. They were not only business partners holding legal contracts, but also personal friends upon whom I might need to rely in the future for potential business, positions, or recommendations.

To minimize the impact to their enterprises, I began planning how to provide for their business needs. I wanted to thoroughly consider how best to address the needs of their program/project teams and operational support teams.

I realized that my contracts, mostly in the form of statements of work (SOWs), contained specific provisions that governed time period notice requirements and intellectual property considerations; yet, they did not fully address all of the client's business needs after my consultants completed current projects.

The SOWs were written and signed, in part, to cover only worst-case scenarios, not all possible issues. They were written so that the affected enterprises would have to make their own adjustments to complete some projects and provide operational support on numerous systems.

I saw these issues as opportunities. I wanted to provide customer service for my clients rather than simply shut down my own operations and turn over the required code and documentation. I could better ensure a smooth transition for the affected enterprises and improve my position with them for any future needs or considerations with a little extra effort and planning.

I discussed this issue with staff and asked if they would consider signing on with clients as independent contractors to help complete projects or provide operational support. (I'll discuss more issues regarding staff later in the article.) I also contacted various IT organizations that could supply the manpower and services we had been supplying, and surveyed their ability and effectiveness towards providing support for my clients.

Consequently, when I finally broached the issue of closing down my consulting firm with my clients, and once they were past their initial shock, I had viable options to offer them.

My own staff and other organizations were offered to them in a cost/benefit analysis approach that truly gave them a comfort level for proceeding. My clients felt that they were still being treated well, and had positive options. They had confidence that any code and documentation which they would need would be fully provided, and most of all, that they had alternatives on the table for addressing their project and operational support needs.

We all left the discussions with smiles and a warm and positive feeling. I felt that any future needs that I might have with them would likely be welcomed. I found that not burning any bridges, but trying instead to further build and enhance them, created a win/win solution.

Coordinating change management
I had a unique relationship with my staff in that I didn't have any direct employees. They were all subcontracted, with most running their own corporations or sole proprietorships. In this situation, the downsizing issues were greatly minimized. The subcontract approach also minimized many hassles and costs to the consultancy.

Also, as I mentioned, by working with my staff to position them to take over roles with my former clients, I gave them some viable options from which to choose. Just leaving them on their own with no options was not something I relished.

Although naturally disappointed about the upcoming change, they all left the discussions about the closing of operations fairly happy and optimistic about future options. I provided the names of the companies I had researched as potential alternatives for my clients. These companies had indicated that they might need some of my experienced players to assist in providing more seamless transitions.

Some final thoughts
In retrospect, I believe I took a very sound approach to closing down the consultancy; there were no hard feelings created inside or outside the company. My clients, staff, and my former clients' future business partners were all well positioned to provide effective solutions for all parties involved.

This approach will serve me well if I need any of their services down the road, and I could not see a better way to effect the closure of my consultancy. Striving toward a positive solution during such a difficult turn of events was well received, and by far, the best practice to employ.

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