If you’ve worked in a specific area for any length of time, chances are you’ve gained enough knowledge and insight to serve as a consultant to organizations that are looking for a little guidance. Whether it’s a company looking to launch their marketing department or a sole proprietor looking to make his or her first hire, these people all need something that you have: experience.
But how exactly do you start a consulting business, and what steps should you take? We’ll explore these questions below as well as conducting a quick assessment that ensures consulting is the right occupation for you.
Is Consulting Right For You?
Answer each of these questions:
- Do you like helping people by using your knowledge or experience?
- Do you have confidence that you can make a positive impact on any person or assignment?
- Do you like sales?
If you answered “yes” to these questions, you’re poised for a career in consulting.
Why Those Questions?
If you don’t like helping people, or find most people difficult to deal with, being a consultant probably isn’t the best choice for you. While most wouldn’t call consulting a type of altruism—you’re still getting paid, after all—there is an inherent level of offering aid and assistance that normally speaks to a person’s desire to make an impact.
Working as a consultant takes confidence as much as it takes expertise. You need to believe that you—yes, you—can bring something valuable to the table and help to educate or inform a client on what he or she needs to do. If you don’t believe you can do it, the client won’t either.
As with any job or business, a large part of it is finding clients and getting paid. As a consultant, getting customers is about selling your talents and competency. If you’re not comfortable promoting yourself, you might find it challenging to run a successful consulting business.
I’m Ready to Consult. Now What?
Now that you feel you’re ready, it’s time to roll up your sleeves and start getting paid. Here’s how to do it.
1. Thoroughly Assess Your Skills and Talents
What industry, topic or niche are you most qualified to consult about? What are you most comfortable offering advice about? The answer to these questions may be different, so it’s important to understand what you know before you strike out on your own.
If you’ve worked for ten years in the financial sector, then you’ve probably learned a lot of information that others might find useful. Your passion, however, might be marketing, which is what you’d really like to help businesses understand.
Enthusiasm for your subject can take you places, but enthusiasm alone isn’t sustainable. A small business or entrepreneur is going to hire you based on your track record. In the aforementioned example, your track record was made in finance. If the thought of working in finance again feels mind-numbing and completely repulsive, then you may need to spend some time building up your reputation in a different area.
2. Conduct Research on Your Chosen Specialty and Consultant Type
You should understand exactly what you’re getting into. Spend time researching your industry, determine what others are offering and then offer something different. You want to bring something unique to your consulting business, which ideally will be the sum of your experiences and expertise.
Remember, however, that “unique” shouldn’t mean “useless.” Many consultants spend unnecessary energy attempting to conjure up new solutions to old problems; solutions that ultimately don’t work. If you have something truly unique to offer and know that works, then by all means, flaunt it. But don’t reinvent the wheel if the one you have is right for the road you’re on.
3. Determine What Type of Business You Want to Start
You can choose to be a sole proprietor, but some larger clients may hesitate to work with you because all of the legal liability falls on you alone. There are more protections offered with a limited liability company (LLC) or limited liability partnership (LLP) if you’re working with a partner.
Remember, however, that decreased personal liability comes with legal responsibilities as well. Make sure you have a clear understanding of the tax rules you need to follow.
4. Define Your Target Audience
Once you know your specialty area and industry, it’s time to identify your target market. Your market will likely be other businesses, so look at factors like a business’ age, services offered, revenue figures and more. Once you build an understanding of who your customers are, it will be easier to find potential clients that find you useful.
5. Set Your Rates and Stick to Them
Many consultants have difficulties charging their clients what they believe they are really worth. The source of this difficulty, be it modesty or a lack of confidence, is inconsequential. The fact is that if you undercharge, you won’t be a consultant for long.
Try to learn what the typical rates are for consultants in your industry, or with your level of experience. It would make sense that Consultant A, who has 30 years of financial experience, can charge $150 an hour, while you, Consultant B, who has 10 years of financial experience, may only be able to charge $100.
While you may think that a way to get work is to underprice the competition, this strategy has two drawbacks:
- If you undervalue your knowledge too much, potential clients will too.
- Once you’ve set your rates, it’s tough to raise them.
6. Get Comfortable with Marketing and Advertising for Small Business
If marketing isn’t your area of expertise, it’s a good idea to spend time learning about it. That way, you can determine the best ways to promote your consulting service. Effective marketing methods can vary depending on region and industry. For example, Craigslist is an acceptable way to find consultants in some markets, but might be looked down upon in others.
Conducting some preliminary online research should give you a general idea of what the most common type of promotions are. If you know any other consultants in your area, you might want to ask them how they find clients. You can also ask potential clients—those that you already have a relationship with—where they most commonly find consultants.
7. Be Ready to Work
Saying you’re a consultant and changing your job title on LinkedIn doesn’t mean the clients will just come pouring in. You’ll need to actively sell your services and knowledge to potential clients. That means building a sales pipeline so that you are always in the process of making a sale.
8. Work at Building Relationships
Consulting is inherently a relationship business. In other words, clients must feel comfortable with you so that they can work with you. From first contact to a signed contract to the final invoice, focus on keeping the relationship open and honest. Be upfront about your knowledge and how you can help the client. Don’t be afraid to tell them no or redirect their requests. Remember, you are the expert.
9. Above All, Listen
As a consultant, the most important thing you can offer a client—besides your knowledge and time—is a sympathetic and understanding ear. Owning and operating a small business is a stressful proposition, and these entrepreneurs are really looking for someone who understands them and their daily challenges. Be their business mentor. Put on your active listening ears and convince them that you get it. Then offer them the knowledge they need to fix it.
Being a consultant enables you to work for yourself by doing what you love, or at least what you’re good at. Follow the steps outlined above to embrace the consultant lifestyle and share your knowledge with others who need it.