How to Start a Consulting Business
Starting your own business isn’t easy, especially when it comes to being a consultant and what you’re selling is you. You have to convince people that you have the best advice for operating their businesses, while at the same time, successfully run your own business.
“You’re selling your expertise [and] you’re selling your knowledge base,” said Nancy Effert, owner of a Barrington, Ill.-based, wealth management consulting company focused on working with small and mid-sized businesses. “There’s a lot of work, but, at the end of the day, it can be very rewarding.”
Keep reading to determine if launching a consulting business is the right move for you.
Benefits of starting a consulting business
If you have expertise in a specific area and you want autonomy, starting a consulting business might be the right move. “You’re able to do it the way you want to on your own terms,” Effert said. “It’s a nice way to leverage what you’ve learned in the corporate world.”
You can take on as many or as few clients you want, choosing those who are a good fit for your business. You can adjust your schedule at any time to accommodate changing life circumstances.
“Most consultants have an absolute passion and desire to help this underserved market of small businesses,” said Richard L. Weinberger, CEO of the Association of Accredited Small Business Consultants, which is headquartered in Austin, Texas. That includes helping small businesses increase their profits and run their operations more efficiently.
Challenges of starting a consulting business
The first challenge of starting a consulting business is building a client base. “You have to develop your own marketplace,” Effert said. You no longer can depend on corporate clients from a previous employer. You need to branch out on your own. Start by maintaining an active presence on social media and networking whenever possible, including attending conferences and other business events.
“It does not happen overnight,” Weinberger said. “It’s relationship building, it’s gaining a reputation, it’s gaining experience.”
Your next challenge will be when your business takes off. The bigger your business becomes, the more problems that can arise. For example, hiring the right people to handle a growing business can be a daunting undertaking.
“Finding the staff that you can afford may not give you the staff that will help your business grow or be the appropriate person,” Effert said. Be flexible to get the right people. For instance, Effert located two people with outstanding skills who are willing to work part-time — one in the office and one remotely.
Steps to starting a consulting business
The first step in starting a consulting business is getting licensed or certified. Weinberger’s Association of Accredited Small Business Consultants offers certification for people who want to become small business consultants.
“We have members in over 40 countries around the world,” he said. “Someone that becomes certified with an association like ours has international recognition, and they gain credibility.”
That’s because of the requirements for certification. To pass the certification exam, you need to demonstrate that you’ve mastered all the requirements to be proficient in the area of small business consulting, Weinberger said.
Effert advises anyone looking to start a consulting business to research their industry as much as possible and, like any small business enterprise, consult with key business support people including accountants, attorneys, bankers and financial advisers.
“Be prepared to work very hard to find the business, do the work and build a clientele,” Effert said. “Know where your money is coming from and where it will go. You may have to go to nontraditional sources to get the funding to support your business.”
Effert urges acquiring the tools you need to support your practice, in terms of technology as well as staff. That might involve taking training courses or purchasing software. Keep up-to-date in your field through continuing education, she said.
“People are paying for your knowledge and experience,” Effert said. “Read everything, take courses, get accredited.”
Make a name for yourself
Use as many marketing methods you can. “No one is going to give you the business, no matter how smart you are if they don’t know who you are and why they should be working with you,” Effert said.
Become visible in your business community, which might include joining organizations, attending events and executing mail or email promotions.
Consider joining the Society of Professional Consultants, which offers networking, mentoring and education for consultants. The organization has a member directory on its website with individual profile pages for possible referrals. New members also receive three mentoring sessions with a seasoned consultant during their first six months of membership. And the SPC also offers a referral service.
Continuously monitoring your online presence is essential, Effert said. “Be aware of your reputation, because potential clients will be searching online.” So that means checking Facebook, Yelp and any other social media site where people might have left comments or reviews about your work.
Once you begin getting work, be carefully attuned to your clients’ needs. “Ask questions and listen,” Effert said. “A project is considered a success if and when it meets the stakeholder’s goals.”
Solutions might sometimes be beyond your area of expertise, so Effert advises building a network of experts to consult.
Costs to start a consulting business
When you first start your consulting business, you’ll need to get a license or pay for training. Costs and time vary, depending on your field. The Association of Accredited Small Business Consultants charges $499 for certification, which includes a training manual, 40-video lecture series and the cost of taking the exam.
You’ll also need typical office equipment, such as a computer, software, phone, fast internet connection, business cards and stationery. You’ll need a website and budget for marketing expenses. Plan to spend at least 3 percent to 5 percent of your annual gross revenues on marketing for a new business, and possibly as much as 7 percent to 8 percent.
Having a physical location isn’t essential, but it can help.
“How are you going to get business if you don’t look like you’re established, especially when you’re starting out?” Effert said. “In my business, I thought it was more beneficial to have a brick-and-mortar place. If someone wants you to manage their wealth or provide them with consulting, they want to see that you look stable.”
Weinberger noted that sometimes consultants keep their regular jobs and start consulting part-time. Some members of his association work out of their homes. Although he agrees that having an office location can give you more credibility, many consultants tend to meet clients at the clients’ places of business. When that isn’t possible, consultants can rent a conference room at a coworking space for client meetings.
There are additional costs if you need a staff. The amount will depend on the number of hours required, where you are located and the person’s level of expertise. You’ll probably also need to pay for the services of a lawyer and an accountant.
Is a consulting business right for you?
There are no educational requirements for becoming a consultant but, to be a successful one, you must have a good understanding of business and a love for your subject area, Weinberger said. Additionally, you have to “enjoy challenges and love working with individuals,” he said.
Before committing to consulting, ask yourself some of these questions:
- Do you have the expertise in a subject matter that’s in demand?
- Do you have any built-in clients?
- How long can you afford to run the business before turning a profit?
- How many hours do you want to dedicate to the business?
If you’re willing to work hard and accept that it will take time and effort to grow your consulting business, it might be the right venture for you.