Start a Service Business Using Your Professional Skills and Talents

Are you cut out to be a consultant? Consulting to businesses and organizations can result in higher earnings than working as an employee, provide you with needed income if you are laid off, and allow you to work from home. But success as a consultant isn’t guaranteed. In this step-by-step guide, you’ll learn how consultants work, the essential elements of starting a consulting practice, and how to land your first clients.

The Ins and Outs of Consulting

Consultants provide their clients with analysis and advice, expert guidance, or an extra pair of hands to fill staffing gaps. Corporations, small businesses, nonprofits, and government agencies hire consultants by the hour, the day, or the project to help them solve problems, complete essential projects, or handle day-to-day responsibilities when a position is vacant.

During an economic downturn, layoffs and downsizing can create new opportunities for consultants. Companies who lay off full-time workers frequently hire consultants on a short-term or project basis to complete urgent tasks or provide missing expertise. If you’ve been laid off yourself, or fear you will be, working as a consultant can allow you to earn a good income in a time when salaried jobs are scarce.

Working as a consultant has many potential benefits. You may be able to earn more per hour than you could as an employee, with more independence, increased flexibility, and less office politics. You can often work mostly from home and have more time with your family. If you’ve lost your job, consulting will help you stay current in your field, provide you with useful contacts, and fill the hole in your resume if you decide to seek another salaried position.

But not everyone has what it takes 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 clients. And you will also need to present yourself as a skilled professional with a defined specialty, as opposed to just someone who needs a job.

Step 1: Defining Your Consulting Niche

The first step to launching your consulting business should be to make an honest assessment of your professional skills and experience. What kind of consulting assignments does your background qualify you for? In what industries do you have the most experience? What type of work do you both enjoy and perform well? If you’re going to be an expert-for-hire, you have to know your stuff.

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.

The most successful consultants have a clearly defined market niche which includes 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 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 who most interest you, and allows you to position yourself as an attractive solution to their needs. Without a niche, marketing yourself as a consultant can be quite a challenge. You will find yourself pulled in too many different directions, pursuing 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.

Step 2: Marketing Your Consulting Practice

Once you have chosen a consulting niche, begin by creating some marketing collateral. You’ll need business cards and a marketing kit, and you may want to consider creating a website.

A typical consultant’s 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.

Consultants typically find most of their clients through three different marketing approaches: 1) contacting prospective clients directly by phone, mail and email, 2) networking in their field or industry, and 3) speaking and writing to establish themselves as experts.

When you’re first getting started, the most productive marketing tactic is usually to network with people you already know. This kind of “warm” marketing will often produce results more quickly than “cold” approaches to organizations where you are unknown.

Reach out to former co-workers, members of your professional association, alumni of your school, and anyone you know in your chosen industry or field. Unless you have a contractual agreement with your former employer not to compete, clients you formerly served as an employee are also fair game. Let your contacts know what your consulting niche is, the type of work you’re seeking, and who would be a good client for you.

Your contacts don’t necessarily need to work for an organization that might hire you. You should also build a network of potential referral sources – people who can refer you to possible clients. To expand this network, participate in the local chapter of your professional association or one or more business networking groups. The more people in your field you can get to know, the more referrals you’re likely to receive.

Step 3: Turning Prospects into Clients

When one of your contacts or referrals shows interest in hiring you, you’ll still need to close the deal. Ask to set up a meeting with the organization’s decision-makers to find out more about their needs, and tell them how you can help. Focus on describing exactly how you can solve their problems or help them achieve their goals, rather than simply presenting your capabilities. This will allow you to demonstrate your consultative skills and encourage them to think of you as an effective problem solver.

Before ending the meeting, ask for a commitment to some sort of next step. If they’re not ready to hire you on the spot, what will help move the process forward? Do they want to see a proposal? Would they like to speak to some references? Can you follow up in a week?

Be prepared to follow up with your prospects multiple times, and don’t get discouraged if time goes by and you don’t hear from them. It sometimes takes weeks or even months to close a deal, but you’ll speed up the process and improve your chances of getting hired if you’re persistent.

The final stage of landing a contract often centers around negotiating your fee. If your prospect balks at the hourly or daily rate you request, consider offering them a package price or reduced scope of work to lower the overall cost, or cap it at a certain amount. The client’s bottom-line concern is usually the total budget for the project, rather than what you are earning per hour.

