Navigating the transition between a salaried employee and running your own consulting business can be tricky.
If you’re ready to take the leap, we’re here to share 4 of the 10 steps you’ll need to know to get started. And if you like what you read here, be sure to read the complete 10 step guide on how to start a consulting business.
1. Choose Your Niche
One of the keys to success as a consultant is identifying and embracing your niche.
Businesses will spend their hard-earned money to pay you for smart, actionable advice. And, they want some degree of assurance that they’re going to get their money’s worth.
Knowing that you’re an expert in their issue will boost their confidence in your ability to get the job done.
Dana Anspach, certified financial planner, consultant, and retirement expert, explains:
“Don’t try to offer something to everyone. You will be a far more successful consultant by applying your expertise to a niche market that needs what you have to offer. In this way, you can tailor your services, so they add value to a specific group of people or businesses.”
You may find that your niche reveals itself easily. It may be the area in which you have the most expertise in your field. Or, it may be the niche that you find most fun and exciting.
For example, in our guide on how to start a successful clothing brand or clothing line, we take entrepreneurs through the steps of starting a new clothing brand or line. But if you already have lots of experience in the apparel industry, maybe you’d be happier and more successful as a consultant, helping many other businesses to get started.
If you’re struggling to identify what your niche might be, consider these techniques for narrowing it down:
• Identify any underserved specialties in your field.
• Determine which areas in your field clients struggle with the most.
• Ask yourself if your unique background provides you with a rare area of expertise.
• You’ve probably informally helped friends already to solve their business problems. What areas have you focused on when working with your friends?
Most likely, you’ve already taken steps to unearth the areas where you’re a true expert. Here’s how Mandi Ellefson, CEO of The Hands-Off CEO, started her consulting business:
I had a design company where we did branding and web design. I was not able to remove myself from the business at all. It was dependent on me and I really wanted this company to be generating income without me. But it wasn’t anywhere close to doing so. So I had to figure out how to scale the business without working more in the business. In the process of doing that, I had a lot of success and started building processes around how to do that. And as a result, I sold my company and started a consulting business to help others do the same thing.
2. Define Your Services
“Consulting” is a broad and potentially vague concept. But clients don’t pay money for vague promises.
You can start by brainstorming the general services you’d like to offer. But, it’s important that you nail down the specifics before you work with any clients.
This is vital for three reasons
- You need to be able to articulate your offerings to potential clients in order to convince your potential services that your services are valuable.
- You’ll need to charge fees that let you run a sustainable business.
- Specificity helps to set realistic expectations for your clients.
This last point benefits both you and your clients. Your clients can make comfortable, informed decisions. And, you can avoid being taken advantage of.
3. Develop Your Brand Identity
To gain their clients’ trust, consultants must be viewed as credible experts. Don’t leave your brand identity to chance because a weak brand identity will undermine that credibility.
Mandi Ellefson, a successful consultant helping small businesses to improve their growth and revenues, explains:
We believe that good design is good business.
You absolutely have to elevate your brand. If you want to charge higher fees, if you want to attract a certain level of clients, you have to project a certain image. And if you have a sloppy website, one that looks like it’s from the 1990s and a nasty pixelated logo, you won’t attract good clients or project a professional image.
In other words, you’ve got to walk the walk and talk the talk.
So, before you hit up your first networking event, ask yourself these important questions:
• What identity/personality do I want my consulting brand to project?
• Who will want or need my services?
• What can clients get from my services that they can’t get anywhere else?
• What can clients get from working with me that they can’t get anywhere else?
• What are my brand values?
• What is the most important part of my clients’ experience?
Your answers to these questions (and others like them) will build the core of your brand. All of your future branding decisions should expand on these ideas. Your company name, your company logo, and your website design should all grow from the concepts you laid out here.
4. Fill In the Business Blanks
Once you define your brand, you can begin to think about the vitally important details of actually starting and running a consulting business.
There’s a lot to think about.
First, you will need to choose the legal structure for your new consulting business. Sole proprietorship or LLC? Incorporate or register a partnership?
A sole proprietorship is the “most basic type of business to establish” according to the SBA (Small Business Administration). You are the sole owner of the business; and, as such, are solely responsible for the assets and liabilities accrued by the business. This may be just the ticket for your brand new, consulting business as it is also the easiest to set up.
If you’re interested in a little more protection, an LLC (or Limited Liability Company) may be a better fit. The LLC business structure provides the limited liability features you would find in a corporation. The Small Business Administration has all of the details about these common small business structures and others.
After you determine your business’s legal structure, you’ll need to file the necessary paperwork.
The U.S. Small Business Administration tells us that some form of license or permit is necessary for virtually every type of business. Their website has all of the info you need to find out what sort of license or permit you’ll need to start a business in your state.
If you need help with employment, contractor, or vendor agreements, take a look at Quickly Legal, which offers entrepreneurs, small businesses and startups an easy and inexpensive way to create, sign and manage legal contracts and agreements, with many agreements that you can start using right away.
There are limits to how far you can go when you’re working for someone else.
For the brave men and women who dare, starting a consulting business may be the most rewarding, life-changing decision they ever make. Will you join them?
Katie Lundin is a Marketing and Branding Specialist atcrowdspring,one of the world’s leading marketplaces for crowdsourced logo design, web design, graphic design, product design, and company naming services. She helps entrepreneurs, small businesses and agencies with branding, design, and naming, and regularly writes about entrepreneurship, small business, and design on crowdspring’s award-winningsmall business blog.