Six tips to start your own consulting business

Corporations, businesses, and firms handle a lot of work daily. It is inevitable for them to come to a point where they need help to resolve issues they can’t handle on their own. Sometimes, they need a fresh set of eyes to diagnose internal problems or consult with experts to deal with a field-related concern

Consultants can play a significant role in resolving such scenarios. Cambridge Dictionary defines a consultant as someone “who provides expert advice or training to people or companies regarding a particular subject.” Specifically, they focus on gaining specialization on how to resolve a company’s problems so that they can step in to help and then get paid in the process.

But why consider being a consultant? Consulting firms do freelance work, which means consultants get perks like negotiable salary rates, flexible choices on when they work and what they do, and minimum requirements for work setup. And many workers pursue freelance employment. According to a 2019 study by Upwork and Freelancers Union, 57 million Americans or 35% of the American workforce do freelance work.

As you sell your expertise as a consultant, you can compute how much you charge to a client company depending on the following:

  • What kind of help the client company needs help with (and level of difficulty); and
  • An estimate of external expenses incurred by giving your advice and labor, plus advertising costs.

For well-established consultancy firms, clients will automatically approach to ask for their help.  Therefore, consultants have the freedom to choose the projects they want to work. They can also negotiate with the client to set a time and date on when to work and what tasks to do

Unlike restaurants or large-scale infrastructure projects where you need a lot of capital, people, and equipment to start working, your beginning as a consultant only requires you to have a cellphone, a laptop, and a high-speed Internet connection at the comfort of your own home. There’s only a minimum cost required for you to start selling your expert advice to clients.

The thing with consulting work is that there are a lot of potential customers because companies won’t hesitate to pay big money if they need one or several unique problems to be resolved. Consultant firms are so lucrative that they are worth $250 billion globally, according to Consultancy UK. Statistics by Statista Research Development report that the consulting market in North America is estimated to be worth $130 billion. Simply put, there is a lot of money to be made in the consultancy business.

With the emergence of small and large companies who need expert help from time to time to maintain their operations and protect their stability, consultancy work is among the most-sought after service among industries. Establishing a consulting business is not only in-demand, but it also provides an open opportunity to start earning money.

 

The consulting firm industry has diverse types of specialization, primarily because companies have different departments, and problems can pop up in just about any field of work from finance to human resources and legal matters. A 2019 study by Consulting Success lists down the distribution of consultants from America:

 

 

Management consultants are the most abundant, making up 25.10% of the consulting market. Strategy consultants rank second, at 19.20%. Other types of consultants make up 16.73%, while 10.46% of consultants work for the operations industry. Marketing consultants make up 6.84% of the consulting market. Finally, information technology/tech and HR consultants are tied at 4.75%.

 

Meanwhile, here are some examples of specialized consultants:

 

  1. Financial Advisory Consultants

 

Making an optimal financial decision can make or break your company’s financial stability. Financial consulting provides services to ensure the financial security of a company. A financial consultant’s work involves advising on business restructuring, investments, risk management, insurance, litigation, and corporate finance. Most financial advisors use stocks, market trends, and other economic factors to help a company increase its profits. According to Wes Moss (2018), hiring a financial advisor can increase the company’s returns by 3.75 % annually. Financial advisors also help companies with valuations. Some of the questions that are in line with the expertise of a financial advisor are as follows:

    • What actions are suitable to increase the returns of the company?
    • What investment opportunities should the company take producing the lowest risk?
    • How much risk should a company take to lessen the possible cash outflow of the company?
    • To which projects should we invest in to strengthen the company’s returns?

