3 Things You Should Do Before Starting A Consulting Business
Being an expert in your field is one of the most important requirements to start a career in a consulting business . Examine and acquire yourself with these three important things.
1. Are You Really A Qualified Do Consulting? Really?
We’ve all encountered consultants who obviously aren’t qualified. Certain fields seem to be magnets for unqualified practitioners (social media, anyone?), while others that require specific licenses or formal training do a better job of keeping out the riffraff.
Before you jump headfirst into consulting, ask yourself whether you have the knowledge and experience necessary to really help people do whatever it is you help them do – and be honest when you answer.
Let’s pretend you’re an event coordinator. If someone didn’t know anything about event coordination and the future of her business hinged on the success of one seminal event, would she be in good hands if she hired you to hold everything together? Really?
If so, great. If you’re not sure, it might be best to hold off until you get a little more experience in your field.
2. A Consulting Business Plan
The best businesses start with a plan. A good idea is only that – a good idea – until it’s put into action, and the most reliable way spur effective action is with a plan. But more than that, when you go out looking for startup capital to fund your business, the people you’ll be asking for money are going to want to see your business plan.
Creating your business plan also gives you time to address all the foreseeable challenges ahead before you’re presented with them. For example, will you be consulting people one-on-one or in groups? Where will you perform this consulting? Who is your competition and what makes you different? How do you plan to dominate this competition? Who is your target demographic: the social/economic profile of your ideal and anticipated clients? And how do you plan to reach them?
This is also a good time to give due consideration to your consulting business name. Will it be your own name or some catchy combination of words? When choosing a name you have to think of how it will be perceived by your market niche. And you have to be sure you have the right to use that name in your jurisdiction. As for trademarking your own business name, it’s highly expensive and not usually necessary unless you’re a big corporation; plus filing your business name with your paperwork (see The Legal Stuff, below) will give you the right to use that name legally in your jurisdiction (unless legitimately contested in a court of law: hence, research.)
The work you put into your business plan before you start operating business will reward you with the two greatest boons a business owner can hope for: sustainability and growth.
3. Set Your Rates and Stick to Them
Many consultants have difficulties charging their clients what they believe they are really worth. The source of this difficulty, be it modesty or a lack of confidence, is inconsequential. The fact is that if you undercharge, you won’t be a consultant for long.
Try to learn what the typical rates are for consultants in your industry, or with your level of experience. It would make sense that Consultant A, who has 30 years of financial experience, can charge $150 an hour, while you, Consultant B, who has 10 years of financial experience, may only be able to charge $100.
While you may think that a way to get work is to underprice the competition, this strategy has two drawbacks:
If you undervalue your knowledge too much, potential clients will too.
Once you’ve set your rates, it’s tough to raise them.