6 Facts You Need to Know About Starting Your Own Consulting Business
Thousands of professionals have dreamed about starting their own consulting business. It seems like a great career path. Hang a shingle, bring in clients, be your own boss, do awesome stuff and make bank.
Consulting, as it turns out, isn't sexy, glamorous, or easy. It's downright hard -- harder than you might think. I encourage anyone with the moxie to start a consulting business. But I also offer cautions -- a few yield signs that could save you a lot of grief and get you closer to achieving your dreams.
Here's what you need to know:
You’re going to face cranky people
Some people can't handle unpleasant relationships, especially people who BS them or kick them around. If you're not ready to face cranky people, then consulting isn't for you.
Consulting is a face-to-face business. You meet with people. You shake hands. You step into corporate offices. You sit across tables. You talk to people.
And some of those people you talk to are just plain mean.
You figure out pretty quickly who is worth working with and who's not. As you figure it out, you might have to endure some relationships that eat away at you.
Your deliverable is knowledge
A consultant is hired for one reason: Knowledge.
You must assert your knowledge in the niche for which you were hired. A client selects you to work on their behalf because you know something that they don't.
This means that you tell them like it is, and don't back down. Deliver the knowledge that they pay for. If they don't like it, so be it. If they disagree, so be it.
Your deliverable is knowledge, and if you deliver it in a half-baked way, you're losing the quality of your service.
You’re probably not charging enough
One of the biggest mistakes I see new consultants make is that they don't charge enough for their service.
Maybe it's guilt. Maybe it's inexperience. But maybe they just don't know how much they should charge. There's no magic formula for fee-setting, but there is a general rule: Charge more than you think you should.
It's important to your client that they are getting a return on their investment, so this should be important to you, too. If you can prove your ROI, you've got leeway to charge a healthy percentage of the client's profit.
Remember, the higher your rate, the better you look. If you saw two wristwatches -- one for $10 and the other for $5,000, which one would you think was superior? Obviously the more expensive watch is a better timepiece. The same goes for consultants. A consultant whose fees are $100 per hour will be valued far less than a consultant who charges $5,000 per hour.
If you're expensive, then you'll be more likely to get the clients who pay expensive. And that's where you want to be.
You’re selling yourself
As unpleasant as it sounds, a consultant is selling him or herself. There's nothing sordid or dirty about this. This is the way business is done in the consulting world.
To successfully sell yourself, here's what you need to be prepared to do:
- Dress to kill. You've got look as good as the services you provide.
- Put a big price tag on yourself. People associate higher cost with higher value. The more you charge, the more people will consider you to be valuable.
- Be trustworthy. Trustworthiness is essential in consulting. First off, no one will hire you unless you're trustworthy. Second, if they do hire you, they won't take your advice. Trust is what you have to go on.
- Prove your worth. You can't just look it; you've got to actually be it. Give what you promise, and give it well.
- Think of yourself as a valuable brand. The better the brand, the more successful you become. The higher-quality the brand, the better your marketing becomes.
You aren’t your own boss
The myth of consulting is that you are your own boss.
You're not your own boss.
I don't know of any industry or occupation where you can essentially "be your own boss" in terms of defining what you do, when you do it and how you do it. Whoever gives you money is your boss. As a consultant, that means your clients are in charge. They own your billable hours and they expect results.
Being your own boss extends to your ability to say "no," discipline yourself to work smart and hard and demand fair fees. Beyond that, you've got to work hard for a bunch of other bosses.
You’re going to face disappointment
Try starting any business, and you'll have moments of absolute devastation, both personally and professionally. One of my entrepreneur friends explained how the challenges of running a business caused severe health problems, and forced him to seek psychiatric care.
If that sounds brutal and scary, then you're exactly right.
Consulting can take an emotional toll. That's a price that you have to pay, but it's not one that you can accurately quantify or predict. Everyone's emotional and personal makeup is different, and what destroys you might make someone else stronger.
Regardless of how you respond in the face of challenge, one thing is true: You will face disappointment and failure.
There's no easy way to get through tough situations, but the best preparation is simply to expect it and to be ready for it.
If you aspire to be a consultant, I applaud you and encourage you. I've been down that path, learned valuable lessons and lived to talk about it.
As awesome as it is, there's nothing easy about consulting. Now you know the facts. So, roll up your sleeves, grit your teeth, keep your eye on the goal and be the best consultant you're capable of being.