A dynamic way of starting your own Business
Becoming an independent consultant may seem to be very difficult, but think about it twice: you don’t have to be necessarily a Business consultant.
- Usually, “consultant” and “business consultant” are understood to be the same.
There are “thousands” of opportunities and different sectors where you can become a successful consultant.
Here, we’ll analyze:
- Steps necessary for becoming an independent Consultant.
- How you could start your own Consulting business.
- Which promotion strategies you could use.
- According to our professional experience.
- What would you need for making $1.000 a month?
Remember: we have worked in the Business Restructuring (and Venture Capital) sector for years, so we have experience in Consulting.
- We’ll share our experience, giving you Advice about what works and what doesn’t.
What should you be Consulting about?
Here is the first obstacle you’ll have:
- You want to become a consultant but… you’re not sure about what or how.
- Moreover, although you are an intelligent person you lack of “commercial” abilities for selling yourself or your services.
This is very common.
- Some of the most intelligent and experienced people we’ve ever met, tend to think they don’t know enough for becoming a consultant.
The more intelligent you are, the less you think you know about anything (it is called the Dunning–Kruger effect).
On the other hand, some of the best consultants we’ve ever met were people that didn’t know a lot about anything in particular, but they loved to learn new things so they technically were renting their brains.
This leads us to understand the Consulting Business in 2 different ways:
- As a way of “selling” your cognitive ability.
- A way of sharing your experience.
1. Consulting as a way of selling your Intelligence
If you know something about Top Consulting firms such as The Boston Consulting Group, McKinsey or Bain, you probably have already realized about it:
- They hire young super-intelligent people with no experience at all.
- These young professionals go to an external company on behalf of their Consulting firms in order to tell much more experienced people what they should do. And… They tend to be right.
What is going on?
- These Consulting firms are renting very powerful brains.
How can they pick super-intelligent people? Well… Why do you think they do all those tests and personal interviews?
* Of course, for Management positions, they don’t hire just intelligent people but also experienced professionals.
If you are an extremely intelligent person, your advices will be very valuable in lots of different sectors as long as you work very hard and get well informed about those sectors.
But what if you have an average level of intelligence?
Don’t worry; there is no problem at all.
There is other way of becoming a Consultant as good as the first one:
- Become an expert in something.
2. Consulting as a way of selling your Experience
Other successful Consultants are maybe not the most intelligent ones but the most constant and well informed ones.
Acquiring experience at something may be the best and “easiest-to-sell” way of becoming a Consultant.
If you can prove experience at something, you’ll always find someone willing to pay you for that information.
Once analyzed these 2 Consulting conceptions, let’s start analyzing how you could become a Consultant, what you would need and how you should start:
Business Idea: Start a Consulting Business
There are lots of different consulting firms in this world, but what if you started your own company?
What if you could start a profitable consulting business by sharing your knowledge or your intelligence?
Today we’ll analyze whether becoming an independent Consultant could be regarded as a viable and plausible Business Opportunity for you or not.
* We analyzed the e-learning sector in our “Start an e-learning business” page.
- If you want to become a Consultant but you are not sure about the field in which you could success, there we share some tips that could be helpful for you.
In case you think you could never become an independent consultant, check these Consulting Ideas:
Ideas for your Consulting Business
If you have worked as a waitress:
You could start a Consulting firm about:
- Human resources for restaurants (big restaurants).
- How to maximize results by incentive the waitresses.
- You know what waitresses want and like at work.
- Best practices for new restaurants.
- What new restaurants should avoid doing and what not.
- etc, etc.
If you have worked in a factory:
You could start a Consulting firm about:
- Process optimization.
- For minimizing work accidents.
- Designing quality-inspection hierarchies.
- etc, etc.
If you have worked in a retail shop:
You could start a Consulting firm about:
- Theft prevention (unfortunately, very common).
- Internal organization.
- How to organize shelves in order to increase sales.
- Which spots are more “successful” within a shop.
- etc, etc.
You probably got the idea:
There is always something you can give advice about if you pay enough attention and collected all the information possible.
Moreover, you can always start a Human resources Consulting firm for helping in the hiring of the best professionals in the business sector you have experience about.
- While restructuring companies, we have used experienced professionals that helped us identifying valuable skills to consider when hiring new employees.
- It is very common.
First Steps for Starting your Consulting business
As we mentioned before, the very first step is: knowing yourself.
We’ll assume that you are an average-intelligence person that maybe has been working at something for more than 2 years.
Hence you surely have experience in something.
Now, think about that “something”. You have to master it:
- Read about it.
- Collect all the data you can.
- Study new trends in different countries.
- etc, etc.
The best way for becoming a Consultant is by mixing your experience in a certain field with a deep research about it.
As we mentioned before, some consultants lack of this experience, and the only reason other professionals “respect” them is because they work for a very famous Consulting firm.
