If you've ever thought about starting your own business because you want to use your skills and knowledge to help others, consulting might be the right way to go. Starting a consulting business has little overhead, allows a consultant full control of their clients and schedule and is an easy business to grow and scale. With some strategy and planning your consulting business can grow as much and as quickly as you want it to. That isn’t to say you won’t need to do some hard work, but the opportunities are plentiful if you are willing to work for them.
What is a Consultant?
In short, a consultant is an expert who advises in a specific area. Consultants are usually hired by companies or individuals for their expertise in a particular subject matter.
A consultant could be brought in by a large company to help them operate more efficiently, grow business into new verticals or markets or advise on management structure or specific programs.
Other times, consultants have deep expertise in one area of business. Some companies hire outside consultants to help with SEO, digital marketing, sales strategy or content production.
Most consultants work with more than one company or client at a time; however some will work with one company for a specific time frame (six months or a year, for example) before moving onto another engagement.
Benefits of Consulting
• Set your own hours.
As a consultant, you can decide what hours you want to work and be available to your clients. Some consultants offer 24/7 access to their clients, while others may only be available only Monday – Friday from 10 am to 3 pm. How you want to work will depend on your personal preferences and the commitments you have across your entire client base.
• Work with clients on your own terms.
Just like you set your own hours, you can decide what type of work you’ll do and how you do it. If you only like to manage digital projects or consult on social media but not email marketing, that's a decision you can make as a consultant. Additionally, you can decide if you want to work in an office or remotely and conduct meetings via videoconferencing. Some consultants like to take opportunities to travel since they can work from anywhere in the world. When you start a relationship with a client, you’ll set up your statement of work and contract, which will outline exactly what services you’ll perform, what you will deliver to the client, how you will communicate with them and when and how much your services will cost.
• Use your experience and expertise to help others.
One of the best parts of being a consultant is being able to help others. Your strengths can complement the strengths of your clients to help them grow or scale their business. You can also help companies save money by working with them on a part-time basis. Your consulting fee, while significant to you, is generally less of an expense for your client then the salary and benefits of a full-time employee with similar experience and skill sets.
13 steps for starting a consulting business.
1. Define the services you want to offer.
You’ll want to decide what you’re best at and what you can sell. Just because you do something really well doesn’t always mean people will pay what you want to charge for it. You should do some research and look at what services people hire consultants to perform to help inform your thinking. Be sure to think about the work you most enjoy doing. In a full-time job, you probably wear many hats, but as a consultant, your work can be much more specific.
2. Define your target customer.
Whom do you help? If you consult on digital marketing, your clients will most likely be CMOs or marketing directors. You want to make sure you’re aligning your solution with a very specific role. This will help you find more of your target customers. For example, if you specialize in SEO for companies with revenues between $10 million and $50 million a year in revenue, you’ll have a better chance of being able to qualify prospective clients quickly.
3. Set up your business legally and financially.
You’ll need to decide if you want to set up as a sole proprietorship, S-corp or limited liability corporation (LLC) and file paperwork accordingly. You’ll also want to set up a business bank account to separate your personal finances from your business finances. It's a good idea to consult with your accountant or hire one to make sure you’re set up for the year tax-wise. As a consultant you’ll need to pay your estimated taxes quarterly.
You should also work with your lawyer or an online service like LegalZoom to set up your paperwork. You should have a contract with every client and may want to outline deliverables on a statement of work (SOW). Some states, like New York, require a contract for all work over $600. Your lawyer and/or accountant should be able to help you navigate all of the set up for your business to ensure you’re operating legally. There are also resources available through the Small Business Administration and other local small business clinics. Check with your local university or library to see if they have one. Even consultants sometimes need to hire consultants!
4. Determine starting prices for your offering.
One of the most important questions you’ll need to answer as a consultant is “How much do I charge for my services?” This might make you a little nervous, and that's okay! There are a number of ways to break down this process into a figure with which you feel confident and comfortable. See if you can find salary survey data for other freelancers. Groups like Freelancing Females have a crowdsourced rate sheet where freelancers/consultants from around the country self-report their rates for services. You can use this information as a guide. Remember to account for your level of experience when you consider rate ranges. You can also use your most recent salary as a starting point. Take your last salary, and add 30-50% to account for additional taxes, vacation, health insurance payments, retirement contributions and business overhead. Then, divide by 12 — that’s how much money you’ll need to bring in each month. You’ll then want to divide that number by the number of billable hours in that month, and that would be your hourly rate.
For example, if you made $80,000 at your last full time job, you should target $120,000 as a consultant. That means you need to bill $10,000 a month. If you bill 100 hours per month (about 20 hours per week) you’ll need to charge $100 per hour. If you bill 140 hours per month (about 35 hours per week), you only need to charge $71.50 per hour. These rates are a general guideline and don’t take into account market rates or cost of living in your city. You may also decide to charge a retainer or a project-based rate. This means instead of tracking and billing hours, you bill a flat rate for specific work. If you decide to bill on a project basis, you will want to make sure you are very clear about what is included in the rate.
