Let’s be frank. Everyone loves to shit on consultants.
Consulting can be quite a profitable industry – the annual salary for an average consultant is $79,536, although the pay range is usually between $53,000 and $119,000. Think of it as a variant of freelancing – it’s a self-starting, people-driven industry that caters to the self-employment movement and gets you working with a multitude of different entrepreneurs and corporations.
This article exists to help you on your quest to pursuing consulting as a livelihood, and to help you navigate the start of a consulting career. If carried out professionally, effectively, and with a driven, confident attitude, you can turn consulting into a flourishing career – one which brings you satisfaction, profit, and purpose.
Consulting as a Profession
If you clicked on this article, you may be wondering how you can start a functioning new business in consulting. Your skills are there, your qualifications are there, but now your main focus is how you’re going to turn these skills into a functioning business.
As a consultant, you’re going to be a for-hire specialist on a given topic, hired in order to share and contribute that expertise to a client or company. For instance, if your area of expertise is communications, you’ll usually be hired by companies to help strategize methods for more efficient, healthy workplace communication. If your area of expertise is marketing, you might be hired to do market research and organize an advertising strategy.
Consulting is about finding your niche and catering to it. When you start a consulting business, you’re making a commitment to comprehensively understanding your expert topic so that other people don’t have to. The only product you’re selling is knowledge.
The Pros and Cons of Consulting
To start off this article, let’s delve into the pros and cons of consulting. These should constitute general reminders and precautions for those interested in pursuing consulting careers. Here are the pros and cons, listed below:
Pros of Starting a Consulting Business
- Huge room for advancement and many growth opportunities. Consultants are really only a few recommendations away from gaining a large, loyal client base. More clients (particularly more satisfied clients) leads to higher profits and larger influence in your niche.
- High pay. This is a pretty open-and-shut pro of consulting, provided that you are successful. Consultants have some of the highest profit margins (something we’ll get into later in this article) and provide specialist knowledge in an internet-driven generalist society.
- Attainability of experience in many different industries. Consultants, being hired by many different companies and clients, will have numerous and extensive experience with many different topics. This means that, as a consultant, the larger your experience-base is, the more knowledge and monetizable skills you’ll have.
Cons of Starting a Consulting Business
- Consulting is a high-stakes job. To put it plainly – the success of a consultant is measured by how well they meet client goals (usually somewhere on a numerical value). If these goals are not met, a consultant can be quickly and easily replaced by a more competent one. The career success of a consultant is driven by how unmatchable a quality of work that consultant can produce. This creates a high-pressure mentality.
- Starting from square one. Unless you have extensive connections or know someone who can get you those connection, you’re going to be starting your business from zero. This can be an exciting thing – you’ll be able to see your business blossom if you run it the right way – however, it can also be incredibly stressful at the beginning. You’ll have no experience, no reputation, and limited funds.
Though it isn’t necessarily true that the cons of consulting should deter you from pursuing a career in consultation or starting a consulting business, they’re important to keep in mind. Know your abilities well, but know your obstacles intimately. This is vital to follow in the world of business.
Making Money with Consulting
In the consulting business (as with any business), you have to make money. Your success in business will be largely determined by two things – how much money you’re able to make while working, and how much influence you hold within the niche where you choose to consult. Predominantly, you’ll want to be good at what you do, and you’ll want to be important.
In the context of this article, it’s important to keep in mind the original question: how do I sell consulting services? When you’re a consultant, you’re selling your own expertise. Your product, as stated in the previous section, is the knowledge you’ve accumulated on your particular specialized subject. Therefore, if you know your stuff, you have a good product.
Let’s go over the profit margins in consulting. As a professional consultant, you’ll be running a business which aims to maximize profits while delivering top-notch service – as such, you’re going to want to understand the profit margins associated with consulting.
