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How to Start a Consulting Business - With High Earnings

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Do you want to know how to start a consulting business? For many professionals, consulting sounds like an attractive career choice. There's a lot of flexibility in the work and there can be high pay. In some cases, there's also a lot of travel involved.

But what does it really mean to be a consultant, and how would you know if it's right for you? This guide provides an overview of consulting, its pros and cons, your possible career path options as a consultant, and what it takes to become a high-earning consultant.

Start a Consulting Business
Start a Consulting Business (graphic)

What Consultants Do

Generally, consultants are advisers hired by businesses so that they can achieve a specific goal. Since what falls under "consultant" is vague, consultants could help businesses in almost any aspect of their operations, whether it's efficiency, profits, or sales. 

They can even help in less business-inclined areas such as design, morale, employee personal development, creativity, and company diversity. The broad possibilities of consulting is probably one of the reasons why it's a career option that attracts many professionals. In the United States, for management consulting alone, there are over 700,000 jobs, a number that's projected to grow at a faster rate than in most occupations.

Launching a consulting business has its fair share of benefits. Consultants often have the autonomy to choose their own projects and clients, allowing them to tackle the problems and challenges that they find most interesting. The profit margins can also be high, since you'll be providing expertise that your clients don't already have in-house, plus operating costs can be low if you don't need too much extra staff or equipment. 

But there are some costs that come with these benefits. Because consulting attracts so many people it can be very competitive. It will take a lot of work to stand out from other consultants with similar services. This means it will be difficult to get a consistent stream of clients. 

Also, like with any business you start yourself, in the beginning you'll have to do a lot of the legwork apart from the job itself. Be prepared to answer phones, be the only salesperson, provide client support, and become the Head of Marketing as well. Expect to invest long hours, at least during the start of your consulting business.

What It Takes to Become a Consultant

There are some specific requirements to become a consultant, but you'll find that most of them are informal or can be achieved with some training. Here are some of the qualifications and skills you'll need before you get started:

  • Valuable expertise. Since you'll hire out your skills, there must be something in your background and experience that proves the value you'll provide. For example, if you're looking to be a company's diversity consultant, do you have a background in sociology or anthropology or, at the very least, do you have experience working on diversity programs? If you plan to work as a sales consultant, have you led a sales team and do you have the numbers to show the difference you made? Did you write a book on the subject that you're helping your clients with? While you don't necessarily need to have a specific degree for most consulting jobs, you need to have at least some proof that you have the expertise to contribute something valuable to your clients.
  • Knowledge of business practices. Even if you plan to work on projects that don't directly impact business operations, understanding how a typical business works will allow you to navigate your clients' needs more thoroughly. You'll understand how different departments work with each other, how hierarchies typically interact, and foresee any potential problems that will interfere with your efforts.
  • Excellent communication skills. Most of your time will be spent communicating with your clients. You'll be managing their expectations, persuading them to accept your solutions, and interacting with many different individuals and departments. A single misunderstanding can cause a lot of damage, not just to your project, but to your client's business. Because of this, consultants need to have good communication skills, especially the ability to adjust their communication style depending on the context and medium.
  • Soft skills. Other soft skills are needed to run a consulting business and work with your clients, including negotiation, collaboration, and organization. You'll be tapping into these skills regularly throughout the course of your career.
  • Relevant certifications. Some consultants need formal credentials, whether as a requirement or an optional way to prove their expertise. For example, management consultants can get a Certified Management Consultant qualification, if they meet criteria such as having at least five client recommendations, a college degree, and pass certain written and oral tests. As you plan your consulting business, make a note of the formal credentials you'll be needing when you set up shop.

How to Get Started Consulting

Now that you're more familiar with how a consulting business works, here are the steps you need to get started once you've decided that consulting is the right path for you. 

1. Pick a Niche

When you first considered starting a consulting business, you probably already had some niches in mind. Your niche is the industry you'll be working in, which includes the types of services you'll offer and the clients you'll have. Usually, it's best to start with the services that you already have knowledge and experience in, so that you can start working as soon as possible. The more experience you already have in your industry of choice, the faster you can start.

