Using your expertise to become a business consultant can be a lucrative and rewarding career. A business consultant provides advice to companies to streamline their processes, increase profits, manage employees, and come up with new plans, strategies, and ideas to help their businesses grow.
Business consultants have been used for decades. In the late ‘90s, U.S. companies were already investing tens of billions of dollars hiring consultants to help improve their business models. That figure has massively increased, with most Fortune 500 firms investing 1-3 percent of their organizational expenditure, averaging at $100-150 million. In short, there is a massive opportunity for those with expert knowledge to start a consulting business and make a lot of money doing so.
What are the benefits of starting a consulting business?
You are your own boss. Working for yourself can be tough, however managing your time, setting your schedule, creating your career path, and selecting which projects to work on are huge benefits that far outweigh any challenges. It’s no wonder that over 16 million Americans choose to be self-employed rather than work for someone else.
How to get into consulting
The most natural route for someone hoping to start a consulting business is to begin consulting in the field where you already have lots of experience. If you worked in IT, for example, you could become an IT consultant. If you worked in HR, you could become an HR consultant and so on.
There are lots of fields that are a good fit for consulting. Some of the most common include:
• Accounting consultant – all businesses from small independents to huge chains need accountants to assist them with their financial needs.
• Advertising consultant – businesses looking to boost their marketing through advertising may hire a consultant to help them devise a productive and profitable strategy.
• Business consultant – for companies who need help with their overarching business strategy, a business consultant can help them understand how to make positive decisions.
• Career counseling consultant – can help those looking for a career change to find a role that maximizes their potential and brings about excellent job satisfaction.
• Communication consultant – specializes in assisting employees and employers in communicating more effectively, which should boost efficiencies and optimize business processes.
• Gardening consultant – can help businesses create peaceful recreational outdoor spaces and also works with individuals who need help taking care of their gardens at home.
• HR consultant – a human resources consultant, will help teach businesses how to address employee grievances and develop robust policies that ensure your team works together effectively and respectfully.
• Insurance consultant – all companies need insurance, and this type of consultant can help obtain the best policies at the best price.
• Law consultant – businesses who need help understanding particular laws and the legal obligations of their business may enlist a law consultant’s services.
• Marketing consultant – all successful brands know that a robust marketing strategy can help their products and services reach new audiences and turn them into loyal customers. A marketing consultant can help ensure that the company has a compelling ongoing marketing plan to promote their business to the right people and strengthen their brand.
• Management consultant – will look at the business’s overall operations and find more effective ways of doing things by solving problems that lead to much higher efficiencies.
• Operations consultant – is hired to help improve the efficiency of a business’s value chain. Services such as developing and implementing target operating / service delivery models, helping to reduce outgoings, and optimizing business processes are included in the job title.
• Public relations consultant – if a business needs assistance managing their PR, they can hire a PR consultant to ensure they get good press coverage.
• Taxes consultant – a person with expertise in tax affairs can offer excellent value to businesses of all shapes and sizes, ensuring that they are compliant with tax law, while simultaneously finding smart ways to reduce their tax bill each year.
• Writing consultant – all businesses benefit from good content, and a writing consultant can help improve wording for websites, marketing campaigns, and more.
The best consultants are passionate about the field in which they work; they pride themselves on being experts and have a genuine desire to help their businesses. They are always striving to learn the newest techniques and trends and understand how to translate their expertise into practical, workable, and effective solutions that deliver exceptional results.
Anyone who desires to become knowledgeable in a particular area and share their expertise could become a successful consultant. The key is understanding where your unique passions lie. Once you have explored your options and found an area that you want to work in, you need to learn as much as possible to become a valuable resource that others will pay good money for.
Considerations for anyone wishing to become a business consultant
Licenses and certifications
In some industries, you will need appropriate licenses or certifications to qualify you to carry out the role. For example, to become a legal consultant, you will need to prove that you have legal training and expertise. Other consulting jobs don’t require any formal qualifications as a prerequisite; however, the more formal skills and demonstrable experience you have, the more successful you will be. A fundraising consultant, for example, doesn’t need any particular criterion. However, becoming certified through the National Society of Fund Raising Executives will prove your level of expertise and will be something that will impress a business you reach out to and will build trust.
Experience and expertise
To become a consultant, you need to have a certain level of knowledge and expertise in your field. Businesses pay consultants to teach them things they don’t know and improve particular areas to make them more successful. You need to make an effort to make sure you remain at the top of your game and up to date with any changes in your particular industry.
Organization, communication and networking skills
A successful consultant should be meticulously organized, able to stick to project deadlines, attend meetings, and plan and prioritize their own workloads. They need to be effective communicators and ensure that they keep open communication lines with the business they are working with. The ability to explain their methods and strategies clearly and coherently is essential for consultants, particularly if their area of expertise involves lots of technical language and business jargon. Networking skills are also crucial as building a network of contacts will ensure a steady stream of work.
Target market
Before taking initial steps to becoming a consultant, ensure that there are businesses out there that need your services. Do your research before starting your consulting firm to ensure that people are willing to pay for your advice. Make a list of potential clients you could reach out to and take the time to prepare a business and marketing plan to target them.
Why would a business want to hire a consultant?
There are a considerable number of reasons why a business might be motivated to hire a consultant. Let’s explore the most common ones:
Expertise and specialist knowledge
Many businesses just want to focus on developing and delivering excellent products and services. This means that there are many areas of running a business where their knowledge might be lacking. If they don’t want to be concerned with understanding the complexities of business law, finding ways to pay the minimum amount of tax, or need marketing or technical expertise that they don’t have themselves, hiring a consultant can be hugely appealing.
