When Times Get Tough and Jobs Dry Up, Consulting May Be the Ticket
An economic downturn may seem like the wrong time to start your own business, but layoffs and downsizing can create new opportunities for one breed of entrepreneur — the corporate consultant. Companies who lay off full-time workers still have many needs for specific skills, and frequently hire consultants on a short-term or project basis to fill these gaps. If you’ve been laid off yourself, working as a consultant can allow you to earn a good income while salaried jobs are scarce.
Working as a consultant can have many benefits. You may be able to earn more per hour than you did as an employee, or work mostly from home. You’ll have more independence, increased flexibility, and the possibility of more time with your family. If you’ve lost your job, consulting will keep you current in your field, provide you with useful contacts, and fill the hole in your resume if you pursue another salaried position in the future. A consulting contract may even turn into an offer for a full-time job, once an employer gets to know what you can do.
But not everyone is cut out to be a consultant. You’ll need to be a self-starter, able to work without a boss looking over your shoulder, and manage your time efficiently. You’ll have to learn and employ sales and marketing skills in order to land consulting contracts. And you will also need to present yourself to prospective clients as a skilled professional with a defined specialty, as opposed to just someone who needs a job.
How Consultants Work
As a consultant, your job will be to provide analysis and advice, expert guidance, and/or an extra pair of hands to your business clients. Corporate clients hire consultants by the hour, the day, or the project to help them solve problems, complete essential projects, or handle day-to-day responsibilities, such as when an important position is vacant.
Some consultants work at the highest levels of the company, analyzing a problem or situation and advising management on how to resolve it. Others work at the mid-management level, overseeing projects, implementing new initiatives, and advising internal staff. Consultants also work as specialists rather than advisors, executing projects and completing tasks in specialty areas such as information technology, marketing, or accounting.
In some situations, consultants work similarly to employees. They travel to the client’s site on a daily basis and get paid by the hour or day while they are there. Other consultants work at home or virtually, seeing their clients in person only rarely. Consultants who work off-site sometimes get paid by the project or result they produce instead of for the hours they put in.
While the roles that consultants can play and the nature of consulting contracts can vary widely, to be successful at landing clients, you’ll need to make some choices about what type of consultant you plan to be. New consultants often make the mistake of approaching prospective clients as generalists who can work in many different capacities. But clients prefer to hire people who specialize in providing the specific type of help they are looking for.
Defining Your Consulting Niche
Before you hang out your shingle, make an honest assessment of your professional skills and experience. What level and type of consulting assignments does your background qualify you for? Consider also what types of work you both enjoy and can do well. You’ll be much more convincing to prospective clients if you are enthusiastic about your specialty and can tell success stories about projects you have completed for your employers in the past.
The most successful consultants have a clearly defined market niche. This means that they have identified both a professional specialty and a target market. Your professional specialty is the specific area of expertise you plan to offer your clients — technical writing, for example. Your target market is the industry or field you plan to concentrate on — for example, health care. Your market niche is then the combination of the two — in this example, technical writing in the health care field.
Defining a market niche enables you to target the kind of clients you are most interested in working for, and allows you to position yourself as an attractive solution to their needs. Without a niche, marketing yourself as a consultant can be extremely challenging. You will find yourself pulled in far too many different directions, pursuing numerous unrelated leads and opportunities. And when you speak to a prospective client, it will be much harder to convince them you are the right person for their job.
Getting Started as a Consultant
Once you have chosen a consulting niche, begin by creating your business identity and some marketing collateral. You’ll need a business card and a marketing kit, and you may want to consider creating a website.
Your business card can be one of the most important marketing tools you’ll have. Make sure that your card includes a few words about your market niche or capabilities in addition to your contact information. You don’t necessarily need a business name or a job title, although some consultants like to position themselves as “president” or “principal” of their own consulting firm. If you’re a one-person shop, using just your name on your business card is fine.
In addition to business cards, you’ll need a marketing kit. Most consultants use a folder with inserted pages rather than a pre-printed brochure. This allows you to be flexible about what you include in your kit, and also to get started with very little expense. You can purchase folders at an office supply store and print the inserted pages on your home computer.
A typical marketing kit includes a professional bio or resume, a description of your services or capabilities, examples of the benefits or results you provide to your clients, and testimonials or endorsements from people familiar with your work. You might also include an article you have written, a fact sheet about your specialty, or a case study of a successful project.
If you are planning to enter the consulting field permanently, you’ll definitely want to create a website. But even if you believe you will only be consulting for a short while, you may wish to build a simple site. Having a description of your expertise available on the web will build your credibility with prospective clients and make you appear more professional. It will also allow you to take advantage of opportunities to spread the word about your availability online.