 

  1. Human Resource (HR) Consultants

 

Employees are the backbone of any successful company, so any issues with the workforce would significantly affect company work output and profit. HR consultants are called in to address a wide range of workforce issues such as overhauling a department’s leadership structure, addressing grievances from resigning employees, providing advice to improve HR programs, and so much more. Among the skill sets needed in this kind of profession include proficiencies in information technology, accounting, sales, marketing, and human resource management, as well as knowledge of labor laws and organizational management. Among the questions addressed by HR consultants include the following:

 

  • How should a company’s HR policies and procedures be developed, revised, or implemented?
  • How should a company conduct HR audits and develop HR policies/procedures to ensure they comply with existing wage and labor laws?
  • What are the existing HR-related problems of a company, and what are the possible steps to resolve it?
  1. Operations Consultant

 

Quality control and performance strategies are essential in the continuous improvement and strength of the company. However, with the evolution of technology and the demands of the workforce, it may be a tedious job to implement plans for the development of the company. Thus, hiring a strategy/operations consultant is needed. Operations consultants analyze lapses in a company’s process management and workflow information, then provide concrete plans to ensure optimal production output. Some of the questions addressed by an operations consultant include:

  • What strategies of action should the company implement to maintain the quality of work/product?
  • How should labor be divided to produce optimal results on workers?
  • What should be done to minimize the production error in the operations process?

 

  1. Legal Consultant

Corporations and firms face legal issues and technicalities that hinder business operations, especially during times of scandals and lawsuits. They hire legal consultants to provide legal advice on various law fields such as tax, corporate, intellectual property, criminal, real estate, and so much more. Legal consultants also help create and analyze legal documents for their clients.

 

  1. Public Relations (PR) Consultants

 

Reputation and branding are crucial, especially to big corporations and institutions. PR consultants are communication specialists who promote their clients’ public image in a good light. They write press releases, organize press conferences, help mitigate crises using help from the media, and develop promotion strategies for clients. PR consultancy firms are also called in to help clients resolve issues related to public images such as controversy scandals, market competition, and negative feedback from people.

 

Entering the consulting business, or any type of business for that matter, is like entering into a battlefield. An army must plan by setting objectives, choosing specialized soldiers and weapons that fit the mission, and anticipate scenarios they may face in battle. Starting a consulting business runs on the same principles of preparation, which focus on specialization and anticipation in the industry. Here are six simple things you need to start on your consulting business:

 

  • Targeting a specific niche, you can excel at
  • Identifying the market’s needs and desires
  • Formulating a compelling offer for clients
  • Making more clients come to you
  • Setting up your consulting business
  • Negotiating your rates

 

Targeting a specific niche, you can excel at

 

Throughout a lifetime, most people choose to focus on being very good at one or two fields of study. But some people want to dip their toes in multiple pools of knowledge, hoping that they can solve various problems through various perspectives.

 

Let us set an example of two lawyers who both plan to enter the consulting business. Lawyer A focused on studying labor laws, working to defend labor workers against big corporations, and obtaining an international diploma with specialization in handling labor cases. Lawyer B thought that being knowledgeable on multiple related law fields gave him an edge, so he decided to study labor, criminal, and taxation law.

 

On the other hand, companies, firms, or even individuals are likely to encounter a simple problem or a web of interconnecting issues that stem from one or two principal causes. If a supermarket chain’s branches close down due to a mass labor strike by cashiers and merchandisers, the corporate owners may blame a massive labor dispute. A labor strike can have numerous causes such as unpaid overtime hours, lack of benefits, delayed salaries, which all point out to a critical reason: poor human resources management.

 

The best consultants are experts who can solve a client’s specific problem very well. In the reality of business, the supermarket chain in trouble would find it more beneficial to ask help from Lawyer A rather than Lawyer B. Although Lawyer B can provide the potential client essential advice on how to handle criminal and labor-related charges, Lawyer A can give specific details on where the client went wrong and what must be done to remedy the situation in such a way that the client gets reduced fines or resolves the issue with an agreeable settlement.

 

If you want to get into consulting, you would want to build a skill set. Skill sets are a combination of knowledge, abilities, and experience. The best way to acquire this is by studying and work. You would also need a passionate interest in the field you want to be an expert in. Otherwise, the effort won’t pay off well if you give up in the middle of studying and gaining experience.