What you’re going to want to focus on in consulting is your net profit margin. Your net profit margin, essentially, is a percentage that tells you how much profit you’re generating from the income you receive. Let’s break down the formula:
N = [(S-C)/S] x 100, or Net Profit Margin = [(Sales-Cost)/Sales] x 100
In this formula, S represents sales, or the income you received via sales during the time period that you’re trying to calculate profit margins. C represents all costs and expenses associated with making those sales happen.
And that’s it. It’s that simple. Let’s do an example:
Let’s say you worked as a marketing consultant for one month. During this time, you received $10,000. However, your expenses during this month (office rent, utilities, internet, etc.) tallied up to $2,000. In order to calculate the net profit margin for this month, we would plug in 10,000 for the S variable and 2,000 for the C variable. The formula would then look like this:
N = [(10,000-2,000)/10,000] x 100, or N = (8,000/10,000) x 100
Your Net Profit Margin is 80%.
When you start out your business, the profit margins will be lower (mostly because you won’t make as much money right from the get-go as you will once you’ve gained a client base and a positive reputation in your industry). However, your goal as a businessperson is to maximize your profit margin. You want your expenses to be low and your revenue to be high. If you want to be successful in consulting, closely monitor the profit margins. Once you start to stray from the dedication to maximizing your margins (which, as a consultant, will actually be comparatively high as opposed to other professional careers), you may find yourself off track.
So, how do you make money with consulting? Maximize your net profit margin.
Another thing – perhaps the most important thing – worth going over is the difficult topic of pricing. Going back to increasing profit margins, setting up a good system for pricing is one of the most direct ways that you can impact your profit.
Let’s talk a little bit about the 2-5-3 method of pricing. This is a recent model made by Joel Barolsky, and it’s worth going over. Each number in this method (that is, 2, 5, and 3) represents a given number of dynamics in a specific category. Here’s what the system looks like:
2 Objectives, 5 Factors, 3 Decisions.
In this method, the 2 objectives that you’re aiming to hit are:
- Client satisfaction and overall perception of your value as a consultant.
- The maximization of profit margins.
The 5 factors you’re taking into account are:
- The costs and expenses associated with your services (this was gone over in the net profit margin calculation, and basically just refers to any bills or money spent while working: utilities, office rent, internet, and other such charges all pertain here).
- The client’s perception of your value to them, or how important this project or service is to the client hiring you. I’ll get into this more in-depth below.
- What the pricing of your competition looks like.
- Capacity utilization, or how much of your working and earning potential is being utilized. How much are you charging for how much work? How much can you be charging, and how much more work can you be doing?
- Whether or not you have a partner relationship with a client or a one-time job with them.
The 3 decisions you’re going to be making are:
- What is the pricing structure? Will you be charging hourly rates or fixed prices? Are you going to be selling subscription services? If so, what will those services look like based on the 2 objectives and 5 factors?
- How much will these charges be? For example, will you be charging $200 per hour or $400 per hour? What will your fixed fee be?
- How will you pitch this price to clients in order to get them on-board with your billing statements and confident in your value as a consultant?
Essentially, this method takes into account all valuable aspects of a business and gets you to think about your pricing in an objective, numerical way. Utilize this method alongside monitoring profit margins, and you’ll wind up with an organized, profit-based consulting business.
Another element important to maximizing profits is B2B value. Business to business value perception is extremely influential when looked at in the context of pricing. Harvard Business Review goes into this concept in-depth, but it’s worth going over here for the sake of completeness.
B2B value perception’s impact on pricing, as a consultant, refers to the extent to which a client values your service for their business. So, if you’re a creative writing consultant hired at a bank (for whatever reason), your value perception might be low. If you’re a marketing consultant at an advertising firm, your value perception has the potential to be extremely high.
There are 40 elements that go into B2B value, so it would take up the majority of this article to go into too in-depth. For further reading on this concept, go to the Harvard Business Review link provided above.
