How to Start a Consulting Business
According to a June 2016 report from Source Global Research the U.S. consulting market grew at a healthy 7.7 percent to reach nearly $55 billion in 2015. Now more than ever it’s an accepted and desired service for business management and improvement. As well as big consultancy firms, there are many people starting up small independent businesses all the time.
Initially to be a good consultant you need determination and a drive for excellence. Find your niche and where you are happy working – with people or technology. For example, are you an expert at charity fund raising? Maybe designing web sites is a big part of your skill set. Steer your consulting business in the direction that your talents lie.
A business will call in a consultant for many different reasons; to generate new business, bring in new energy, training, bring objectivity to a situation, to motivate people or maybe do some of management’s “dirty work”. You should be prepared to multi task within your chosen sphere and be flexible.
Some initial questions you may have include:
- How much do consultants make? Really the sky is the limit. Depending on your education and reputation, a consultant employed by a company, as opposed to freelance, can expect to start at annual salary of $50,000 depending on experience.
- How much do consultants charge per hour? As freelance consultant this could be the most important question you ask yourself. It’s tricky to place a value on your talents and knowledge and people notoriously undervalue themselves. You also need to take your expenses into account and be sure to include a profit. You are selling your knowledge, expertise and experience to businesses that need it. Some independent consultants take the figure they would be earning as a salary, break that down into an hourly amount and double or triple it but as a very rough guide $80-120 per hour is an average fee to charge when starting out.
- How can consultants get more clients? Obviously it makes sense to use marketing strategies to gain more business; direct mailings, improving your website using SEO techniques and referrals are all proven methods to draw in new clients. Networking is a vital tool which is readily available, and should be used to your advantage at every opportunity. Once you perform well for a client, don’t hesitate to ask for a referral.
- How can I protect my personal assets in the event of a lawsuit? Offering advice or performing tasks for a client has its own set of unique risks. One of them is if the results of your service are not delivered to the client’s satisfaction. A well written contract can eliminate some of this risk but for greater peace of mind a consultant should purchase a Professional Liability insurance policy designed for consultants. This can be obtained for as little as $50 month.
Another risk is if proprietary information owned by your client somehow becomes public knowledge. A well written non-disclosure agreement can help solve this risk exposure. This is an agreement by one or more parties to keep information confidential prior to initialising any business dealings. Obviously this is crucial to some businesses you may deal with and it’s best to have this agreement in place and ready to go before you even start consulting.
A consultancy business can be whatever you want it to be – consulting on staff, technology, business strategies, and so on. Your success is only limited by your knowledge, skills and how you market them. Like anything worthwhile, it will take time and effort to grow, but owning a successful consulting business is worth the hard work.
Paul Stewart is a licensed Property Casualty and Life & Health insurance broker in the state of California. For over 10 years he has helped small business owners protect their business. He also consults businesses and non-profits on cloud application selection and implementation using API. Paul holds a degree in Cultural Anthropology from UC Santa Barbara.