Dreaming of leaving your day job and hanging out your shingle as a consultant? Read on to learn whether consulting is for you and how to start a fabulous consulting business that will move the world.
What is a consulting business?
Consulting businesses help businesses or individuals strategize, solve problems or roll out solutions. For example, a consulting firm might help a company cut costs or incorporate new technology infrastructure. Others might code websites or author web content for an individual.
As you can see, the businesses operate in a variety of industries, from finance to technology. But what they have in common is expertise in their given industry. This niche expertise is the lifeblood of consultants.
What should I consider before starting a consulting business?
These considerations will help you determine whether you have the ideas, expertise, temperament, and motivation to succeed in consulting.
Demand: Think hard about the business landscape and whether there is a need for the consulting services you plan to offer. If demand is low or non-existent, you may have a hard time landing client. But the same is true if the market is over-saturated with businesses like yours. If this is the case, think about whether there is something that sets you apart from competitors in your niche.
Qualifications: Don’t start a consulting business until you have at least some knowledge and experience in your niche. Degrees or certifications are one way to prove your knowledge in an area. But there’s nothing like real-world work experience in your niche to showcase your expertise.
Drive to sell: Consults must adopt the mindset of a salesman to pitch their services and land clients. The skill of selling can be learned. But you should have at minimum a willingness to sell your services and at times even accept rejection. If you’re uncomfortable with the prospect of selling your services or hiring a sales expert, consulting can be a rough business.
What are the first steps for starting a consulting business?
Decided that you have the preparation to run your own consulting business? Here’s how to start a consulting company.
- Establish the business: Think about whether you and your future clients would benefit from a sole proprietorship, a limited liability company or another business entity. Then, fulfill any state or local requirements needed to establish the business.
- Identify the specific services you’ll sell: Will you provide advisory services? Or, will you deliver tangible work products like website designs or web content? Pinpoint the types of services you plan to offer and the scope of those services.
- Identify your target market: If you considered the demand for your services beforehand, this step should be straightforward. Think about who your services would help and where along with what you can do to attract that market.
- Set rates: You should have a clear sense of the price of your services before your pitch to clients. Factor in both your level of expertise and the time it would take to perform each function when setting rates. Your rate scale could be hourly or on a per-service basis.
- Market services: Devise a marketing strategy around the target market you identified for your services. Then, advertise your services at local events or trade shows or roll out online ad campaigns. The key to successful advertising is getting your target market to see it.
- Network: Establishing industry contacts makes it easier to land clients. Primarily because making a sales pitch to someone you are already acquainted with feels natural rather than forceful. Aim for a combination of in-person meet-ups and virtual correspondence. Between the two, you will rack up a sizable Rolodex that should get you face-to-face with a prospect and pitch your services.
MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.