If you need some additional ideas, here are some consulting fields you can get into:

  • Management consulting
  • Sales
  • Information technology, web, and computers
  • Public relations and marketing
  • Finance and accounting
  • Human resources
  • Business intelligence and data
  • Business process consultants

As for picking your niche of clients, try to craft a buyer persona that describes the characteristics of the decision-makers you plan to sell your services to. This document will direct your next steps, since it will give you a firm idea about who your target clients might be and what their potential needs are.

2. Plan Your Service Offering and Pricing

Once you've selected your niche, you can narrow down the services you'll be providing, the types of problems you want to solve for clients, and the goals you'll help them achieve. You can then craft a service offering that outlines exactly the types of tasks or projects you can do for your target clients.

As for pricing, more than just figuring out the amount you'll charge, you also need to know the models to use, whether it's by project, by task, hourly, on retainer, or a combination of more than one fee model. To figure out your initial rates and the  models you can use, there are many pricing resources here on Envato Tuts+, which provide you with tips on proposing and negotiating your prices.

3. Find Your First Clients

It can be overwhelming at first to think about all the clients you have to acquire throughout the life of your consulting practice. Because of this, during the start of your consulting career, focus only on acquiring your first two or three clients. 

By focusing on getting your first few clients, your effort and time will be invested in making sales and building your first crucial relationships. This will prevent you from spreading yourself too thin—a common tendency for entrepreneurs who are trying to get a new venture off the ground.

Here are some resources that can help you acquire your first clients:

Become a High-Earning Consultant

Now that you know how to start a consulting business, it's time to take action on your consulting income goals. To maximize your earning potential as a consultant, here are some strategies you can use:

1. Find Profitable Markets 

Some companies are more profitable than others and, as a consultant, you'll need to learn how to gauge a business' profitability from afar before you make your pitch. The more profitable the business or the industry, the more they can pay you for your work. 

For example, a medium-sized financial corporation would be more willing and able to afford the premium rates of a PR consultant than a small mom-and-pop shop would. If you want to target profitable clients, this comprehensive guide walks you through the process of identifying them.

2. Find Quality Contacts

More than just meeting potential clients, building your network means reaching out to other people whose work you find interesting. This includes those who could possibly introduce you to potential clients. 

For example, if you're looking to be a business intelligence consultant on medium-sized law firms, rather than just seeking out contacts who are partners in law firms, get to know the people who are most likely in touch with them. 

This includes people involved in organizations for legal professionals, corporate event planners, or editors of law-related publications. They might not be your potential clients, but they know people who might be your potential clients, and they can also provide you with industry insights you wouldn't normally have access to.

Think about the people or organizations that your target clients often interact with. Then, see if you can find some of these people that may genuinely need your services, and reach out to them.

3. Focus on In-demand, Profitable Services

The more you can improve your client's business—whether through increasing their profits or by solving their most pressing problems—the easier you can justify higher rates. If you offer just services that are "nice to have" rather than "must haves", it will be harder to make a sale or to justify high prices.

4. Develop Strong Branding and Marketing

If you want to reach top-tier clients and provide highly profitable services, your marketing should reflect that. This includes everything from your business card to your website template. Sloppy or cheap-looking design might indicate that you're not ready to handle high profile or top-tier clients, so be mindful of the impression you're making with your marketing materials.

Consider your target clients' design sensibilities. What do their marketing materials look like? Which types of premium products do they use, and what does the design and packaging of these products look like? 

As for your marketing plan itself, you can start with a minimalist plan that requires less effort and fewer resources, so that you can spend time on the things that matter. For example, it's better to have 50 beautifully designed business cards than 400 cheap-looking ones. 

It's also better for your branding to have an elegant one-page website, rather than a website with a blog, too many pages, and multi-media features but looks hastily put together. By focusing on the essential marketing tasks and making sure that the output is high quality, you're likely to get more for the time and money you invest into your marketing.

Start a Consulting Business the Smart Way

While consulting can be a challenging, intimidating, and a highly competitive venture, the rewards are attractive to those who are able to do the work. If you find that consulting is a good fit for you and that you'd be able to thrive with full autonomy, then all the effort you put into starting a consulting business will be worth it.

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