 

A guaranteed way to find your niche – the job that best fits you in the consulting industry – is choosing a field of expertise according to your interests, your existing skill set, and the career path you want to get into. Avoid choosing a niche just because you see a lot of potential clients in a reputable consulting business like finance, operations, or human resources.

 

To see how skillsets can determine your potential career in being a consultant, here are some examples:

 

  1. A communications graduate with two years of experience has been interested in writing and fluent in debates since grade school. He/she has been serving as a media liaison for a sub-conglomerate, and five years of experience as a communications specialist for an advertising company would thrive as a public relations consultant.

 

  1. A non-college graduate taught himself to specialize in Java, C++, R, and Python after being fascinated with coding in high school. He served as a programmer for a small-scale electronics factory, an information technology (IT) specialist for three years, and a penetration tester for a sizeable technological company. If he decides to enter the consulting business, he could serve as an IT consultant for companies who need advice on IT, programming, and software security.

 

Identifying the market’s needs and desires 

 

As you pick your niche, it’s essential to have in mind a list of top five industries or groups you can easily handle using your skillset. This way, you would have a means of scanning for opportunities and resources you can use to start offering advice to clients. Track down each industry you’re capable and interested in working in, and take note of the following:

 

  • In a particular industry, what do companies view as significant or insignificant issues to address?
  • Why are businesses struggling to hold their own, and what specific problems cause such issues?
  • Do companies suffer from specific and technical problems that not many consulting firms can address? If these companies ask you for help, what would you do?

 

The best way to answer these questions is to approach professionals and clients in the field you want to engage in. Ask for 5 to 10 minutes of their time to gauge their sentiments about the latest issues in their industry. Use their answers to make adjustments or revise the type of services that you’ll offer as a consultant.

 

Formulating a compelling offer for clients 

           

According to Consulting.com, every organization or person aims to achieve a target state or outcome. However, limitations and opportunities presented by factors such as environment, competition, limited resources, and conflict can determine the progress of obtaining objectives. In simple words, the goal of a consultant is to help their clients get from point A to point B by resolving factors that hinder a client’s development and growth.

 

Clients such as businesses, organizations, and corporations face problems of different types and scales from time to time. Some people might ask these entities: why bother asking a consultant’s help if you can reduce costs by letting your departments and employees handle problems on their own? Here are some reasons why clients would need help from consultants:

 

  • Clients need expert advice. An advertising company being sued with obscenity for using an offensive double-meaning tagline in a brandy commercial would not have any in-house employees with sufficient knowledge to interpret and analyze the legal implications of such a charge. In this case, they would need to hire a legal consultant to help them with trials and provide law-related advice.

 

  • Clients need an outside eye to have a look. A clothing company plans to promote a clothes collection for the summer season. They have an advertising and marketing department to handle promotional preparations for the sales launch. The boss, however, is skeptical of the advertising and marketing strategies presented to him and decides to hire an external advertising consultant firm.

 

  • Clients need someone to identify their problems. A business process outsourcing company’s revenue drops due to negative feedback from clients. On top of that, they slowly lose call center agents and can’t find replacement employees fast enough. They eventually call in an HR consultant to figure out the reason behind the resignations and low quality of employee service.

 

  • Clients need to revitalize their business. A perfume company is losing sales because its products are marketed to older men. They want to appeal to a younger generation of men and women. They decide to hire a marketing consultant to seek help at rebranding and reinventing the company’s public image.

 

  • Clients want their staff to be trained. Sometimes, consultants are brought in to teach new skills to employees. A news organization that frequently faces hacking and data theft in the newsroom would benefit from a few courses from an internet security consultant.

 

Notice that in all of these examples, the consultants were called in to solve specific problems. Companies will only care about you as a consultant if they see that you’re the best at what you do, and you present your expertise clearly and precisely. To stand out from the competition, you must avoid giving vague answers about the services you can provide. Instead, go for short sentences that highlight your niche and expertise.

