Many consultants left employment and set up on their own to escape the trappings of working in a large organisation. A common complaint being that their time was spent managing the organisation rather than delivering their core skills to their clients ...
However, they discover that remaining small can also have it's down side. If they are successful they hit their ceiling and have to turn work away. Or they find that they cannot bid for some work as they don't have the skills or time necessary for larger projects.
A Hub Firm builds on the strengths of having a strong network of complementary businesses who you can draw on to provide services for your clients when you either don't have the time or the skills to deliver on your own.
Usually, but not always, it grows out of a strong referral relationship. The difference is that you as organiser are at the centre co-ordinating the project. You will usually take the lead in acquiring the client and bring in others to deliver specific parts of the project. These specialists in their own field (the cooperative firms) may, in their turn, bring in sub-specialists from their own network or Hub Firm for their expertise (shown as the blue circles in the image above)
In some industry sectors this is the normal way of operating. The construction industry comes to mind where the builder may bring in their own subcontractors of associated trades such as plumber, plasterers and electricians.
Business and management consultancies also use variations of this to greater or lesser degrees of sophistication. The consultant may bring in a marketing expert who in turn brings their web developer, copywriter, graphic designer or photographer.
The advantages for both the consultant and client is a confidence that the team knows each other and can work smoothly together and problem solve. For the Hub Firm in the centre, they are able to pitch for projects larger than they could manage by themselves
However, working collaboratively where each member of the team is working as an independent contractor can have it's own problems. Here are some things to consider when setting out such an arrangement:
- How well do you know this specialist?
What is their special area of expertise? Their competencies may be an obvious area, but do you also know their ethics and reliability? Do they 'fit' with this client?
- Who 'owns' the client?
Make sure you have clarity and a formal agreement around the commercial arrangement with both client and co-operative firm. Who bills the client and who is accountable for what? Who is free to negotiate further work from that client?
- Is reciprocation part of the deal?
An important one to get clear is to manage the expectations on both sides. Referrals are not always reciprocal or the main purpose of the relationship. Some specialists work purely as freelancers for other firms because they don't enjoy the marketing and sales part of running a business.
What they offer is their speciality which, in turn, increases your ability to operate further up the food chain and creates competitive advantages that you couldn't on your own.
However, they can also add value to your marketing through their other relationships, promoting and introducing you to others who need your expertise. As they are operating within your client's organisation, they are well positioned to notice further opportunities for the Hub Firm and bring them to your attention.
I'll leave you with my top tip: Draw out a Hub Firm around your expertise. Who should be in the centre? Do you want to grow your business through leading the Hub Firm or reducing your marketing time by joining other people's Hub? Or maybe you don't want to do this at all and prefer to employ someone or stay small?
Now, which kind of expert would you put in each position on the diagram above? Are you ready to put some real names against all or some of these? Are you already working this way with some people, and which ones need some effort to come on board? Where are the gaps in the service you can offer your clients or Hub owner? How can you meet people to fill those gaps?
Beware being over enthusiastic and going straight for a fully blown 'virtual' organisation. I've seen so many people enter the networking scene and have what they believe to be an original idea to form such a company offering the expertise in the room.
Before they have had time to get to know each other well they are forming a company, paying for branding, a website, an accountant and guess what? No customers!
My prescription start with your own vision of a hub, keep it small and informal and grow from there.
If you'd like to learn more about referral marketing then do give me a call on 07970 638857 and let's have a chat and see how I can help you.