Deciding What to Charge
With your marketing collateral in hand, you’re almost ready to start seeking out potential clients. But first, figure out how much you need to charge. In most cases, clients will ask you to set your own price rather than offering you a pre-determined amount. Keep in mind that your consulting rates must pay not only for your time, but your overhead expenses, marketing costs, and more.
In addition to covering your business expenses, your fees should be high enough to cover the benefits you received as an employee which you will now have to pay for on your own. These might include health, disability, and life insurance coverage, a retirement plan, sick leave, vacation time, and one-half of your Social Security payments.
Also, don’t set your fees expecting to bill 40 hours per week. Over the course of a year, most corporate consultants bill an average of only 20 to 25 hours per week. You may be working for your clients only part-time, or have gaps between full-time contracts.
Once you know how much you need to charge to cover expenses and earn a comfortable living, compare your rates to what others in your niche and geographic area are charging. Surf the web looking for posted fees, or ask your professional association. Even if your financial needs are low, you shouldn’t charge significantly less than the competition.
If You’re Still Employed
If you still have a job, the most practical thing you can do before becoming unemployed is to line up your first client in advance. Failing that, set up your business as completely as possible before you leave. Buy business cards, develop a website and marketing kit, and buy or upgrade needed computer equipment or other tools of your trade.
If you are leaving your job with your first contract in hand, you should have three months living expenses put aside. If you don’t yet have a client, your emergency fund should hold enough for six months. Apply for all the credit you think you might need while you are still employed. If you’ve been thinking about refinancing your home, do it now. Investigate your health insurance options before leaving, too.
Marketing Your Consulting Business
When you’re first getting started, begin by telling everyone you know about your new business. Go through your address book and holiday card list. Review the rosters of associations you belong to and directories of companies where you’ve worked. Send a card, email, or note to these contacts letting them know what you’re doing now, and follow up with a phone call. Ask your existing associates to refer you to potential clients, prospective companies, and other useful contacts to expand your network.
Remember to emphasize your defined market niche in these conversations. Don’t make the mistake of saying, “I can do anything in the area of…” Maybe you can, but clients will want to know what you do best.
For a one-person consulting business, spending money on magazine, newspaper, or directory advertising, or on mass mailings, is almost always a mistake. You don’t have the budget to sustain an effective advertising campaign, so leave that to the big consulting firms. The best ways for independent consultants to get business are usually personal referrals, networking at live events and on the web, speaking to professional groups, and publishing articles about your specialty.
Look around your local area for events you can attend to meet potential clients and make new contacts in your field. Seek out meetings of professional and trade associations for your specialty or industry, business mixers sponsored by the Chamber of Commerce, networking groups designed for professionals to meet each other, and lead exchange clubs such as Business Network International or LeTip.
When attending meetings like these, don’t try to sell yourself on the spot to everyone you talk to. Instead, make it your goal to meet people, have brief conversations on a topic you have in common, and collect their business cards. Then follow up the next day with anyone who seems like a useful contact in your search for clients.
The same events you might attend to meet people can also be good places for you to speak. Public speaking is an extremely effective form of marketing for many consultants, because it allows you to visibly demonstrate your expertise. Many association meetings and networking groups are always looking for speakers who can share useful information with their members, so it can be easier than you might think to get yourself booked as a presenter.
Will You Ever Go Back?
You may find that you enjoy consulting so much that you wouldn’t ever consider becoming an employee again. If you develop your sales and marketing skills enough to create a steady stream of clients, you may even decide to expand your one-person business into a consulting firm, hiring or subcontracting work to other professionals.
On the other hand, you may grow tired of always needing to sell yourself and managing a fluctuating income. Many consultants also suffer from feelings of isolation, or find themselves procrastinating endlessly. The prescription for these self-employment ills is to build some structure and support into your new lifestyle. Stick to a regular work schedule. Set goals and deadlines for yourself, and use a coach, mentor, or mastermind group to help you see things through.
Most importantly, try to spend time with other self-employed people to share ideas, experience, successes, and challenges. No one will understand what you’re going through like someone who has been there.
Sidebar: Success Tips for Consultants in an Economic Downturn
1. Network, network, network. When the market is tight, networking can save the day. The more people you talk to, the more likely you are to hear about an opening before someone else grabs it.
2. Seek out repeat business. It may be easier to get more business from existing clients who trust you than to convince new clients to take a risk. Watch for opportunities to propose new projects to the clients already in your stable.
3. Tell clients how you can save them money — or help them make it. Could your consulting services have the impact of reducing clients’ expenses in the long run, or of helping them increase sales? Now is the time to emphasize those possibilities in all your marketing efforts.
Copyright © 2008, C.J. Hayden. All rights reserved.
This article was first published in the August 2008 issue of Home Business Magazine, and has not been reprinted elsewhere. If you would like to reprint it in your publication, please contact me for details and permission.