How to Start a Consulting Business – A Comprehensive Guide

by | Jun 7, 2020 | Business, Starting a Business

If you’re extremely self-motivated, looking to start your own business, and considered to be an expert at something, then maybe you should step into the world of consulting.

These days, businesses are relying more and more on consultants over traditional full-time employees since they are generally cheaper (no insurance or retirement plans) and can be more effective at getting results.  According to the website Consultancy.org, the global consulting sector is one of the largest and most mature markets in the service industry.  It currently has a total value of around $250 billion and doesn’t appear to be slowing down any time soon with a 4.1% year over year growth rate.

So how does someone actually get hired as a consultant?  In this post, we’ll walk you through everything you need to know on how to start a successful consulting business.

Starting consulting business

Define What You Can Offer For Your Consulting Business

Before you even think about your first consulting client, take a step back and honestly ask yourself: 

  • Why would anyone want to hire me? 
  • What do I bring to the table that others don’t?
  • What deep-level expertise do I have that is marketable or useful to an organization?
  • How could I help to identify problems and then work with a team to solve them?

In other words, you need to define your expertise or niche.  

For many consultants, they typically take past experiences and best practices that they’ve learned from their previous jobs and then apply this knowledge to their client’s situation.  For example, someone with professional, corporate accounting experience would likely make a wonderful consultant to a smaller business that is under a stressful audit or struggling with their books.

Build Your Credentials

Another thing you’ll want to do is research if you need any special certifications and special licensing to become a professional consultant.  These could end up becoming potential roadblocks to attracting customers if you don’t have them.  

Be sure to contact your state’s local Department of Licensing and Regulatory Affairs (or similar branch).  In addition, you may also want to look up other consultants in your area and take note of what types of credentials they’re advertising.  

Brush Up On Your People Skills

Don’t forget that as a consultant you’ll be working one-on-one with clients.  So now would also be a good time to remember your people skills.  

You could start by grabbing a copy of Dale Carnegie’s “How to Win Friends and Influence People” and refresh yourself on his timeless principles for collaborating with others.  Or you could enroll in an online class that teaches you about developing your emotional intelligence.

Make Your Connections

To get the word out about your consulting business, networking is going to be critical.  Start regularly reaching out to past colleagues, bosses, suppliers, and other friends you’ve made in the industry.  Connect with them on social media and even invite them out for lunch or drinks occasionally.

Another strategy will be to go to places that are key to the industry of your expertise, such as upcoming trade shows, expos, seminars, training events, etc.  Not only will this help you to stay current and stay in touch with old contacts, but it will also help to establish some fresh, new ones.

Other ways you could attract some attention from potential clients would be to:

  • Volunteer part-time
  • Join a committee
  • Participate in public speaking events or forums
  • Start a blog and gain a following
  • Publish white papers
Connections For Your Consulting Business

Perfect Your Pitch

When someone asks you about your consulting business, be sure your message gets communicated the way you want it to be.

Draft your elevator pitch and practice it regularly.  Rather than make it a dry, robotic script, let it serve as a flexible set of points that you want to intermix into conversations with potential clients.  Your pitch should highlight your strongest attributes such as expertise, past accomplishments, success stories, etc.

In addition, you should also assemble a digital portfolio that you can readily email to potential companies and organizations.  Your portfolio will have the same information as a resume but it should definitely be more eye-catching with colorful photos, graphics, sales figures, testimonials, etc.  If you need some help creating it, you could always outsource this activity to a freelance artist on Upwork or Fiverr.

Form an LLC

To protect yourself legally, it’s highly advised that you form an LLC (limited liability corporation) for your new consulting business.  This will help shield your personal assets in case one of your clients decides to sue you for any reason at all.  

LLCs can be set up easily through services such as Legal Zoom.  After you create one, you will next want to file for an Employer Identification Number (EIN) with the IRS.

What To Charge Your Clients

According to Glassdoor, the average earnings for a consultant is $79,526 per year, with the range being between $53,000 and $119,000 annually.  While that works out to approximately $40 per hour for a full-time employee, remember – most consultants work only part-time.  Therefore, you should be able to charge a lot higher than this.

Ultimately, the price you negotiate will come down to the market rate of your competition and how much the business is willing to pay you.  As an alternative to an hourly rate, you could also offer a fixed fee for a project (for example, $20,000 to work part-time over the next 3 months).  That might be seen as a benefit to both sides since your hours could be more flexible.    

Most businesses look at consultants just like they look at any other business opportunity – they want to see a great return on investment (ROI).  For example, if they can hire you for $100,000 but you help them to save $1,000,000, then you will be perceived as a great deal for them.  Therefore, no matter what your rate is, it’s in your best interest to help your client to understand how your service will benefit them financially.

Charging clients

Working With Your Clients

To make the deal official, your client should sign a contract.  This way they will be legally bound to pay you for your services (just like you are bound to provide them with proper service).

Once you’re hired, its time to show them what you’ve got!  Be sure to very active participant in every meeting or project you’re involved in.  You don’t need to dominate the conversations, but you should definitely provide guidance and insight as much as possible.  After all, that’s why you were hired!

Regularly summarize your progress in emails so that you have a clear paper trail of all of your deliverables.  That way no one can dispute your contributions to the team or the fulfillment of your obligations.  Plus that will make it a lot easier for you to detail your activities when you send your invoices.

Keep yourself organized by keeping a running list of your activities and the status of each one.  Also make sure your calendar is always up to date and that you have notifications ready so that you never miss an appointment or deadline.  If being organized is something you struggle with, consider hiring a virtual assistant (VA) to help you stay on top of your tasks.

Continue Your Education For Your Consulting Business

One of the worst things you can do as a consultant is to let your expertise become obsolete.  Technology and best practices are always changing, and so to remain relevant you’re going to want to make sure you’re always up on the latest methods.  Spend some time going to training sessions or seminars that you feel will help you to keep up with the times.  Yes, it might cost you some of your profits, but it will a reinvestment into your business that you won’t regret down the line.

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<span style="font-size:12px;font-weight:500">Author</span><br><a href="https://wealthpursuits.com/author/kevin/" target="_self">Kevin</a>

Author
Kevin

Kevin is an ambitious entrepreneur that is obsessed with all things related to finance. From a young age, Kevin has always been involved with side hustles ranging from online selling to freelance work. Over the years, Kevin graduated from side hustles and started launching multiple online and offline businesses. Kevin is a serial entrepreneur who loves starting new businesses and exploring all things related to business and finance. He is constantly looking for new ways to save money, invest money, and create income streams.

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