More than half of the battle in profiting from your consulting business is tackling the data. Once you have data, you have to carefully calculate what to do with that data. And once you’ve done that, it really depends on your and your ability to deliver quality consulting services.
To elucidate, consultants dedicated to quality, polished, effective service will always make more money than those who aren’t. There are so many consultants and consulting firms out there, some of which offering the same skills you have. The trick to thriving once you’ve figured out all the data is delivering a product that knocks it out of the park. Once you’ve found your niche and created a system for profit, you have to deliver the services you believe will sustain that business. All the data in the world won’t save you from personal incompetency (of course, that’s harsh – and so is business).
Going back to value perception, a knack for what you do and a commitment to helping your clients to the maximum possible capacity is what will get you business partnerships. It’s what will get you recommendations. It will set your value high, and therefore your pricing high. It will establish you as a consultant above all competition, allowing for you to work and make money doing what you love to do. And hey, if you can do that, you’ve reached the dream.
Profitable Consulting Niches
Here’s where we’ll list some of the most profitable niches for your consulting business. If you’re thinking of starting out as a consultant and you have any one of the skills present here, now is your time to strike. So, in no particular order, here a few of the most profitable consulting niches:
We are in a time of global economic and financial transition. Corporate downsizing has become more and more commonplace, the freelance economy is exponentially growing, and more people are looking for career solutions to overcome this transient time. Much of the time, this will include second career consulting – a job that requires you to advise an already successful person on how to start a new career. Second career counseling will often make you more money, because those who hire you will have more connections and a larger payoff rate.
For those who possess a green thumb, you may be surprised to know that gardening consulting has begun to exponentially rise in demand. This comes from a growing trend of promoting the décor of outdoor spaces, as well as an increase in the home improvement industry. Professional gardening has rapidly become a profitable industry, and gardening consultants are usually in high demand.
Human Resources Consulting
In general, a career in human resources is a very safe one. Business are always in need of HR staff, because businesses are always getting into issues internally that require mediation. As a human resources consultant, you’ll be advising and supporting companies who are looking to improve company relations, and you’ll be making decent money (the mean salary for a human resources consultant is $90,860, but in a top-paying state like New York pay a mean of $102,420).
Marketing consulting is one of the most sought-after careers for consultants. A marketing consultant is hired by a company to do market research and help implement a plan for marketing. Success in marketing consulting is very quantifiable – if the companies get large returns on the marketing plan, the consultants are often re-hired, recommended, and paid very well.
Public Relations Consulting
A career in PR consulting demands social skills. If you’re an expert in public affairs, communication (specifically mass or digital communication), or any other field involving analysis and planning out organized PR strategies, you can build a huge reputation for yourself in the field of public relations consulting. PR consultants are hired by companies, public figures, and organizations that are concerned with their ability to communicate effectively to the public. Your job here will be to help them get their messages out effectively and accurately.
An environmental consultant is an expert in the field of environmental science (biology as a plus) and is committed to identifying environmental issues brought about by a client and fixing the issues identified. They aid clients to come up with plans and strategies to reduce their carbon footprint and effectively “go green,” as the saying goes. Many large corporations will hire environmental consultants to boost their public relations, which is why networking is essential for environmental consultants (another consultant might recommend you).
Information Technology Consulting
IT consulting is an extremely modern, useful consulting career path. Many companies and long-time employees struggle with efficient operation of technology and network systems. As an IT consultant, your job will be to aid a client in their use and understanding of technology, as well as the recommendation and adequate explanation of prospective technologies.
Beyond these, there are endless consulting niches that you can make work. These are only a few of the vast number of profitable niches for consulting, and I urge you to not stop here if you don’t see your area of expertise – as I said in the previous section, your success in consulting eventually comes down to you and your own competency and capability level.
Getting Started Selling Consulting Services
When you get started selling consulting services, there are a few factors you can observe which will guide you in the right direction (that is, the direction of profit, client satisfaction, and success). Let’s list them all out below.