Step 4: Finalizing a Consulting Agreement

Once your client agrees to hire you, it’s a good business practice to have a written agreement. With a short-term contract for a relatively small amount of money, your agreement might simply be a letter confirming what you have agreed to. With a longer contract or larger sum, your agreement should be more formal and spell out more details.

A simple letter of agreement should include a statement of the work you will perform, the due date if you will be delivering a specific result, the hourly rate or project fee you will be paid, and on what schedule payment from the client is expected.

A more formal contract should include all of the above, plus a termination date, payment terms for travel time or expenses, and conditions under which your fee might increase or the contract might terminate early. It might also include statements about confidentiality, ownership of the work produced, warranty for the quality of the work, and liability for any damages. A contract like this may require the advice of an attorney, especially the first time you produce one.

Sometimes organizations will present you with their standard contract rather than asking you to provide one. In this situation, be sure to review all the terms to make sure they are acceptable before you sign.

Step 5: Beginning a New Assignment

Your success as a consultant will ultimately depend on how well you serve your clients. Doing a good job on a consulting contract will increase your confidence, and lead to repeat assignments and referrals.

When you begin an assignment, take the time to fully understand the client’s needs and establish what will constitute a successful outcome. Most misunderstandings in consulting arise when the client’s expectations aren’t fully understood by the consultant at the outset.

Establish a schedule for the work to be performed that takes into consideration any needed review cycles, turnaround time for project components, and the travel and holiday plans of all participants. Nothing makes a consulting assignment turn sour faster than missing important deadlines.

Step 6: Collaborating or Subcontracting with Others

As your consulting career advances, you may discover possible contracts that are larger than you can handle alone. This can be an opportunity to expand your consulting business.

You may be able to collaborate with one or more colleagues to deliver the contract together. For example, a marketing consultant might bring in a web designer, photographer, and copywriter to produce a website for his or her client.

In some cases, you may wish to have your colleagues contract with the client directly, but you can also hire them as subcontractors. You would hold the contract with the client and receive payment for the entire project, and your colleagues would receive payment from you. Subcontracting arrangements can lead to additional income, as you typically charge your client a higher fee than what you pay your subcontractors.

Tips for Long-Term Success

One of the biggest challenges for most consultants is the “feast-or-famine” cycle. At times you may be so busy you feel overworked, and at other times you may have no work at all. This leads to wide fluctuations in income, and can also be quite anxiety-provoking.

The best way to avoid having to worry where your next job will come from is to keep your marketing pipeline full. Even when you are busy working on a contract, allow some time every week to nurture your network of contacts. Don’t wait until you are unemployed again to get back in touch; by then it will be too late.

Another avenue to ensure long-term success is to establish yourself as an expert in your field through public speaking and writing articles about your specialty. Speaking at professional meetings and conferences will add to your credibility and can often lead directly to consulting offers from people who attend your talks. Publishing articles in trade journals and websites that serve your target audience will build your name recognition and provide compelling new elements for your marketing kit.

Consulting can become a lucrative permanent occupation, or simply serve as a bridge between salaried positions. Consulting contracts sometimes turn into full-time job offers, once an employer gets to know what you can do. The choice is ultimately up to you.

If you enjoy the security of a steady income and the comfort of not having to constantly market yourself, you may wish to leverage your consulting experience back into a full-time job. But if you prefer the freedom, flexibility, and autonomy of running your own business, and the potential for a higher income, then consulting may be the ideal long-term career.

SIDEBAR: Elements of a Successful Consulting Engagement

1. Good fit for your skills. The best assignments are ones where the work closely matches your capabilities. Consultants are expected to arrive with the necessary experience, not to learn on the job.

2. Adequate compensation to do a superior job. It may be tempting to reduce your fee to land a contract, but don’t lower your price so much that you’ll have to skimp on producing results.

3. Generates referrals and repeat business. When you do good work and are paid appropriately, you’ll land more contracts that will lead to the same. If your work is substandard, you won’t get referrals. If you work too cheaply, you’ll get referrals for more low-fee work.

4. Enjoyable work environment. Consulting allows you to choose your clients; don’t feel you have to accept every offer. If you lock yourself into work you don’t enjoy, you won’t be available for more rewarding jobs.

Copyright © 2009, C.J. Hayden. All rights reserved.

This article was first published in the October 2009 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.

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