Many of us dream of the day we’re paid just to share our thoughts. Owning a consulting business means your opinions are valued, you’re seen as an expert in your field, and people are willing to pay for your help.
In many ways, it also means freedom.
When you own your own consulting business, you can set your own schedule, establish your own rates, and pick and choose which projects you want to work on. You’re your own boss, so you don’t need to answer to anyone except yourself.
But while a career in consulting sounds like a dream come true for many people, setting up your business involves a lot of work. Although consulting is valued in many professional and personal spaces, a number of key pieces must first be in place before you can get your business off the ground.
What are those important pieces you need to get straight? Keep reading to find out.
With this article you’ll:
- Know what you’re good at and how it fits in the market
- Figure out what licenses you need
- Get the additional training you need
- Differentiate yourself
- Build your client base
- Build a clear rate strategy
1. Know what you’re good at and how it fits in the market
Niche knowledge is always in demand. If you’re an expert in a particular area or topic, chances are there is someone willing to pay you to share what you know.
The first step is figuring out what that specialty is.
Successful consultants are usually established experts in their fields. Potential clients will want to know why they should hire you over another consultant, so you need to make sure you have the proper qualifications.
Just choosing a consulting path because it’s lucrative or seems exciting probably isn’t going to get you the best results.
For some, this step is the easiest. Maybe you’ve already spent a couple of decades working in a particular field and you’ve gained enough industry experience to speak credibly on the topic. Or, maybe you’ve invested years into a hobby that you’ve become passionate about and you’re ready to share what you’ve learned with those just starting out.
If you already know what area you want to consult in, you’re lucky.
But not everyone has a clear path to consulting––or an area of expertise that is profitable.
Here are some steps to follow to finding a consulting niche to build your business upon.
- Make a list of areas you’re an expert in. What do you know more about than most people? What useful information do you have to share? What experiences or insight would you be able to provide that the average person couldn’t?
These are just some questions to help get you started. While you might immediately jump to your profession or something you’ve studied intensely, don’t be afraid to think outside the box. Look beyond just what you know and consider what unique experiences you’ve encountered that could provide valuable information to someone who needs it.
A great example of this is Twitter’s ex-CEO Dick Costolo. After Costolo left the tech company, he signed on to become a consultant for the HBO show Silicon Valley. While he isn’t providing tech-insight to the show’s creators, he is offering valuable ideas and opinions about what actually goes on inside a Silicon Valley startup.
- Know which areas need your thought leadership. Sure, it’d be great to get paid to share your vast knowledge of your favorite video game from the ’90s, but if there aren’t clients willing to pay you to share that information, your consulting business isn’t going to be very successful.
After you’ve identified the areas where you know more than the average person, you next need to look at which of those topics or industries actually has a demand market you can tap into. In other words, who is going to pay for your consulting services?
Try to get specific. Rather than just saying “businesses,” identify your target location, industry, size of the business, or a particular struggle that companies may be dealing with. For example, you might say small agencies located on the East Coast without in-house HR departments.
- Be ready to pivot. Not everyone finds their niche the first time around––and that’s okay. You may not even get it your second time. When you’re still getting off the ground, you might find that the audience you identified isn’t as profitable as you originally thought or the services you want to provide really aren’t in demand.
Pay close attention to what the market is trying to tell you. If your original plan doesn’t seem to work, look for opportunities to move into a new industry or area of expertise without straying from your original plan too much.
For example, if you discover that small agencies aren’t looking for HR consulting services as much as you thought, you might want to start focusing on medium-size businesses with HR departments who need help competing for talent.
2. Figure out what licenses you need
There’s paperwork associated with starting any kind of business, even if you’re a one-person operation. Before you can (legally) get your consulting business going, you’ll need to figure out what licenses or registrations you’ll need to get started.
There’s no clear-cut answer to what licenses you’ll need to get started. It all depends on the location you want to operate, whether you expect to have employees working under you, and what kind of services you want to provide.
Do the research to find what you need for your unique situation and business. If you’re feeling confused or unsure, consider talking to an attorney.
3. Get the additional training you need
Training isn’t always an obvious requirement for starting your consulting business. After all, if you’ve been in the industry for years, it probably feels like you already know all you need to know.
But consulting and running your own business is an entirely different game. You need to have skills beyond the skills and knowledge you’re offering.
For example, if you’re just learning to run your own business, you might need to learn how to manage your finances and company books. If you don’t have any experience in accounting or budgeting, you might want to complete a training course to familiarize yourself with it.
