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5 Tips on Starting a Consulting Business

Before you start a consulting business, you have to understand how tough it can be.

These days, it seems that everyone wants to be a consultant and it is not hard to see why. Businesses are spending more on consulting than ever, with the Wall Street Journal reporting that “spending on U.S. management-consulting reached $58.7 billion” in 2016. And consulting seems like an easy job, leaving yourself free to be your own boss.

But there is always a catch. Consulting is in fact very challenging, as you are now competing with countless other consultants not just in the U.S., but across the entire globe. Striking out on your own always take a bit of luck, and you very well may fail as a consultant no matter how hard you try. All you can do is take the right steps to maximize your odds and show that you are passionate and knowledgeable about your subjects. Here are some ideas that can hopefully jumpstart your consulting career.

1. Be Serious and Passionate

The problem with being a consultant is that practically anyone can claim to be a consultant on something, and that you are competing with millions of other consultants, each with their own little area of expertise. You thus have to stand out.

So how do you stand out? You have to market yourself as a person and as a consulting business. Create a website detailing your expertise and what you have accomplished. Establish a social media presence. Cold call potential clients. And network like you are a 22-year old fresh out of college. If potential clients ever think that you are not serious about consulting, you are in trouble.

2. Stand up for Yourself, but don’t argue

A major challenge with consulting is that you are often brought in to advise a company on how they should do something, whether accounting or managing or marketing, differently. However, there are those who are satisfied with the status quo, and thus will constantly try to disagree or argue with you.

Dale Carnegie famously observed that you cannot win an argument, and this is especially true in consulting. But that does not mean you have to let your clients walk all over you. A good tactic is to admit that you were wrong in some minor way, which helps put an angry client at ease. Then you can calmly sit down in person and hash out how things can be improved in a way which will leave practically everyone satisfied.

3. Hire People

You are starting a consulting business so you can help people with your knowledge. You are not starting a consulting business so that you can lick envelopes, file business paperwork, and deal with all that other minutiae.

When you start a consulting business, it is okay to try and do everything by yourself. But as you have more clients and you consider working in an actual office, you should consider hiring people to take care of mundane tasks. This leaves you more time for consulting. Furthermore, simply being around other people, even someone with limited working experience, can invite fresh perspectives and help you see how to handle problems from a whole new angle.

Another alternative to hiring someone to physically be in the office is to hire a virtual assistant. Entrepreneur has a good list of places to start looking for someone who can help out now and then.

4. Figure out your rates

A common mistake by those starting a consulting business is that they charge too low out of the hope that they will attract more clients. But charging too low can drive away clients just as easily as charging too high. If someone sells me a diamond ring for just $50, I would not buy it as I assume it would be low quality or a fake. The same principle is true for consulting.

Figure out what your competition’s rates are by asking around, and then set a price which is competitive with everyone else. Make sure you factor in tax costs by consulting a company like Vanguard before you set your price. Also make sure that you list precisely what your expenses are, and include a miscellaneous section to account for sudden and unforeseen expenses.

5. Know When to Fold Them

Consulting is not for everyone. You may need the structure of regularly working in an office. You may be tired of being treated as an outsider by the company you work for. Because you will be called in to fix companies, the companies you work for are more often than not a mess. The Guardian notes that a quarter of small business owners fall ill from stress and overwork, and a consulting business can be particularly stressful.

Before you start a consulting business, you have to understand how tough it can be. If the stress gets to be too much, there is no shame in folding and ending your business. If you have not got your health, you have not got anything.

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