A natural move for many execs-turned-entrepreneurs is to start a consulting business. With years of industry experience under their belts, plus the added attraction of low start-up costs, becoming a consultant is often the most obvious choice. However, experts warn it's not always the smartest choice.
"There are so many people today who call themselves consultants and come from a large corporate environment that it's an extremely crowded field right now," says Molly Thorpe, chair of the executive committee of the Caltech/MIT Enterprise Forum and owner of Thorpe Associates, a Canoga Park, California, business planning consulting firm. "Any consultant who starts out today has a real tough time of it."
What are the most effective ways consultants can compete? Develop an area of specialization, advises Thorpe. "As an independent consultant, you have to have a specialty and not say you do everything," she says. "Too many consultants say they do 20 things, and maybe they do, but when people think of them, it's too unfocused."
Still, even specialized consultants are likely to run up against challenges. For example, while Schiele's focus is quite narrow (she chose cultural diversity and leadership management training), she's found plenty of competition in her field. In fact, she admits sometimes her focus can be somewhat limiting.
"It's been rewarding and a struggle at the same time," Schiele confesses. "I'm able to do what's important to me, but there's a real glut of diversity consultants. I don't get as much business as I'd like, but at least I'm doing what I want to do."
Having an alternative means of financial support is an important consideration before launching a consulting venture, says Thorpe. In addition, consultants are more likely to succeed if they've researched their target markets ahead of time and tried to find ways to serve them. Possessing a healthy dose of patience while building your credibility and establishing your client list is vital as well.
Above all, be prepared to put on your sales hat and promote yourself. "You have to learn to market yourself, and a lot of former executives aren't comfortable with that," says Thorpe.
Somewhat uneasy in a sales role, Schiele hired a broker early on to make contacts and set up meetings with new clients. Says Schiele, "The broker really makes the whole process a lot easier."