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Start Your Consulting Business on the Right Foot

5-minute read

Stephanie Clarke

Stephanie Clarke

12 November 2018

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Consultants are defined as an advisor with a particular area of expertise who works with a company or an individual.

Companies tend to ask for consultants when they need to change the way their business operates, or when they need a fresh flow of ideas. A recent survey indicated that many U.S. businesses think consulting is important, spending over $20 billion a year on consulting fees from many different types of consultants.

Because companies spend so much money on consultants, many people want to try their hand at consulting. You may be one of those people. But how do you know if there is a market for your services? Keep reading to see what kind of work consultants do, who hires them, and how to take the steps towards becoming a consultant.

Why do Businesses Hire Consultants?

Consultants are hired for a variety of reasons, but here are a few common examples:

  • A consultant might be hired for his or her expertise in a certain area that the company just doesn’t have. For example, if the company is concerned about maintaining its security online, and they don’t have in-house security IT people, they may want to consult with a security consultant.
  • Consultants are also hired from the outside to have a look at a specific problem within a business, such as a communications issue with employees. There are also times when a consultant is needed temporarily as an employee to supplement the staff. In some cases, this is more cost effective than hiring someone full-time.
  • Businesses hire consultants when they need a change agent, because the business seems to be stuck in one place. They may also be hired to provide objectivity when a company is polarized between two different ideas.
  • Consultants have been hired to fire employees, layoff a group of employees, and make determinations about which employees should keep their jobs and who should be laid off. In an era of change, downsizing, and workplace violence, no company employee wants to be responsible for firings or layoffs, so they hire an outsider to do it and minimize their risk.

What types of consultants are there?

Businesses don’t hire consultants who don’t have an extensive track record of success in their consulting field. In general, there are many areas of specialization for consultants:

  • Accounting consultants can be hired to help companies with accounting issues or during a new business’ first tax season, for example. Specialized accountants may also be consulted to detect misuse of funds or fraud.
  • Media and advertising consultants are used to develop a new advertising campaign or media strategy for a company.
  • Often, companies hire auditors to find mistakes or errors in accounting, especially in billing for large companies. There are times when auditors can find hundreds of thousands of dollars in billing errors for companies, and therefore are well worth their fee.
  • As opposed to consultants who are working with an entire business, career consultants work with individuals who have lost their jobs or who are looking for a second career to move into.
  • Communications consultants work with companies to improve their efficiency through improving their communication skills.
  • Computer consultants, whether for software programs or new technology, are always in demand to keep companies up to date.
  • Editing, Writing, Publishing, Transcription Consultants help businesses with all forms of written communication.
  • Human resource consultants are always in demand, so that corporations can head off personnel issues before they become a lawsuit.

What Steps Should You Take to Start a Consulting Business?

If you want to become a consultant, you must have a game plan. Like anyone who is beginning a business, you need to begin with a roadmap of where you want your business to go.

First, think about what the mission of your consulting business is. What do you want your business to do for your clients right now? Most mission statements are one sentence, and state clearly what the business goal is.

Second, after you write a mission and vision statement, you will need to organize goals for your company, and determine how you will know when those goals have been accomplished. This will help you establish the framework for your business.

The third step, depending on what you specialize in, would be to get a Consultant Business License. Why? In some areas of consulting, you get additional credibility with potential clients if you are licensed in your field. You might also need to be registered with your state depending on what kind of consulting you do.

For example, political consultants and lobbyists must be registered with states if they lobby inside a state or they help political campaigns in a state. Federal lobbyists must be registered with the federal government.

Often licenses and certifications require an exam and experience before you can obtain one. However, they make your client search easier when you can list extensive qualifications, experience and certification or licenses on your website.

Finding Your Target Market or Your Niche Client

In order to become a successful consultant, you need to find your target market. If you go out into the world with a business idea you adore, you might be caught off-guard if you haven’t done research to see if there is a market for what you want to sell.

Unfortunately, not all of our favorite ideas are successful business ideas, and that may just mean tweaking what you want to do.

Your target market is a group of clients who would be willing to pay you for your expertise in a particular field. Before you begin, you need to think about who your possible clients might be.

For example, if you are thinking you want to become an accounting consultant, let’s say one who specializes in forensic accounting, then you will need to market your skills to corporations and government agencies who might be in need of an accountant who can track and detect fraud in ledgers.

One great first step for a possible consulting business is to search the number of consultants in your field in the area. Also, you may want to ask businesses you have a working relationship with if they ever hire consultants to do work for them, and if so, what kind.

You may also be in a position to be hired by the company you work for if they have a particular problem that you have expertise in. If you work from within your company first, they may be willing to recommend you to other companies as well, which can help you get your feet off the ground.

In addition, to be an effective consultant, you need to engage others. You need to network. Call on old friends in the business to see if they have ideas for clients or if they need someone. Join business organizations and pass your business cards out. Establish a website and a social media footprint, and constantly promote your business.

When You’re Just Starting Out

When you’re just starting out, there are several things you need to consider. First, you may want to think about operating your business as a home office. The home office allows you to begin your consulting business with low overhead, because you wouldn’t pay rent or utilities for a new space. Best of all, most home offices are tax-deductible.

Operating out of your home also gives you more flexibility, which gives you the ability to create your best schedule to fit the needs of your lifestyle. Most people state that being your own boss gives you flexibility you never had when you were working a 9 to 5 job.

Your hours that you choose to keep might be better for you physically and mentally as well. Some consultants are up and working by 4 a.m., work till noon, and then take off to go to work out, pick up kids from school, and volunteer.

Another great perk you get when consulting from a home-based business? No more long commutes and dealing with rush hour, which will cut back significantly on gas expenses – and lower your blood pressure!

Starting your own consulting business isn’t easy -- there will be a lot of trial and error, but if you’re super passionate and love what you do, it just may be the most rewarding decision you make!

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This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer

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