 

When asked about the kind of job that they do, many consultants say that “I… helped corporations with their businesses.” That’s not good, because by then your potential clients won’t get to know how you can help them with their problems. Instead, let your potential clients know about your expertise and the services you offer by using this template:

 

I helped [company] resolve [specific problem] by [service offered] as a [niche].

 

Using the legal consultant example earlier, here’s what the template would look like:

 

I helped [an advertising company] resolve [an obscenity charge] by [providing legal advice and processing legal documents] as a [legal consultant].

 

Here are some more practical examples of the template:

 

  • I helped a clothing company resolve a marketing issue by giving a second opinion as an advertising consultant.
  • I helped a business process outsourcing company recover lost profits and decreasing human resources by revamping existing HR policies and suggesting additional payments/benefits to employees as an HR consultant.
  • I helped a perfume company earn more revenue by helping to rebrand its product and brand image as a marketing consultant.

 

Providing an example of how you can help your clients will surely encourage them to take your services. Consultancy work is a symbiotic relationship: if clients see that their issues are resolved, thanks to your help, they will pay you well and help you get more potential clients through word of mouth.

 

Making more clients come to you 

 

Clients won’t automatically come to you. Merely waiting for clients to enter is like waiting for the thunder to strike your house: spontaneous and random. There are various ways on how you can connect yourself to clients who aren’t even aware that they might need your expertise and services.

 

  1. Networking

 

As you start in the consulting industry – or any business for that matter – making connections to people is an important step. Creating social and professional relationships with the first few clients you meet helps you identify pain points or struggles in the industries you want to specialize as a consultant. The good thing about networking is that it enables you to market yourself to other people. Business owners give you referrals to other business owners whom they think can benefit from your services.

 

Word of mouth is an essential promotional avenue because the endorsement from several people automatically implies trust. It can make or break your business, depending on the scenario. Networking gives positive benefits when clients rate your services as helpful and recommended. The opposite is exact: some types of word of mouth that can negatively affect your business include fake news, videos, and gossip.

 

You have to be careful and ensure that your clients get the best service from you. Otherwise, any negative feedback in your work will convince potential clients in your network to stay away from your business. There are many ways to establish a system, from cold calls to public motivation speeches and face-to-face meets with business owners.

 

  1. Brochures

 

Brochures are used when potential clients inquire about you and the services that you can do. Think of it as a calling card they can use when the need arises. A brochure must be simple and clear enough to highlight the nature of your consulting business. It should be convincing enough to make clients curious and interested in availing of what you have to offer.

 

Since you are the one selling yourself, the burden of convincing people lies in how you present your consulting business as a credible, experienced, and professional company. Here are some examples of information that do well in promoting your consultant expertise, and why you should include them.

 

  • Portfolios of other clients you’ve handled and how you dealt with their problems show the extent of your expertise. Highlighting more prominent clients is a definite plus. Citing examples would help your potential clients know how you work.
  • Statements of vision and mission incorporating the core of your consultancy service make your business image shine from the competition.
  • Licenses, accreditations, personal, and staff education projects credibility and showcases your skillset as a consultant.
  • Testimonials from satisfied clients show good examples of why your business is considered one of the best.

 

  1. Cold-calling

 

Cold-calling is when you introduce yourself and your services to businesses and industries as a means of persuading them to avail of what you have to offer. In short, it is an unsolicited advertisement over the phone.

 

Cold-calling is a marketing trick for self-promotion that allows you to approach multiple potential clients at a time, hence increasing your chances of being hired as a consultant. It is relatively easy because all you have to do is to read a script over and over again until someone says yes.

 

Although cold-calling is effective at expanding your reach and building potential networks, it does present some challenges. Relying on multiple cold-calls is like shooting a shotgun at flying birds, leading to a lot more misses than hits, especially when you’re inexperienced. Cold-calling can also sound impersonal, scripted, and forced. The time of your call can also affect your chances of talking directly to the boss.