5. Create a website and online presence.
Once you’ve decided what services you want to offer and how much you're going to charge and set yourself up as a legal business, you’re ready for clients to find you. You’ll want to set up at least a simple website, as well as appropriate social media for your business. This could include a Facebook Business Page, Twitter and LinkedIn. At first, the purpose of your online presence will be to establish credibility and allow potential clients to find you. Next, you may want to consider adding a blog and/or some digital marketing plugins including opt in for emails or offers or some free resources.
7. Tell your network about your business.
You want to make sure your network knows about your business. Your friends, family and former colleagues can help you find your target clients if you empower them to! Make sure they know at a basic level: who you help and what services you offer. The more specific you can be with them about who you want to meet, the easier it is for them to help you. If you see a friend is connected to a potential client you’re going to meet or want to meet, feel free to ask them for some insight, an introduction or a reference.
7. Network with your target customers.
Find out where your target customers hang out. Is there a networking group or a professional association you can join? Try to attend events and build relationships. If you meet someone you click with and think you can help, follow up for a coffee or lunch meeting. At this point you’re working to build relationships and credibility, not going for the sale! Use a CRM like Hubspot, Zoho or Insightly to keep track of these relationships and notes from your meetings. You can plan your follow-ups and assign yourself tasks so you don’t forget. If a CRM feels overwhelming at this point, you can track the same information in a spreadsheet. The nice thing about a spreadsheet is that you can import it to a CRM when you’re ready.
8. Land your first client.
All of your building will pay off when, hopefully sooner rather than later, you land your first client. Make sure all the paperwork is in order, celebrate your success and then kick off the work! Be sure to set up regular communication with the client and ask for feedback through the engagement to ensure your client is happy with your work.
9. Continue to grow business.
The hard work isn’t over once you land that first client — it's actually just beginning. You’ll want to continue to network and build up a network of clients. As you grow, you may even think about adding additional services or working with partners. If you're a branding or design consultant, you may want to network with a web or app developer, content creator and SEO expert to build a team to offer additional services to each other’s clients.
10. Ask for testimonials and referrals.
If you're able to deliver great results for your clients and they praise your work, ask them to spread the word. In order to get the best testimonials, let your clients know what and where to post them. For example, you might ask for a Google review if that’s where you get a lot of your clients or a LinkedIn recommendation if that works better for you. If you’re looking to build up your B2B content-writing clientele, ask a B2B content client to write a testimonial about how you increased their conversion rate in just three months (assuming you did).
11. Ask for help and say thank you when people help you.
If you’ve ever worked for a big company, you probably had an IT person to help you when your computer didn’t work, an accounts-payable pro to make sure your invoices were paid and checks were cut and a coworker to watch your projects while you were out of the office sick. As a solo consultant, you won’t have any of these resources at your disposal automatically. Don’t be afraid to ask other consultants, friends or family for help. People will want to see you succeed and will be happy to offer their help and expertise when they can. Make sure to say thank you, compensate when appropriate and pay it forward when you can.
12. Continue your professional development.
Chances are, you've attended certification, continuing-education workshops and conferences throughout your career. As a consultant, this will become even more important. You want to make sure you’re networking with leaders in your field, building your reputation as a leader and learning new skills. Clients want to hire experienced consultants who understand trends and the latest developments in their fields.
13. Celebrate your achievements.
Building your business is going to be a lot of hard work. You want to celebrate every milestone along the way. Signed a client? Billed your first $10K? Made it a year as a business owner? Be sure to celebrate all of it. There will certainly be hard days and lots of mistakes along the way, but by having plenty to celebrate, you’ll be better able to handle all the hard stuff.
How do I start a consulting business with no experience?
You probably have more knowledge and experience than you think you do. It takes some courage to try something new. So if you’ve never done anything like this before, start slowly, maybe even part-time. Build your successes, and ask your clients to recommend you to their friends and peers. Soon, you’ll have a full client base and plenty of experience. Everyone has to start somewhere, so don’t let imposter syndrome get the best of you if you feel you don’t have the experience.
That said, don't ever lie to clients about your capabilities. It will almost always come back to bite you and could be a costly mistake for you and your clients.
Do I need a license to start a consulting business?
Not necessarily. The answer to this question depends on what type of consulting you want to do. If you’re working in a regulated industry like insurance, construction or financial advising/investing you may. If you are doing general business, marketing or HR consulting you might not. Some clients like to see professional credentials like advanced degrees and certifications, but you don’t always need a license. Consult with your lawyer about specific legal requirements for your business in your geographic location.
What if I wanted to consult on budgeting?
This could be a great business to start for someone with a little financial savvy! Almost everyone needs help setting or refining their budget. You’ll want to consider adding a specific niche, such as people who are getting married, new college graduates, or soon-to-be retirees.
You also will want to be clear in the scope of your services. If you do any financial advising or help people with stocks or investing, you may need additional licensing or certification to do that work.
If you don’t want to do this work yourself, consider partnering with a stockbroker or advisor.
What if I have trouble finding clients?
Patience and persistence! Make sure your service is something people want and need and that you’re in line from a cost perspective. That does not mean offering steep discounts just to land the business.
If you’re still struggling a few months in, make sure you are asking people who tell you "no" why they're choosing not to work with you. This will help you improve your pitch, ultimately lead to a "yes" and plenty of clients.
Marissa Taffer is the Founder & President of M. Taffer Consulting, a business development and project management consulting practice headquartered in Philadelphia, PA.