A niche tends to be an excellent place to look when deciding how to start a consulting business, whether your area is the strategy (improving performance, perhaps through workflow management), HR (managing the workforce of a company, including sourcing, selection, technology (delivering and implementing new software solutions), hiring, and ensuring compliance), or some other consulting service that will help other businesses improve and grow.
Consultants are experts that give information and guidance to clients in exchange for fees. They work solo or as members of a consulting company, hiring or partnering with other experts. Consultants practice in areas such as IT, marketing, management, finance, or logistics.
If you have got a lot of experience in a specific field, you may have considered growing as a consultant. But to prefer your independent consultant venture, there are several steps you should take to learn how to start a consulting business.
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1. Determine Your Niche
Rather than trying to help everyone, get hyper-focused. Your experience and background will assist you in defining your niche. Companies hire consultants because they have specific knowledge the company does not.
The more precise you can get about your expertise, the more worthwhile. Someone skilled in management, for instance, could practice in a variety of areas. You could establish a consulting firm that can manage consulting for startup companies that often require help filling their senior-level spots. Or your business could focus on management consulting for a specific industry, such as power or education.
“Consulting is all about reputation,” says Marah McMillan, a consultant to the apparel industry. “Trying to consult on a topic that you do not know well enough will lead to negative reviews and poor reputation. If you want to be a consultant but do not have an area of expertise, spend time gaining experience and insights. Look for ways to get right in the middle of what you want to be an expert about.“
2. Figure Out Your Market Requirements
Once you have known your niche, think about what sorts of issues, queries, and pain points businesses in your preferred area of expertise have. It’s not sufficient to simply have a strong skill set and a lot of expertise in your field. If businesses do not have problems that your consulting firm can solve, you will find yourself treading water.
The best way to find out what your market requires and wants is to ask. Start by doing an online search for blogs in your niche. What are the thought leaders writing about? Where does there seem to be a lot of uncertainty? Is there heated discussion in any forums or comment sections over a specific topic?
You can also find the main points in your market by tapping your network. For instance, if you want to start a digital marketing consultancy, then who can you think of that either possess their own business, works closely with digital marketers, or is a digital marketer themselves? Possibilities are, you know a lot of people. Ask them about difficulties they face in meeting their short and long term goals. Then determine how you and your business can benefit.
3. Create A Legal Entity
Next, place your business structures in position. Your consulting firm will require a legal form, such as being a sole proprietor, partnership, LLC, or corporation.
“If you are an individual, starting out as a sole proprietor will be fairly straightforward,” says McMillan. “However, if you plan on setting up a team or you have personal assets that you want to protect, an LLC might be right for you.“
You will also require a separate bank account, and you should have a contract for your services that spells out valuable information, like deliverables, timelines, prices, and payment times.
While consulting is a low overhead business, make sure to have sufficient money in the bank until you build up a good cash flow and have funds in place, says Carlos Castelán, founder and managing director of the startup The Navio Group consulting firm.
“It’s important to continuously monitor expenses in relation to current and projected revenue to ensure [you’re] not making decisions that could jeopardize a businesses’ solvency,“Carlos Castelán says.
4. Get Your Business Insured
Just as with licenses and permissions, your business requires insurance in order to work reliably and legally. Business Insurance preserves your company’s economic wellbeing in the case of a covered loss.
There are different types of insurance policies designed for different kinds of businesses with various risks. If you are uncertain of the kinds of risks that your business may encounter, begin with General Liability Insurance. This is the most basic coverage that small businesses require, so it’s a great place to start for your business.
Another important insurance policy that many businesses require is Workers’ Compensation Insurance. If your business will have employees, it’s a good opportunity that your state will ask you to carry Workers’ Compensation Coverage.
5. Set Your Pricing
As a consultant, you give intangible services. Deciding what to charge for your knowledge is a challenge. You have some options. One option is to charge by the hour, which is an easy way of pricing, and it’s often an excellent way to start. Fixed your hourly price based on what others in your market are charging.
You can also charge by the project, which benefits clients assume their total cost. This is a suitable pricing method if you deliver a particular service, such as an IT consultant hired to set up a remote working network for a company’s employees.
A final pricing choice is by retainer. This is a good structure if you give ongoing support to a client. For instance, a website design consultant may charge a retainer to maintain a company’s website, including any changes to content or software updates.
“One common mistake when starting a consulting company is charging too much or too little,” says Scott Cairns, founder and CEO of Creation Business Consultants. “Study your industry’s rates so you know how much you would charge as a starting rate. Cheap rates will generate leads, but it would not help the business because when you adjust your rates, clients might leave. On the other hand, an expensive rate will make it difficult for you to gain customers.“
6. Create a Web Presence
When companies looking to hire a consultant, many will go towards an internet search. Create a website that promotes your services and showcases your experience, background, and any certifications or designations you have. Be sure to utilize the keywords a potential client would use to discover you. If you had given similar services before, even if it was as an employee, ask for feedback and get approval to post testimonials.