The same goes for other business divisions like marketing and sales or operations. If you don’t know how to market your services and get new clients, or you struggle to maintain the day-to-day tasks that keep your business moving forward, you’ll run into hurdles that can slow down your business growth.
Consulting often involves things like public speaking or running workshops. If you don’t have a lot of experience working with or leading groups, you might want to refine your speaking skills.
Get the essential training out of the way early and slowly add to your skillset as your company grows so you can ensure you have all the info you need to keep moving forward. Don’t feel like you have to wait until you know everything to get started with your consulting business, but try not to jump in headfirst without preparing.
Get the business basics out of the way and then create a continuous learning plan to ensure you’re always evolving. Treat your training process as an opportunity to develop new offerings, refine your skills, and just create a better experience for your clients.
remote-ready business in 10 steps
4. Differentiate yourself
Take a look at the successful consultants in the space you’re trying to enter. If you want to be successful too, all you have to do is model what they’re doing––right?
While it might seem on the surface like all consultants in your space offer more or less the same thing, if you start to look at the details, they’re all a bit different. They’ve found ways to differentiate themselves in the market. And you need to do the same.
Finding your unique position narrows down the number of clients you might have but makes you immediately more appealing to that unique group. While it might seem counterintuitive to try and reduce your market share, specializing your skills can make those groups want to hire you even more.
For example, take a look at David Hott, founder of Hott Solutions. Prior to beginning his consulting career, he was the CIO of a commercial real estate company.
Rather than moving directly to consulting to all commercial real estate companies, he narrowed down his offering to specifically focus on the property management solution, Yardi. Using RingCentral, Hott set up a consulting service to offer assistance to real estate companies and professionals using Yardi.
Specializing in a tool is just one way you can differentiate yourself from other consultants. Here are some other ideas for making yourself stand out.
- Experience. If you have a significant amount of experience or experience that is somehow different from other consultants in your space, you can absolutely use this as a differentiating factor––you just need to play it up the right way.
Experience doesn’t automatically mean better, so be sure to say why your experience is important to potential clients. What does your experience give you that someone newer to the market can’t offer?
- Price. Cheaper offerings can often be a go-to differentiating factor for consultants trying to make a name for themselves in a crowded space. While a good pricing strategy (more on that later) can be appealing, it can also cut down your margins––making it harder for you to see the success you want as a consultant
Offering lower rates is a great way to get started and build a client base, but don’t sell yourself short too much. You don’t want to equate “low price” with “low quality.”
- Customer support. If a person or company is going to hire a consultant, it probably means they’re struggling with a certain aspect of their business and they need some help. They’ll probably be looking for someone readily available and willing to answer their questions or walk them through concerns.
Offering above-average customer support is a great way to stand out from other consultants. Maybe you have weekend working hours, or you’re available for late-night calls. Think about the additional help your specific audience might be looking for and how you can offer that to them.
- Tools and processes. Like Hott Solutions, focusing on a specific tool can help you gain clients that are interested in learning that product or process. However, you can also differentiate yourself by marketing the tools you use to run your consulting business.
If you have access to software or databases that are complicated or expensive for your clients to use themselves, this can be an appealing factor and give you a better value proposition. They’re not only getting access to you, but also to that software.
5. Build your client base
Consulting is often a referral-based business. People want to be sure the person they’re hiring for help actually knows what they’re talking about.
If you’ve already developed a name for yourself in your business or industry, getting those first few hires to make up your portfolio can be pretty easy. Maybe you’ve already been asked to help out by old coworkers or business partners.
But if you’re struggling to make those first few connections or you’re not sure how to build a portfolio, it’s hard to know where to start.
Here’s how to find new clients so you can build a portfolio of work and start gaining referrals:
Know your perfect client
When you’re just starting out with a new business, you might feel so desperate for work that any client will do. And while that’s sometimes necessary when you’re still trying to get your work off the ground, knowing the clients you want to work with will give you a direction to focus.
You might have already pinpointed this audience when determining the services you’re going to provide, but it helps to write it out. Create a persona of your ideal client or company you’d like to work for.
If you’re trying to work with individuals, outline who your ideal client is, what they’re trying to accomplish, and what help they might need from you. Where are they in their careers? Where are they trying to go and how can you help them get there? When would they bring you on for consulting services and how long would you work with them?
The process is similar for companies, but consider things like size of the company and their annual revenue. Do you want to work with startups or established enterprises?
Get specific––even if all your clients won’t fit within this category. The important thing is having an ideal client in mind so you know what kind of clients you want to attract.