Identifying and addressing problems
Some businesses aren’t performing as well as they hoped, yet are unable to isolate any specific problem and, therefore, can’t see a way to turn things around. A consultant provides a fresh pair of eyes and expert knowledge to understand better what might be causing these challenges and provide practical solutions to overcome them.
A catalyst for change
A consultant may be hired as someone who is not directly involved with the company or too close to it to motivate employees to change. Sometimes it can be challenging to encourage teams to improve their processes if it’s ‘the way it has always been done.’
Still, a consultant can serve to shake things up and persuade people that doing things differently could make everyone’s lives much easier.
Teaching new ways
Teaching teams about new systems or processes can be a mammoth job that some companies just don’t have time to carry out internally. Hiring a consultant as a teacher who can show employees how a new program works, teach them new skills, or implement a new way of working can be a much more time and cost-effective way to get the job done without committing significant resources.
Bringing in new business
Because of their expertise, a consultant could be hired to identify new business leads and bring them in. They may be required to create strategies to reach new audiences, connect with them, and turn them into loyal customers.
Setting up for consulting business – the basics
Now you have decided on your area of expertise; you need to figure out some logistics to start your consulting business.
First, you need to consider where you will operate. Starting a business from home can be a smart move as you’ll keep your overheads down and claim tax relief. Working from home means you have increased flexibility around your schedule and won’t have to commute anywhere to begin your working day – saving time and money too.
You should also consider whether to hire employees to help you with the business’s day-to-day running. This may not be a concern initially, but as your business grows, you may need administration and organization. An office administrator could better handle practical jobs such as sending out inquiries, responding to emails, and answering the phone. Make sure that you hire someone reliable with experience and excellent references, and this could be a hugely cost-effective way of getting your paperwork in order, freeing up more of your time to do what you do best!
Online presence
Having a strong online presence is essential if you want potential clients to discover you and take you seriously. A compelling website is an ideal platform to direct people for more information. You can describe your services and rates in detail, showcase your portfolio and case studies, and gather glowing testimonials from satisfied clients. A quick and easy way to create a website for free is by using a powerful website builder, such as Boxmode, that helps people build their business website in no time.
Fees and billing
Deciding how much money you intend to charge clients can be one of the trickiest decisions to make. It’s essential to do your research before setting your fees. You want to remain competitive, but if you set your prices too low, you’ll seem inexperienced, and potential clients will be concerned that you won’t do a good job. If you set your fees too high, no one will have the budget to employ you, or you will get hired, but the expectations will also be ludicrously high, and you may end up feeling that you have bitten off more than you can chew.
It is crucial to be realistic about your skills as well as your limitations. Think carefully about what you can bring to the business and how you will be able to demonstrate your effectiveness and worth.
You should take time to research your competitors and ask for their brochures and rates and what’s included in their service to get a better idea of what the going rate is for your services and set yours accordingly.
Before you decide upon your fees, it’s a good idea to work out your expenses too. Be as thorough as possible when doing. If you miss something off, you could end up out of pocket. Being as transparent as possible when it comes to your rates will impress clients. However, it is good to include a “miscellaneous” line item when breaking down costs for clients, which can cover any unexpected costs for materials and additional services that were impossible to predict.
The majority of clients are aware that every project is likely to incur additional expenses and will be happy with an approximate figure until the work has been completed.
When deciding on your rates, you have several options. You can charge an entire project fee, agree on an hourly rate, or set a retainer. To determine which one is best, let’s examine each in further detail:
Entire project
Charing for the entire project means you will get a fixed sum in return for your work. You will agree to deadlines for delivery of the work and will be paid the agreed amount usually after the deadline has passed, and the work has been successfully completed. The agreed sum could also be broken into chunks and paid as particular milestones are achieved or even just every month. It can be helpful to receive significant amounts of money at once. However, it is crucial to make sure you budget well and trust that the company you work with will pay up in a timely fashion.
Hourly fees
Choosing hourly fees can be the preferred payment method for some clients. However, this can pose some problems for you because you have to determine your worth and calculate how much you can achieve in a tiny unit of time. A ridiculously high hourly rate will put off your clients. One too low means you won’t be taken seriously. Getting the figure right can be difficult, and agreeing how much work can be expected of you for that amount for one hour is often a point of contention between consultants and their contractors.
Retainer basis
Working on a retainer basis provides you with a pre-agreed monthly fee that pays for you to be available for work for the hours you have agreed with your client. They spend the money upfront on securing your services, and you then carry out the work, hopefully, undisturbed by the client. While this can be an ideal way to make money, unfortunately, most clients don’t like to work with consultants on a retainer basis. If they do, they will usually include a clause in your contract to prevent you from working with any of their competitors for the duration.
If you can secure a retainer fee, this can be a useful way to ensure a steady cash flow each month, and because of this, some consultants offer a reduced rate if the client agrees to pay them this way.
Selling yourself
Whether online or in-person, you need to be able to sell yourself and the services you offer, have a clear message, showcase your strengths, and keep your points short, concise, and easy to understand. When you are pitching, you need to sound confident and ready to back up your claims with evidence. Highlight why a company should pick you over your competitors and reiterate the value you bring to your clients. Develop marketing materials such as brochures that you can hand out to clients so they can easily remember what you offer and to keep you at the forefront of their minds when deciding who to go with.
Planning for the future
If you hope to operate a successful consulting business, you need to define your short and long-term goals and come up with detailed plans for achieving them.
Have a plan in place for how you intend to commence a new project, so when a client does hire you, you know what steps to take to get the ball rolling and all the materials necessary to start straight away.
More long-term planning will involve thinking about how you intend to position your business in the marketplace and beat the competition. This includes developing a robust marketing plan and making projections for income and growth. By creating a business plan which provides for all these considerations, you will feel assured and confident that your consulting business will go from strength to strength.