Credibility largely comes down to not only experience, but more importantly how that experience has lead to favorable outcomes of previous clients and projects. this is especially difficult for a consultancy just starting out, which is why the first client is often times the most difficult to land. Why? Because at that point, they don’t have the credibility or the track record that proves that they can add value. Now, the reason that it is “often times” the most difficult client to land, and not ALWAYS the most difficult is due to the fact that if the project is not a success then it makes the next client that much harder to land.
It’s very much like someone who hasn’t established any credit. Banks are very hesitant to give a loan to someone without credit because they don’t have proof that the person can pay back the debt, which is why interest rates are so high- a vicious cycle, but that’s life. However, if the bank does grant the person a loan, and that individual does not pay their bills on time, the next loan will be even more difficult to justify, because at that point, the person has established credit- but the wrong kind. They’ve established poor credit and based on that track record, no credit is easier to bet on then bad credit. This is why it is as a consultancy it is even more crucial to have an abundance of success stories early on.
For individual people, financial experts encourage to take larger risks early in life and become more conservative as life progresses. For a young consultancy however, this rule is actually inversely in effect It is important to manage risk most closely at the beginning to set up a positive track record. to establish credibility. Focus on what you know and gain experience, learn from successful initiatives and pay attention to other areas that may be opportunities of growth in the future.
Credibility is a difficult predicament because, also much like credit, you need it in order to get more of it. Therefore, early customers have to take much more of a risk going with a consultancy that has not established credibility. Therefore, as a young consultancy, they must incentivize this risk by working for cheap. There is a direct correlation between how much credit a consultancy has, and how much of a premium they can charge for their services.