by Elaine Biech, author of “The New Business of Consulting: The Basics and Beyond“
There’s never been a better time to become a consultant. Why? It boils down to three words: the gig economy. According to the Workplace 2025 study released in 2017 by Randstad US, by 2025 a majority of the workforce will be employed in an agile capacity, as a consultant, contractor, temporary, or freelance employee. In fact, the report predicted that as early as this year, as much as 50 percent of the workforce will be comprised of agile workers.
In other words, if you have a skill to share with the world and you long to be your own boss, you’re on the right side of economic history.
There are two big trends that bring huge implications for consulting. First is the trend requiring organizations to be more agile, which means hiring more professionals to assist as needed rather than adding highly paid permanent staff.
The second trend is that our rapidly changing world makes it almost impossible for any company to do it all. A company needs to be knowledgeable about its industry, focused on customers, stay ahead of the competition — and to also know what to do when these factors collide in a negative way. Consultants help solve the puzzle.
There are many reasons why you might want to be a consultant. For example, technology makes it easier to empower people to work from anywhere, to connect with clients, close a million-dollar deal, or build a brand from their mobile phones. Also, an increasing number of consultants are not just surviving, but thriving, earning six- and even seven-figure incomes.
Yet while it’s easy to print business cards, hang up a shingle, and say, “I’m a consultant!” it’s not so easy to make a living doing so. My book shares the knowledge and skills required to start and grow a successful consulting practice. Just a few of its insights:
1. Don’t believe the myths about consulting.
Here are three: “I’ll make a ton of money right away!” “I’ll be free of office politics!” “I can enjoy more free time!” None are even remotely true. To refute them: 1. Even if you charge over $2,000 a day, and even if lots of business flows your way, expenses, taxes, benefits, etc. eat up a huge chunk of that money. 2. Nope. Now you have not one boss, but many. 3. Sorry… you’ll be working 60 to 80 hours a week, at least, that first year.
2. Be aware that working alone can be hard for some people.
You’ll need to figure out your own solutions for the loneliness. For example, you can arrange to have lunch with someone once each week. You can plan to meet other consultants regularly. Even though discussion is likely to turn to work, you will still appreciate the camaraderie.
3. You can’t rely on your area of expertise to be a successful consultant.
Whether you are an expert in communication, leadership, cybersecurity, or artificial intelligence, you likely know your industry intimately. Most consultants do. But your expertise alone will not lead to your success. You need to know what it takes to run a business; you need to be an entrepreneur. How do you market your services? What do you say on a sales call? How do you manage cash flow? What taxes do you pay? You can’t just print your business cards and wait for the phone to ring. It won’t.
4. Take a test drive before you commit to being a full-time consultant.
If you’re not ready to take the plunge, you could consult part-time while keeping your present job. Some people use their vacation time and weekends to conduct small projects — with their employers’ approval, of course. Part-time work will not give you the full flavor of what it will be like to be solely dependent upon consulting as a career, but it will give you an idea of whether or not you like the work.
5. Don’t skip the planning process.
Starting your consulting business without a solid plan is like driving in a foreign country when you are unable to speak the language and don’t have a map or GPS! To get started, you’ll need at least a business plan, a marketing plan, and a financial plan. You will need a roadmap to keep you focused and heading in the right direction. Not having one may be the costliest mistake you make.
6. Don’t set your fees too low.
My book explains how to calculate your consulting fees to generate a comfortable salary and enough to cover business expenses. If you’d like to get an estimate without doing the calculations, the 3X rule is a good shortcut. For example, to earn a salary of $100,000, you will need to bill about $300,000 each year. Don’t lowball yourself: It’s easier to establish an appropriate salary when you launch than to increase it at a later time!
7. Hire the best accountant for your support team.
This should be one of the first steps you take. Your accountant will provide advice as you make decisions about your business structure, accounting procedures, growth plans, and profitability. A great accountant will keep you in the black and out of trouble with the IRS (or whoever collects taxes in your country). Hire an accountant who educates, advises, and helps you grow your business.
8. Begin a testimonial file right away.
Your clients will begin to rave about your work. Collect those statements. You may receive unsolicited thank-you letters or notes. Place them in a file. If clients compliment your work verbally, you may ask them to put it in writing. You will use these testimonials for brochure copy, in prospecting letters, or in proposals.
9. Go for the big fish. You’ll spend just as much time baiting the hook.
When I started, I decided to focus on medium- to large-size businesses. This was one of the best decisions I ever made. Large businesses make numerous training and consulting purchases in a year and may feel more comfortable taking a risk on a new consultant. And if you do a great job, you will have a better chance at repeat business — because they have more opportunities and larger budgets.
10. Look for low-budget ways to market yourself.
There are a thousand ways to get in front of people with a small budget. Be creative. Serve on the board of your community college or a local charity. Conduct a survey, publish the results, and share them with clients. Write articles for your professional journal. Blog regularly. Send a card for atypical holidays: Thanksgiving, Valentine’s Day, St. Patrick’s Day, Groundhog Day, or Independence Day.
11. Plan for the worst-case scenario, but act as if you’re living the best-case.
The first message is practical: Don’t spend your money until it’s in your hands. The second is philosophical. It refers to the message you send to yourself and others. Believe that you will succeed (positive thinking is powerful) and make sure clients believe it too. NEVER hint that business is less than great.
12. Do all you can to win repeat business.
Aim to bill 50 to 75 percent of your annual revenue from the previous year’s clients. Experts estimate it takes 7 to 10 times the investment to sell to new clients. You don’t want to be dependent on one or two large clients, and you still want to balance enough repeat business so that you are not constantly on a client hustle.
13. ALWAYS work to create the client’s independence.
You are not there to make clients dependent upon you, but to ensure that they receive the maximum return on their investment. A lasting impact occurs only if you ensure that the client has the competency required to sustain the changes you help them make. Before walking out the door, the great consultant ensures that the client owns the solutions. A great consultant inherently knows that this is the best way to be invited back.
14. Don’t lower your rate because a client doesn’t have a big enough budget.
It’s unethical. If you said your rate would be $15,500, and the client has only $10,500 in the budget, don’t agree to do it for the lower amount. This is one of the ways that consultants gain a bad reputation. If you can do it for $10,500, why did you ask for $15,500? Does that mean that you had $5,000 worth of fat in the proposal? It will make a client question your ethics and the ethics of all consultants.
15. Put quality and your clients ahead of everything else — including profitability.
The project will end; your relationship will not. You will learn from pricing mistakes and you will not make them again. Poor-quality service mistakes will follow you and your reputation for life. A project that goes in the red is a small price to pay for a lifetime reputation. You are only as good as your last client says you are. Set your standards high and never compromise them.
This list may be daunting, but don’t be discouraged. The book can give you the insights you need to navigate this new territory and gain confidence. While becoming a successful consultant does require a lot of old-fashioned hard work, if consulting is your passion, the effort is worth it.
Don’t let the fear of failure hold you hostage. Try reframing your fear. Tell yourself you are doing what’s right for you, that it is exciting and forward-leaning. You will be more successful by moving than stagnating, so find something you can do every day to move closer to your dream.
Elaine Biech is the author of “The New Business of Consulting: The Basics and Beyond“. She is a dedicated lifelong learner who believes that excellence isn’t optional. As a consultant, trainer, and president of ebb associates for more than 35 years, she helps global organizations to work through large-scale change and leaders to maximize their effectiveness. She has published 85 books, including the Washington Post #1 bestseller “The Art and Science of Training“.
This is an article contributed to Young Upstarts and published or republished here with permission. All rights of this work belong to the authors named in the article above.