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, says Elaine Biech, 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,” says Biech, author of The New Business of Consulting: The Basics and Beyond. “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,” she adds. “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.”
15 ways to become a successful consultant
There are many reasons why you might want to be a consultant. For example, SaaS technology makes it easier to empower people to work from anywhere, connect with clients, close lucrative deals, or even build online influence from the convenience of 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. Elaine Biech shares an inside look at the knowledge and skills required to start and grow a successful consulting practice.
1. Don’t believe the consulting myths
Here are three prevalent consulting myths:
- I’ll make a ton of money right away.
- I’ll be free of office politics.
- I can enjoy more free time.
None of these statements are even remotely true for new consultants. Even if you charge $2,000 a day, and a lot of business flows your way, expenses, taxes, benefits, etc. eat up a huge chunk of that money. Meanwhile, now you have not one boss, but many. And lastly, sorry. You’ll be working 60 to 80 hours a week, at least, the first year.
2. Balance working alone with collaboration
You’ll need to figure out your own solutions for the loneliness factor of entrepreneurship. For example, you can arrange weekly power lunches with friends and industry peers. You can also plan to meet up other consultants regularly at a local coworking space. Even though the discussion is likely to revolve around work, you will still appreciate the camaraderie.
3. Tackle the business side of consulting
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 full-time
If you’re not ready to take the plunge full-time, you could consult part-time while keeping your present job. Some people use their vacation time and weekends to manage 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 consulting fees too low
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 collecting testimonials right away
Your clients will hopefully begin to rave about your work. Collect those testimonials. You may receive unsolicited thank you letters or notes. Place them in a file. If clients compliment your work verbally, ask them to put it in writing. You will use these testimonials for website and brochure copy, in prospecting letters, or in proposals.
9. Go for the big fish
Go for the big clients. You’ll spend just as much time baiting the hook. “When I started, I decided to focus on medium- to large-size businesses,” notes Biech. “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 cost-effective ways to market your services
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, a trade organization, or a local charity. Conduct a survey, publish the results, and share them with clients. Write articles for your professional journal, trade, and business magazines. Blog regularly. Send a card for atypical holidays: Thanksgiving, Valentine’s Day, St. Patrick’s Day, Groundhog Day, or Independence Day.
11. Live in the best-case scenario, but plan for the worst
The first message 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. The second message is practical: Don’t spend your money until it’s in your hands.
12. Focus on 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. Work to create a client’s independence
Your goal is not to make clients dependent upon you, but instead to ensure they receive the maximum return on their investment. A lasting impact occurs only if you ensure the client has the competency required to sustain the changes you help them make. Before walking out the door, a great consultant ensures the client owns the solutions. A high-quality consultant inherently knows that this is the best way to be invited back.
14. Don’t lower rates based on a client’s budgets
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. Negotiate a fair price ethically.
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. “Don’t let the fear of failure hold you hostage,” advises Biech. “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. 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. She is the recipient of numerous professional awards and accolades, including ATD’s inaugural CPLP Fellow Honoree, ISA’s Broomfield Award, and Wisconsin’s Women Entrepreneur’s Mentor Award. Learn more at elainebiech.com.