Create an online presence
Whether you’ve known a potential client for years, they’re a new referral, or someone you came across at a networking event, they’ll probably want to follow up on who you are and what you offer. The most convenient way to do this is by establishing an online presence.
An online presence can take many different forms, but here are the best places to get started:
- LinkedIn. Your LinkedIn profile is the easiest and cheapest way to get an online profile prepared for your consulting business. Because it functions like an online resume, you can use your profile to attract new clients or confirm to existing connections that you’re the right person to talk to.
Make sure your profile is complete, accurate, and represents the consulting work you’re now doing. If you can, ask for referrals––even if those people weren’t directly consulting clients. If they can speak to your expertise, their recommendation is valuable.
- Social media. Chances are you have some personal social profiles already up and running, but as a business owner, you want to be sure all your online personas accurately reflect the business that you’re trying to build––especially as a consultant.
When you’re a consultant, you are the brand. This means your Instagram, Facebook, Twitter, and whatever other social platforms you use need to be cleaned up. While you don’t need to use them to attract new clients or even to promote your services, you don’t want to lose a potential client because of an inappropriate Instagram post.
- Blog or website. Creating a blog or website takes a bit more time and money to get up in running, but it can have a lot of benefits for growing your business. Similar to your LinkedIn profile, it can act as a landing page for new clients to check in on who you are and what you provide, but it gives you more freedom and control to display the kind of content you want your audience to see.
A website or blog should be a goal for your consulting business, but it’s not an immediate necessity, especially if you can get your LinkedIn profile up and running. However, there are a lot of great platforms out there like Squarespace or Wix that can make creating a unique business website easy.
As you start to build your online presence, you can look into expanding the areas where you appear. You might want to consider things like podcasting, guest blogging, or hosting webinars––but don’t rush in too quickly.
Instead, focus on building your foundation and getting a solid presence, so you can grow.
Meet your audience where they are
We all dream of the day where we don’t need to send a single pitch or attend a single networking event. While those goals are certainly achievable for consultants, you don’t reach that status without first putting in the work.
Once your online presence is established and you know what kind of client you’re going to go after, you need to start looking for them and drawing them to your website, profile, or content.
Creating content and putting it out online is a great way to start bringing in some attention, but just throwing something online isn’t going to work. With the amount of content added to the internet every day, the stuff you create is bound to get lost if you’re not dispersing it appropriately.
But what does that look like?
In order to get your target audience’s attention, you need to meet them where they are––both online and in real life. This means figuring out where they spend their time, whether that’s at trade shows and networking events or on particular social media sites.
Here’s how you can find out what that looks like:
- Find your best social platforms. Different demographics will usually use different types of social media platforms. Knowing where your audience spends a lot of their time online will make it easier for you to meet them where they’re at.
Take a look at your customer persona and who you’re trying to target. Then figure out where they’re most likely to be engaged. Beyond just thinking about basic demographics and characteristics, consider the mindset they might be in on each platform.
For example, even though your audience might be active on Instagram, they might not be in the mindset of wanting to engage with a potential consultant while scrolling through their friends pictures and videos. But they might be interested in that kind of content when they’re on LinkedIn.
Don’t just look for places where your target audience is active––look at where they’re most engaged with content like yours. These will be your best social platforms.
- Build community. Communities (both online and in person) occur in just about every industry. If you can become a part of one, it can do wonders for growing your consulting business.
Communities, like Facebook groups or local meetups, allow likeminded people to get together and ask questions, receive or give support, and discuss the latest news or thoughts about their industry. Everyone in the group provides value to the other members.
What they don’t do, however, is spam their services. Joining a community should not be seen as an opportunity to push your message on anyone and everyone who might be a client. Instead, you can use these connections as a chance to get to know the people you might be working with and better understand their challenges. If you can build their trust, they might hire you or recommend you to someone within their network.
You can find communities a few different ways. Online, look for forums or social media groups where your target audience engages with one another. Offline, check out meetups, meetings, or events that seem appealing to you.
- Stay local––at least while you’re getting started. It’s easy to get wrapped up in trying to find potential clients online or at in-person events. Before you know it, you’re planning a trip across the country to attend the biggest event in your industry.
While there is sure to be some value in that trip, it’s not likely you’re going to walk away with a lot of strong leads––especially if your services require one-on-one or in-person meetings. When you’re just starting out, you need to focus your efforts on meeting people within your area.