 

If you want to try cold-calling, despite the risks, here are a few tips to charm your way into offering your consultancy services:

 

  • Prepare a script and improve it continuously. Writings are meant to be a template. It helps you remember the most important things you have to say, and avoid getting side-tracked during the conversation. A good script is a short and sweet explanation of your target clients’ problem, the solutions you offer, and how you are different from the competition wrapped up in three sentences or less.

 

  • Set up objectives for your cold calls. When you’re starting in the industry, do cold calls to know companies’ issues in your niche and assess whether you can offer your services to them. Once you hit the ground running and know more about the industry, cold calls can then be used to directly provide your consulting business to companies with whom you want to be potential clients.

 

  1. Digital Advertising 

 

In the age of modern technology, the Internet has become the most common form of communication. There are around 4.1 Billion people who use the Internet. According to Christina Newberry (2018), at least 80% of social media users follow a business account on Instagram.

 

There are several advantages of using social media to inform people about your consulting business and the services you offer, according to social media management platform Hootsuite. Here are some benefits of using digital advertising as a platform for promoting your consulting business:

 

  • Increase your chances of getting known

 

According to a Digital 2020 report by Hootsuite and We Are Social, around 3.8 billion people use social media around the world, with users spending an average of two hours and twenty-four minutes on social media every day. With the abundance of social media, users come more potential clients for your consulting business.

 

Placing advertisements about the consulting services you offer can increase your chances of getting more clients because content and ads can spread at a viral rate on Facebook, Twitter, and Instagram. Algorithms ensure that your posts will have a high probability of being seen by your target audience.

 

  • Powerful advertisement tools

 

Social media platforms provide compelling tools for advertising. For example, targeted advertising on Facebook, Twitter, and Instagram provide anyone with the ability to focus his/her ads on a select group of people categorized according to date, age, country, interests, and so on. Analytics provides a real-time view of the number of views, reactions, and comments garnered by a specific advertisement, allowing you to adjust your ads to fit your potential clients better. Comments and feedback from your target market can provide you with a data-driven valuable insight on how your audience perceives your business.

 

  • Infinite advertising possibilities

 

Social media is on a digital landscape, which allows for infinite possibilities in the creation of your advertisements. Different mediums are available, such as video, infographic, digital art, blog, etc. You can also choose what type of content you’d like to present, from client success stories, concept-based videos, and so much more.

 

  • Videos as an excellent advertising medium

 

According to the Pew Research Center, about 73% of adults use Youtube to search for content. Some people are more engaged in watching videos than reading texts because it is passive media, meaning you don’t have to exert much effort to understand the message. Using videos as a marketing tool is so popular that 87% of marketers use video content for marketing, according to Wordstream.com. A 2015 statistics list by Syndacast reports that 52% of marketing professionals worldwide name video as the type of content with the best return of investment.

 

Video advertisements can be crafted in such a way that it urges potential clients to consult you for their problems. If you’re targeting individuals who are having a hard time managing their budgets, you can start by using the following template:

 

  • Dilemma: Try to anticipate your viewers’ problems. For this example, saying something in the lines of “Are you having a hard time saving up and tracking down your expenses?” piques the interest of those who suffer from such a dilemma.
  • Hook: People love receiving free advice, especially when it’s helpful. Providing general suggestions such as “put 20 dollars in a jar daily” or “make a list of how much you spend every day” is already helpful. Still, those tips are bait for viewers to think about getting your expert help as a consultant eventually.
  • Promotion: Hooked by the suggestions you offered, the viewer would want to know more. This is when you would offer your consulting services and present your credentials. It would sound like,  “If you want to learn how to manage finances wisely, call our financial consulting services at…. We have already helped [number] of clients say goodbye to debt and empty wallets.”