In small-medium companies, the only way of being respected is by showing your experience in that field.
- You don’t have to be the most experienced person in the world, but you need some experience (unless you work for McKinsey or BCG).
Now, providing you have knowledge and experience, how should you start?
1. Create a Website highlighting your Experience
courtesy of: http://alphastockimages.com/
No matter if you are planning to become an on-line Consultant or a 100% “physical” one: You need a site, a nice one.
- You don’t need the best Website ever (unless you wanted to become a SEO or Website Consultant, obviously).
This site must give evidence about:
- Who you are.
- Which is your experience.
- Which projects you developed or worked on.
- Your contact details.
It should be like your “portfolio”.
But, don’t over-react: you want to give a professional first impression.
So, forget about videos, Podcasts talking about news or politics (politics, specially forbidden)…
- They are not bad options for “attracting” potential clients but normally, they are counter-productive.
- If you are starting, let’s say… A Modern art Portfolio-Site, the “weirder” the better, but if you want to become a “retail” business Consultant, please, don’t Post a video of yourself dancing.
- We have seen “dozens” of well-meaning though terrible Sites.
You want to be considered as an “adult” responsible professional.
Again, if you have experience at it, of course you should do it (and even more if you want to become a Social media Consultant) but most of the people don’t know how to do it properly.
2. Create your Consulting guidelines
Now, you need to gather and classify all you will offer your Clients.
It sounds “trivial” but it is not.
You have to put together all you could offer your clients:
- All your knowledge.
- Yes, you should write it down, at least schematically.
- All your experience.
- Your professional contacts.
- Your best skills.
Now, you should establish:
- The profile of your potential Clients.
- The key questions you should ask them.
- Where your service limits are.
- This is very important so you don’t offer a mediocre service.
The goal is to avoid targeting “everything that moves” without even knowing what you can really offer.
You have to set yourself certain guidelines in order to:
- Offer a standardized service.
- Obtain much more professional results.
- Save time.
- Very important.
Of course, these guidelines may vary over time (and even more at the beginning) but they are necessary.
* We’ve met very brilliant and experienced independent Consultants that didn’t have any guideline and that prevented them from getting much better professional results.
3. Promote your Consulting services
This is extremely important in the Consulting business.
You don’t just need knowledge and experience: companies and professionals must know you.
If you think we’re going to recommend you to spend thousands of euros/ dollars on Advertisements, you’re wrong (or you don’t know us properly… yet).
The best promotion you can do is showing how good your advices are.
Think about the person that could hire your services:
- He doesn’t know you.
- He would have never though about hiring Consulting services.
- Moreover, there is lot of free information in Internet.
- And lots of “spammers”.
Why should he/she hire your services?
If you don’t have a good reputation, the only way they could trust you is offering them something in advance, something “for free”.
Offering your services for free is the best promotion possible: you’ll be able to show what you are capable of.
As you may have already guessed, you don’t have to work for free; give something useful for free, and then offer more for a fair price.
How to Promote your Consulting services - Example
Imagine you own a small retail company.
Your results are “normal”; not good, not bad.
You have never thought about hiring a retail-Consulting Company since you don’t see how they could help you (and you see no need for help).
- Probably, you even ignore that these kinds of companies exist.
- And you don’t want to spend money for listening something you think you’ll already know.
One day, you receive a mail from a guy that has visited your store several times, and in this mail he introduces himself and shares with you a list of measures you could implement in order to improve your sales.
- What if you saw some interesting easy-to implement measures in this mail?
Wouldn’t you, at least, listen to this guy and what he offers you?
Think about it:
- You would have never hired anybody for this.
Now, you are open to see what this guy may offer you.
That is how you should do it.
Forget about nowadays’ philosophy: “A nice logo is what you need for your super-modern-millennial-business, bla bla bla…”.
If you success, you can start worrying about your logo.
Good professionals are hired for their work, not for having a nice logo.
Structure Needed for starting a Consulting Business
You can start your Consulting business with 20 people, or just you.
As you can guess, we’ll propose you this second option.
- If you were very successful, you could hire one employee and then another, and other…
One of the best things the Consulting business has is how “easy” you can scale it up.
How to scale a Consulting Business
For scaling a Consulting business successfully you need just 2 things:
- Hire experienced and/or intelligent professionals.
- Guarantee the quality of your services.
How to hire experienced and/or intelligent people:
- Share your benefits with them (a percentage).
- The more experienced they are, the more generous you should be.
They offer you their experience and you offer them a pool of clients.
How can you guarantee the quality of your services?
- The guidelines (we mentioned before) you have developed during years should contain all the know-how you acquired.
- You should use these guidelines as a “manual” for your new employees so they learn faster than you did.
We told you: these guidelines are the very key to success in the Consulting business.
Investment Required for starting your Consulting Business
We’ll propose you to start at home while you still hold a full or part-time job.