When you focus on building a name for yourself in your town or city, it will be easier to build name recognition and gain momentum with word of mouth marketing. Even a small group talking about your business can lead to new clients.
As you start to get your footing, you can focus on expanding your services to new areas.
Be prepared with a cold pitch
If you want someone to hire you, you first need to make sure they know you’re available for hire. While word of mouth can be powerful, you first need to get that momentum going. A great way to do this is through cold pitching.
But before you get started, make this important distinction––cold pitching is not the same as spamming.
When we say cold pitching, we’re not recommend sending the same generic email to random names you find online. We also don’t recommend copying and pasting the same message to people you do know.
Cold pitching is a craft you need to perfect if you want to get a response. Here are our best tips.
- Get personal. If you start your email out with “Dear Business Owner,” it will almost immediately be deleted. Before you send a message, get to know the recipient––at least as much as you can online.
Address your recipient by name and let them know specifically why you’re reaching out to them. Something along the lines of “I found your website” isn’t good enough. Establish a clear purpose for your service, like you noticed they just opened a new location in your area and you think you could help make the transition smoother, or they just launched a new product or service and you have advice on how to appropriately scale.
The more personalized your message is, the better your chance for a response will be.
- Give them a taste of your business. When you’re trying to make a name for yourself as a consultant, it’s harder to show off your skills. However, if you don’t have a portfolio or past customers you can point new prospects to, you need to get creative about how you show off your skills.
Doing a little work ahead of time, like doing a bit of research before reaching out, can show you know what you’re talking about. Another way to give them a glimpse into your operations is to offer a free call.
This gives your cold pitch recipients an easy in or out. If they take you up on the free call, it’s your time to show off your skills.
- Make getting in touch easy. Signing a cold pitch asking your recipient to let you know if they want to talk further adds additional barriers in getting a conversation to happen. What if they email you back just to lose interest before you can set up a call?
The best way to keep the momentum going is to give your recipient options for how they’d like to connect. Including details like your phone number or a link to your website within your cold pitch can help prospects get more information about you and your business or encourage them to just give you a call if they want to know more about you.
- Follow up, but know when to let it go. Following up is an important part of sending cold pitches. We all get emails all the time that we forget to respond to, even if we’re interested. Sending a follow-up message acts like a reminder.
However, sometimes you’re getting ignored because the prospect really just isn’t interested. And the more you pester them with emails, the less likely they are to want to work with you. If they just remember you as that person who sent 10 follow up emails, they’ll probably avoid you for years to come.
Have a strategic follow-up strategy that includes just one or two messages. Space them out a few days or even a week apart for the biggest impact.
Know your consulting client red flags
Landing a new client is thrilling. You’re finally on your way to getting your consulting business off the ground!
But unfortunately, not every client is going to be a good one––even if they check all your persona boxes.
Putting up with some difficult clients can feel like a right of passage, but dealing with red flag after red flag can stall your business growth. If you’re not valuing your time or you’re constantly trying to put out fires these clients start, you’re preventing yourself from investing your limited resources in helping your consulting business take off.
Here are some client red flags to be aware of:
- Your client is stuck on price. We’re going to get to how you should price your services in a bit, but if a client isn’t sure whether or not you’re worth the money you’re asking for, it might be a sign it’s time to pack your bags and go.
Get to the root of your company’s financial worries. If they’re short on cash, you could offer a paid trial, a limited service, or even a money-back guarantee––but all of these options come with a level of risk.
- Your client doesn’t respect your process. As the consultant, you’re the expert here. If your client is trying to tell you that you’re taking too long to complete a step, that you’re not doing it correctly, or that they don’t understand what is so complicated about your work, they don’t value you as a consultant.
Stay away from clients who want to control what you do. After all, they hired you because they needed help with a task they couldn’t do themselves. If they don’t let you call the shots, it’s time to go.
6. Build a clear rate strategy
As a consultant, you get to dictate what you charge and how you charge it. Here are four effective ways to set your fees:
Charge by the hour
Setting a rate and charging clients by the hour is one of the most straightforward ways to set your consulting fees. It’s straightforward and makes invoicing simple.
However, when setting your hourly rate, you need to consider the additional taxes and expenses you need to charge for. It might seem easily enough to determine your hourly rate based on what you were paid before beginning your consulting business, but you’ll almost always end up charging too low.
An easy way to determine your hourly rate is to divide your former salary (or the salary you’d like to make) by the number of hours per year you want to work. For example, if you want to make $100,000 a year and work 2,000 hours (or 40 hours a week with two weeks off), you’d start with $50 per hour.
