Creating your own consulting business allows you to set your own hours, charge your own rates and only do the type of work you enjoy doing. For that reason, many millennials are going this route in order to either make some extra money or, in many cases, leaving their 9-to-5 gigs for such flexibility.
While starting a consulting or service business obviously takes work — and lots of experience and contacts as potential clients — it’s not as difficult as some may think. Of course, the most important part is to understand how to sell yourself in order to start making money; or, more appropriately, selling your services.
For those looking for tips on how to become a consultant or start a service business, following these steps will help get you going. The rest is up to you on either working part-time or diving in headfirst and consulting full-time.
List Your Skills
The first step in starting a consulting business is to decide what exactly it is you’re going to offer. You can go narrow or broad, but make sure you hone in on what your exact expertise is.
For example, if you’re an event planner, you might niche yourself as an expert in weddings, or in business functions. You’ll have a smaller target customer base, but you’ll separate yourself from the generalists.
As an IT consultant, you might offer one-off troubleshooting to consumers, or long-term systems management to businesses.
If you’ve got business management expertise, you can offer general business consulting services to small companies. As a specialist, you might provide consulting in operations management, financial strategies, marketing or sales.
Or, another way to find your target customer is by specializing things by profession, targeting law firms, restaurants or painting contractors. Nicheing worked for consultants Brandon Lewis and Monroe Porter, who targeted the painting profession.
Lewis started the Academy for Professional Painting Contractors, offering industry specific sales and marketing advice. Porter launched PROOF Management Consulting, focusing on operations advice. Both have become well-known, go-to consultants in a national industry with tens of thousands (but not millions) of potential customers.
After spending decades running trade associations and managing newsletter and magazines, I started the niche consulting business Association Publication Evaluations.
Write a list of broad, general services you can offer in your category and a list of niche consulting services you might offer. This will help you choose which strategy is more likely to work as you conduct your research into the marketplace.
Check Out The Competition
Rather than trying to create a demand for your services, check out what the marketplace wants.
Perform search engine research using the keywords your potential customers might use, such as, “Graphic designer + your town,” or “public relations + your metro area.”
Find out what your competition is charging. Visit their websites to determine how they are branding themselves. Check out where they’re advertising and visit their Facebook pages and Twitter accounts. Look to see if they have client lists posted on their websites.
Finally, talk to potential customers and/or business friends to see what they are looking for in a consultant, how they find consultants and what they’re paying.
Decide On Your Service Offering
Once you’ve assessed your skills, looked at the marketplace, evaluated potential customer pools and evaluated the competition, choose the consulting services you’ll offer.
List both the services you’ll offer and the benefits you can provide customers. This will help you with your marketing and find the right clients.
Set Your Monetary Goals
Create a budget that will help you determine how much money you’ll need to earn to operate your business, pay back your initial investment and give you the annual income you’ll want. As a consultant, your tax liabilities and benefits will be very different from what you had as an employee.
To learn more about the differences between being an employee or contractor, check out our article, Employee Or Contractor: What’s Best For You?
Create Your Brand
Now that you know exactly what you’ll be selling, you’ll need to create your brand.
Your brand is more than just an image or slogan, it’s the consistent message you send about your unique selling differential or proposition. This will include describing your service, your target customer and your benefits.
Use the information you gathered when you talked with potential clients to create your brand message. Thoroughly research your competition, then come up with one main slogan or tagline that you’ll use on your website, business card, brochures and other marketing material.
Focus on demonstrating to potential customers that you have exactly what they need and why you do it better than anyone else.
Set Up Your Business
You’ll need to take some basic steps to set up your consultancy.
First, talk to an accountant about whether you should incorporate. This can reduce your legal liability, protect your personal assets and have significant tax benefits for you. Next, check to see if you need a local or state business license. Find out if you need to carry insurance.
Create a website with information about you, your services, contact information, information articles to show your expertise and, if you have them, testimonials.
Get some business cards, and create a brochure you can distribute, mail, post on your website and send via email as a PDF file. To look more professional, get a Post Office box so you don’t have to put an obvious residential address on your business correspondence.
Decide how you’ll keep records, send invoices, track expenses and generally handle your paperwork.
Do A Test Run
Offer to give your services free to one or two businesses so you can get some consulting experience and generate some testimonials, case studies and a client list. Approach nonprofits, which are always happy to have free help.
As you go through the test run, ask these clients what they feel would be a reasonable fee for your services to help you set your future rates.
Develop Your Marketing Plan
Remember to address the Four Ps: product, price, place and promotions. Marketing isn’t just advertising, PR, promotions and social media. Those things all fall under promotions.
Start with your product. What differentiates you from the competition and, more importantly, why should someone hire you for services? What are your unique benefits?
Consider your pricing strategy. It’s easier to lower prices if you set them too high at the beginning. It’s more difficult to raise prices if clients get used to your initial low fees.
Decide where you’re going to provide your services. Will you work mostly by phone and online? Will you visit clients and work onsite during the engagement? Will you travel or stay local?
Finally, create your Twitter and Facebook accounts. Decide if you’ll use snail mail or email marketing. Send your letters and brochures. Write subject matter expert content for websites, magazines and newsletters your customers visit and read. Give talks. Network. Buy a booth at a trade show.
Create a marketing plan that includes a social media campaign, generating word-of-mouth referrals from your network, sending press releases to appropriate media outlets, making phone calls and doing a brochure mailing — if you have the budget.
Create A Business Plan
Now that you’ve performed steps Nos. 1 through 8, write a business plan. This should serve as a pre-launch document the helps you start your business successfully. It can also serve as an operating plan that helps guide you through your first year as you continue to build the consulting business.
You can increase your marketing communications budget as you bring in clients, or spend your entire budget upfront with an all-or-nothing media blitz; it’s all up to you.
List your marketing options in terms of cost and potential effectiveness, then decide which ones you’ll try first. It’s probably better to start slow — if your marketing works too well, you might end up with too many clients — or you might take on too many and provide less-than-stellar service. Remember, when consulting, it’s a marathon, not a sprint, where you’ll first have to prove yourself before taking on too much work.
All images via Getty