 

  • More active engagement with clients 

 

Social media provides avenues to communicate with clients, be it through a tweet/comment, a direct/private message, or video chat. Queries can be answered in a short time. Potential clients can also reach out, engage, and ask about working with your consulting business.

 

Setting up your consulting business 

 

As you begin your consulting business, there are only a few things that you need to set up. You can rent up an office space where you can hold meetings with your clients and maximize productivity. A telephone with voicemail or fax is also a piece of essential equipment because you have to make phone calls with numerous companies. A computer or laptop with high-speed Internet is an invaluable tool for video calls, connecting with clients, doing work, etc.

 

It is also important to hire some people who will help you with business-related affairs in the long run. Having an accountant audit and manage your business expenses will save you from a lot of headaches, especially when you have to pay taxes. Knowing a lawyer whom you can consult for legal matters is helpful when technical issues about the law pop up in your business.

 

The best time to start expanding and hiring more people is when you start struggling with marketing, consulting, networking, and managing business matters on your own. Also, note that having more staff raises expenses for your operation.

 

If your consulting business is big enough to support additional people, it is essential to note that hiring skilled and passionate workers will help your company a lot. As much as possible, employ other people who possess experience in consultation work or find apprentices who are enthusiastic about learning the ropes of providing expert opinion to others.

 

Such employees should be adequately compensated and must be taken care of. The success of your consulting business is also dependent on your staff. Remember that you are also serving them. Their loyalty will be yours if you treat them with great value.

 

 

 

 

 

 

 

 

 

 

 

Negotiating your rates

 

 

According to a 2019 study by Consulting Success, a majority of consultants (31.37%) use a project-based rate to price their projects. 23.38% of consultants bill by the hour, while 17.30% of consultants use value-based fees to price their plans. 15.40% use monthly retainers — and 12.55% of consultants use a daily rate.

 

Here is a list of how different types of consultant rates differ from one another:

 

  • Project-based rates, as the name implies, sets a fixed price depending on the type and scale of the project to be executed.
  • Hourly rates charge a fixed price per hour of work done. Technically, more hours of consultancy work means more profit; but this rate scheme is disadvantageous for those who can efficiently do work in as little time as possible.
  • Monthly retainers are contracts where you’re given a regular monthly salary. The good thing about this is the security of income because the payout of your work won’t be subjected to sudden shifts and delays.
  • Value-based pricing sets a price depending on how much the consultant thinks his/her/their work is worth to the client. This is very hard to implement, however, because “value” can be skewed by subjective opinion
  • Productized consulting is like ordering multiple food items in a fast-food restaurant. The receipt lists down every type of essential work associated with your service and gives each a fixed price.
  • Performance deals set up a base pay and a bonus payout determined by the performance of your work. For example, a company asks you to increase its monthly revenue of $200,000 monthly to $300,000. You set up a base pay of $10,000. The company agrees to pay you 20% of the extra revenue as a performance bonus. You’ll be paid a maximum of $30,000 ($20,000 as performance bonus)  if you reach the target revenue, or a payout was ranging from $10,000 – $30,000 if you don’t.

 

It’s also essential to know a few basic things about setting rates. First, it is never a good idea to lower your standards to win clients because it looks like you’re underestimating the worth of your expertise as a consultant or you’re selling yourself short. Second, your pricing is not only determined by your knowledge as an expert but also by your soft skills such as personality, work ethic, timeliness, etc. This means that if you know your efficiency and speed isn’t as fast as your competitors, but you can guarantee quality work for clients, it’s okay to adjust your prices a little.

 

Conclusion

 

Consultancy work deals with lots of challenges. Knowing these tips will help you start your consulting business. However, some other questions and problems will arise as you go through the process. It is important to remember that building a business is a continuous learning process.  You will continuously develop essential skills to keep your business moving. You may learn to discover yourself as well. What Is necessary is that you try to do your best in all the things you do. Keep moving forward, and you will be successful in the consulting business.

 

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