Factor 1: Finding your niche. The above section, as well as the section above that, lightly touched on the importance of finding a niche. To put it plainly, you won’t make it as a general consultant. Stick to a niche, dissect that niche, learn that niche, and cater to that niche.
When you commit yourself to one area of expertise, you’re allowing yourself an avenue toward success. You now have the ability to analyze your market and its necessity for consultants. You can determine if there are specific zones of specialization within your niche (for example, if you’re a communications consultant, you might specifically want to target digital communications consulting careers if you feel that your strongest skill in communications is digital). You can determine whether you’re going to be catering to a millennial-driven market, or a more traditional one. You can determine whether you’re going to be catering to small or large businesses.
Largely, clients are going to be looking for specialists rather than generalists. Of course, because you’ll be working for so many different clients in so many different fields, you’ll likely become a generalist on many given topics related to previous clientele and old jobs. However, in sticking with your own specialization, you’re going to know your niche backwards and forwards.
Once you commit yourself to a niche, you allow yourself to work hard to become the top consultant in that niche. Don’t just do general work and dilute the waters of success – make sure you’re targeting your niche and perfecting the quality of work done within that niche to build a reputation and a large client base.
Factor 2: Assessing yourself, as well as undertaking internal and technical preparations. When you begin your consulting career, you have to make sure that you, your business, and your business strategy are equipped for the job.
- You need to make sure that absolutely everything, down to the last punctuation mark in your calendar, is organized. Organization in both scheduling and finance is what will color your career as either painfully chaotic or 100% under your control.
- You need to make sure you have all the licensing, certifications, and on-paper qualifications. For instance, business licensing is a must for starting a consulting business. Beyond that, try to get as many different certifications as possible for your field of work (as an example, if you’re an accounting consultant, be Excel certified). At the beginning of your consulting career, you’ll have to substitute resume experience for certifications and extensive proof of competency. A university or technical degree always helps.
- You need to understand what your goals are and start developing a plan to attain them.
- You need to honestly understand what your strengths and weaknesses are. When you begin consulting, you’ll want to play up to your strengths and minimize your weaknesses.
A self-aware strategy is a working strategy. Make sure that you’ve taken all things into account, both internal and external, while you begin getting started selling consulting services.
Factor 3: Develop a system for attracting, keeping, and being recommended by clientele. A common goal for consultants is this: get to the point where I no longer have to apply for jobs – those jobs simply become offered to me. Actually, this is a very attainable goal. All a consulting business needs in order to achieve it is a workable system.
This is a system that we’ll go more in-depth on later in the article, but I want to emphasize its importance here: you cannot succeed in any business without a game plan or a system. Each system is subjective, and many different things work for many different consultants. However, every successful consultant has a system.
When you get started with your consulting career, keep in mind: consistency is key. It is imperative that you stick to your steps, stay dedicated to profit margin maximization, and always (but especially at the beginning) strive for complete and utter excellence in numbers, satisfaction, and quality of work.
Marketing Your Business
When you start your consulting business, you’re going to have to learn how to gain clients and market your abilities as a consultant. As stated before, this is best done by developing a system and sticking to that system. You’re going to have a subjective experience in the development of your own system (again, different things work for different consultants), but there are elements of marketing worth going over and some common strategies worth talking about.
Electronic Elements of Marketing Consulting Services
A presence on the internet. This, in the modern era, is a no-brainer. It’s the most important thing on this list, and the #1 marketing strategy for contemporary consultants. Most potential clients, at least in the beginning, will be finding you on the internet. You should have all, or most, of the following:
- A blog
- An Instagram account
- A Facebook page
- A website
- A LinkedIn profile
- A YouTube channel
A blog will help you showcase your consulting abilities. You can write about anything relevant to your niche – create general advice columns, question-and-answer articles, as well as in-depth analysis of specific topics. Through this, even if you don’t have extensive work history as a consultant, potential clients can see that you’re qualified and may give you an opportunity based on the expertise shown in blog writing.