“Add your business to as many social platforms as are appropriate for your industry, such as Google, Yelp, LinkedIn, Facebook, Instagram, YouTube, and Pinterest—as well as any other platforms that are applicable for your trade,” says McMillan. “Remember that the more places that you show up on the internet with the same brand image and clear message, the better for SEO and customer attraction.”
7. Finance in the Tools of the Trade
Hopkins, the founder of 4 Point Consulting Chicago, developed her business with technological tools of the trade that allowed her to form and maintain connections with clients, prospective employees, and her assistant.
“I use three types of recruitment software—web-based software that helps you to post jobs,” she says. There’s MightyRecruiter, which has a system that feeds to Indeed, Monster, LinkedIn, and all the job sites you can consider, which saves time and focuses applicants into one space. There’s ZipRecruiter, which is good for low-level jobs. LinkedIn has a two-tiered recruiter service for propositioning applicants or referrals.
MightyRecruiter is $300 a month, while ZipRecruiter is $1,000 for the year. LinkedIn’s RecruiterLite is $150, and Corporate is $700. In total, Hopkins pays about $500 a month for these recruiting tools, which give her a path to connect people that are searching for everything from culinary jobs to data scientists.
Hopkins also suggests video conferencing software, at about $200 per year, for making a better link with clients. “They click in and they feel like they know me,” she says. “They know I’m 5’2″, big personality, blue eyes, talk with my hands, and they get all that even though I don’t have an office space.”
8. Set Objects
Setting business objects, such as landing your first client within 20 days or sending ten letters of introduction each week, can benefit you to stay on trial.
“Make sure, right from the start, you have set a vision for where you want to head and goals to help you get there,” says Castelán. “One failure I had initially was not setting goals for my business. I discounted the importance of doing so and, as a result, did not have a clear strategy or path for growth. Setting goals and tracking progress is important to building a business because it helps you make choices along the way that lead you to the desired successful outcome.“
9. Write Client Proposals
To be in business, you require to find clients. While your website and social media platforms can create leads, networking is one of the most powerful actions. Do not be hesitant to request your current clients for referrals; word-of-mouth promotion is golden.
As such, writing proposals is an essential part of getting business for your consultancy.
Client proposals are your opportunity to explain how you can serve your client and resolve their problem. As such, it’s essential to be clear about what the plan is, why you are lending your consulting services, and when you will accomplish the project. It’s also necessary to be very precise about all the details that will go into the project, including a budget, deliverables, and how you will measure results. Be clear, be reliable, and close that client.
10. Stay Organized and Produce Results
Once your consulting business is on the trail, be positive to stay organized and achieve results so that you can get repeat clients and referrals. Staying organized is vital to assure that you do not lose important information, deliver past deadlines, or forget to remind clients to pay you. Start by observing where you can automate specific processes.
Producing results is a bit more difficult to advise on, but very necessary to the vitality of your consulting business. Be sure to stay at the head of industry trends and check in with your clients to be sure you are producing results that they want and that help their businesses achieve their goals. If you strongly help your clients accomplish their goals, then your consulting business will be set up for progress.
Consulting Niches to Consider
Here are some recommendations for consulting niches to consider specializing in:
As a brand consultant, you can work with businesses to recognize and improve their brand voice and image. As a brand consultant, you will discover about a business’s customers and then craft a brand that will help the company resonate with its target market. To become a brand consultant benefits from having a background in marketing.
Being an independent accountant is a kind of consultant. As an accountant, you will help businesses manage their books and financial requirements. It helps to be a CPA if considering striking off as an accounting consultant, but anyone with a bookkeeping background is qualified to enter this consulting field.
Similar to Hopkins, you can grow as an HR consultant—assisting businesses with their staffing and employee management responsibilities and guiding them on best practices for keeping their workforce comfortable and involved. This job could include everything from writing job descriptions to helping with onboarding.
As more and more businesses act to going green to preserve the environment, consulting on how to lower carbon discharges can be a lucrative field without a lot of struggle. As a green living consultant, you can help businesses achieve various tasks that reduce their carbon footprints, such as producing more green-friendly office environments or manufacturing processes.
Another area of demand for many businesses is web design. As a web design consultant, you will work with companies to create a website on-brand and functions to their specifications. A background in computer engineering is essential here.
Organization consultants guide individuals and businesses on reducing organizational red tape, clutter, and distractions to work more efficiently. This is a domain of increased focus, as technology has created new distractions and blurred the lines between work and home life.
Whether your consulting business will be huge or small, online-only, brick-and-mortar-based, expensive or economical, you require to have the expertise, support, and determination to support other business owners get back on the trail. Everything else is about managing workflow and expectations. Your good research will help you to answer the question of how to start a consulting business, and your dedication and persistence will help you to grow your business.