Then, to make sure you’re covering all your business expenses, you want to double or even triple that number––putting your final hourly rate at $100–150.
Hourly rates are great for consultants who run in-person sessions with clients or might be on-site for a full day. If you know you’re going to be in a three-hour workshop with your client, this is a simple way to determine the cost.
Although hourly rates are pretty easy to figure out, they’re not always the best payment method. Here are the pros and cons of charging by the hour:
Pros of charging by the hour:
- Easy to calculate and invoice for
- Get paid for all your time working with a client
Cons of charging by the hour:
- Clients can try to micromanage your time
- Need to keep meticulous records of your time
Charge by the project
Charging by the project is a great alternative to charging per hour. When you set a flat fee per project, you and your client can agree on exactly how much the project costs so there are no surprises (or arguments) when it comes time to invoice.
To charge per project, consider what hourly rate you determined and how long a project should take you to complete. This is easiest for projects or tasks that you complete regularly.
Charging per project can also give you some freedom in completing your tasks. Because you don’t need to report every hour you spend working on a project, you can complete tasks faster without losing money or you don’t need to defend your process to clients who think you’re overcharging.
As a consultant, these types of projects might not always be as clear. For example, if most of your time will be spent on phone calls or in meetings with your clients, it’s hard to determine how long that “project” will take. If the client requires more of your attention than others, you could end up selling yourself short.
Here’s a recap of the pros and cons of charging by project:
Pros of charging by project:
- No confusion when invoices are sent out
- Freedom to complete projects without defending your time
Cons of charging by project:
- Certain projects or clients might require more attention, meaning you lose money
Charge based on ROI
ROI-based charging strategies consider how much value you’ll bring to the clients you work with. Rather than paying for your time upfront, you’ll get paid for the amount of return your work brings to the company.
For some consultants, this can be incredibly profitable. If your 10-hour day of consulting services results in $1M growth for the company, then the percentage of that growth you’ve sectioned off as your consultant fees would be quite high––probably much higher than an hourly fee or project-based rate would be.
However, those results aren’t always guaranteed and it could take years to truly see the return on investment of the work you’ve done. ROI can also be difficult to measure, especially when trying to separate what return comes from work you’ve completed and what doesn’t.
ROI-based fees are only recommended in very specific situations because they often are more complicated to figure out. Here are the pros and cons of charging by ROI.
Pros of ROI-based fees:
- Usually more money for your time
- Pay is directly linked to the work you do
Cons of ROI-based fees:
- Income is not always guaranteed
- Complicated to determine and measure
Charge by monthly retainer
Monthly retainers are the go-to pricing strategy for long-term consulting relationships. It gives clarity to both you and the client so you know exactly what you’re paying for each month.
With a monthly retainer, you and the client agree on a price the client pays for your services per month. You might also outline what services are included in that package.
For example, you and a client might set up a $5,000 per month retainer. Within this retainer, you might agree to perform two on-site workshops and be available for 10 hours worth of call time with the client and their team.
Every month, you perform the same services (with some flexibility) and the client pays you the same fee.
If you’re providing consistent work to a client, a retainer is a great way to price your services. With a retainer, you don’t have to worry about having pricing conversations every time your client wants help with something new.
However, you need to be conscious of the services you’re providing under a retainer. Some clients can take having a retainer to mean they can demand whatever services they’d like from you––putting you in a tough spot.
It’s always a good idea to establish needs when setting up a retainer. While you don’t want to nickel and dime your client if they use more of your time every once in a while, if it becomes a pattern, you might need to up your retainer price.
Here are the pros and cons of using a retainer for your consulting fees:
Pros of a monthly retainer:
- Know exactly how much a client is paying you each month
- Avoid frequent pricing conversations
Cons of a monthly retainer:
- Clients may try to take advantage of your time
Finding your right pricing strategy
There are no clear cut answers when it comes to setting your prices, but you’ll most likely want to look at hybrid versions of these different models. For example, you might want to try having an hourly rate for in-person workshops and meetings, but a project-based fee for other items.
Feel free to play around with different pricing strategies as you get your footing. You’ll find what works best for you.
Getting started is the hardest part
When you’re just starting your consulting business, everything feels overwhelming. From picking your niche to setting your prices, there are a lot of decisions to make.
Don’t feel “stuck” in the decisions you make when you’re just starting out. If you have an idea, give it a try––if it doesn’t work out, move on to something else. As you start to try new things and evaluate how well they’re working for you, you’ll move closer and closer to the consulting business you always envisioned.