An Instagram account is always a good idea for business owners of any kind. However, if you’re a marketing consultant, it might take some forethought to understand what to actually post. However, if you’re a gardening consultant, a fashion consultant, or offer any consulting services that are visual in nature, you have to have an Instagram account. Showcase what you can do and connect with your niche!
A Facebook page is another non-negotiable element of your presence on the internet. Through a Facebook page, you can connect both casually and professionally, as well as offer up events like networking brunches and webinars.
A website. No further explanation should be needed. If you’re getting anything on this list, it should be a website. In the past, the show of a serious businessperson was a business card. Nowadays, it’s a business card and a website. Every single social media account should take people to your website, which is going to be your main marketing tool as a consultant.
A LinkedIn profile is another element that renders you a professional, serious consultant. This is a really good way to connect with a client base and create dialogue through your own specializations and networking abilities.
A YouTube channel is not always needed. However, if you feel that you have a degree of competency using YouTube and talking into a camera, this is a highly recommended marketing tactic. Having a YouTube channel is much like having a blog – the difference being that viewers on a YouTube channel can see your mannerisms and work style as though they were speaking to you in-person. They’ll have a face and movements to the name of their prospective hire.
Additional Elements of Marketing Consulting Services
An easily accessible portfolio. This should include both the work you’ve done from previous jobs as well as positive testimonials from previous clients. When you’re just starting out, you’ll want to have at least a few items that you can add to your portfolio – content marketing writer Amy Rigby suggests that a work-for-free or a work-for-discount strategy might be a good idea to achieve portfolio pieces and create networking connections.
Partnerships. You likely won’t get by during the first few stages of your career all by yourself. When you first start out, it might be a good idea to work with another consultant in a similar field. For instance, if you’re a financial consultant, it might be a good idea to know an accounting consultant who has already established themselves in a financial and/or business-driven niche.
Networking. Ah, networking – the old reliable. If you take a look back on all the components associated with marketing your consulting business, most of them have to do with networking. Creating a large, well-connected network of clients, potential clients, other consultants, and industry experts will land you at a high advantage as a consultant.
Elements of Marketing Strategies for Consulting Businesses
Let’s get something out of the way right now: don’t ever do cold calls. Almost everywhere, you’ll see marketing websites and entrepreneurial resources tell you to do cold calls for your business, going in-depth on how you’re supposed to succeed at it. Actually, cold calling is largely ineffective now because of the internet, caller ID, and voicemails. It’s the fastest way to lose your motivation for marketing as well as drain your concentration to what matters: actually consulting and perfecting your craft. When was the last time a cold call convinced you to do anything? Can’t remember? Neither can anyone.
In essence, you have to replace old marketing strategies with new, technology-driven ones. You can market and be a consultant at the same time. Blogging, webinars, YouTube advice videos – all of these are examples of marketing that both connects with potential clients and increases your network by attracting traffic that shares the interests of your niche.
Pay attention to your analytics. Pay attention to your audience and your market. Utilize the elements given in this section to market yourself and network within your niche and specialty, and you can develop a marketing strategy that works for your business and your life.
So, How Can You Sell Consulting Services?
When all of these points are hit and all of the boxes ticked, you can sell consulting services with high profit margins and optimal influence over your niche by simply being consistent and staying on track with your work. The many facets of a consulting business can seem to dilute the work by making it appear complicated. Really, it’s as simple as hitting each of these points:
- Stay on top of profit margins.
- Network and market.
- Know all there is to know about your specialty.
- Stay committed to quality.
Once you have mastered all the technical skills involved with setting up a consulting business, it’s largely dependent on you to make that business run. Consultants have some of the most profitable careers in the modern economy, which enables them to do what they love doing (and what they’re best at doing) while making money and holding influence over their market.
If you’re committed to quality and understanding the technical skills associated with the business, you can earn a huge profit selling your consulting skills.