Then, you would only need:
A hosting for your Site:
- $100 per year.
A premium Theme.
- We use KLEO Theme (not sponsored, of course) if you are interested about it, visit “Our experience with KLEO Theme” Post.
Office material (depend on whether you’ll offer your services on-line or “physically”):
Total investment required for starting your Consulting business:
* If you scaled your business, you’d have to spend much more money, obviously.
- We are proposing the “smallest” Consulting business possible.
What would you need for earning $1.000 a month?
Now, let’s analyze what you would need for making $1.000 with your Consulting services.
We must mention that, estimating an average rate-price is very difficult for this particular economic activity.
- There are Top Consultants that earn $1.000 an hour (we have met some of them) and decent Consultants that are hired at $50 a day.
Moreover, you can charge your clients per hour or goals achieved.
Unless you are a well-known professional you should charge your clients per goal achieved.
These goals could be:
- Implementing a new organizational system.
- Results improvement (a bit risky).
- Waste reduction.
- Market research.
- etc, etc.
Since it is a bit difficult to assess this economic sector, we’ll use our own experience with small companies (we’ve also restructured small companies).
- We’ll use the size of the reports generated as a measure of the work realized.
What small businesses are willing to pay for Consulting services:
- According to our experience, no single small company would pay more than $500 for a study, improvement or advice in general. No matter how good it is.
- Also, no small company would pay a monthly fee higher than $100 more than 3 months in a row.
- A small 10 pages report is paid (by an average small company) between $50 and $100 depending on how difficult the sector is.
- This could take you 1 full day of work providing you have previous studies and guidelines about that sector.
- A medium 20-30 pages report is paid (by an average small company) between $100 and $150.
- This could take you 2 to 3 full days providing you have previous studies and guidelines about that sector.
- A full, deep +50 pages report can be very well paid but we won’t expect more than $500 (again, by an average small company).
- This could take you a whole week providing you have previous studies and guidelines about that sector.
* Of course, this is average information from very different European businesses.
- If you developed a deep +50 pages Market research for a big company, you could charge them thousands of dollars (we’ve done it) while other companies would never pay you anything for “just a report”…
With all this information, let’s see what you could do in order to make $1.000 a month.
Personal Consulting scenario
You could ask for a monthly fee of $50 to 4 different businesses during 3 months.
You would commit to analyze their numbers and results, giving a weekly 5 pages report with (for example):
- Potential improvements.
- How to implement those measures.
- How those measures worked.
- Market and product analysis.
Small fees service = $200 per month.
You could have 3 “small analysis” projects (with all the consulting services associated) for $50 each.
- Small reports service = $150 per month.
You could also have 2 “medium analysis” projects per month (although we mentioned just the report, it would imply, of course Consulting services) for $125 each.
- Medium analysis services = $250 per month.
Finally, you would need to develop one “big full analysis” project for $400.
- All together, you would be making $1.000 a month.
This is not easy to achieve.
- You need to promote yourself a lot in order to have this amount of clients each month.
That is why we recommend you to sacrifice profitability in order to gain recurrence.
In the Consulting Business, it is much better to have loyal and recurrent clients than few profitable ones.
- Trust us: this is the best advice anyone could give you regarding the Consulting business.
The profitable ones “fly away” and you can end up with no work at all for weeks.
Escalated Consulting Business scenario
With these reduced margins we’ve just mentioned, how would it be possible to scale this business up?
- You can suddenly lose your clients, this sector is generally not very well paid… How on earth anybody would want to work with you in this situation?
You should think about scaling a Consulting business just if you were able to establish a close and profitable relation with 3 or more companies.
It is what big Consulting firms do:
How Big Consulting companies make profits
- They offer a good price to their best clients in exchange of to a long-term contract.
- They hire young intelligent professionals.
- Then, they send these guys to these clients to work full time with them.
- They charge their clients $100 an hour for their employees’ hours.
- They pay their employees $30 an hour.
- They keep the remaining $70 per hour.
We are not encouraging you to do the same.
In fact, practically all the Consulting firms end up being “temporary work companies” for their clients.
We wanted you to understand that only when a Consulting firms has reached a certain stability should it think about expanding its business.
Verdict: Is Consulting a viable Business Idea?
It is difficult to say.
According to our experience, it is not easy to get the amount of clients necessary for “having a profitable Consulting business”.
The prices are generally low and few companies are willing to pay for “just advices” (that is why we suggested you to charge by results).
Moreover, there are hundreds if not thousands of “fake-consultants” that only know how to dress (sometimes not even that) and make more harm that good to the companies they “help”.
However, you need practically nothing for starting this business and, all the work necessary (gathering information, creating your guidelines and building a site) would make you a better professional in all the ways possible even if you didn’t success.
Our Verdict: If you could combine being part-time consultant with a full-time job, we would encourage you to give it a try.