Everything You Need to Know About Consulting

INTRODUCTION

If you’re a passionate entrepreneur with a respected expertise that exceeds others in your industry, you may be a prime candidate to start a consultancy business. This guide provides insight on setting up as a consultant, rooting out potential clients and creating a thriving business.

DEEP DIVE

What is consulting?

Consulting is the business of giving expert advice to other professionals. While it sounds simple enough, your success as a consultant is dependent not only on having expertise in the industry but also a natural ability to solve problems and make decisions.
Consulting can be categorised into two main sectors:

Strategy consulting

Strategy consultants focus their efforts on beating the competition and elevating business profit. When clients are struggling with a specific business direction, strategy consultants address the question of how to do it.

Management consulting

Management consultants are responsible for the process of developing or improving business strategies. Management consultants often specialise in a particular industry, some of which include:

• Human resources: An HR consultant addresses human resources tasks and processes in the overall business model.

• IT: An IT consultant specialises in optimising information systems and has a sound understanding of technology services. Sometimes referred to as technology consultants, they work with clients to improve the structure and efficiency of technical systems.

• Health care: A health-care consultant is responsible for identifying efficiency gaps to improve the structure and operation of healthcare organisations.

What does a consultant do?

Consultants are hired for a variety of reasons that span from implementing simple changes to completely overhauling current business systems.

Here are five reasons you might be hired as a consultant:

• To teach expertise
  Many businesses lack expertise in certain departments and need a consultant’s help to drive growth. This can be true of small businesses and much larger organisations. In these situations, you’re hired to come in and educate staff on processes that elevate their business.

• To identify problems
  Using your expertise, you may be hired to identify problems in a business model. If you are hired in this scenario, it’s your responsibility to identify weaknesses that are bogging down the business.

• To improve processes
  Some businesses can identify the problem but can’t find the solution. In these situations, a business hires you to create a plan to remedy key pain points.

• To execute new methods
  While some consulting businesses advise, others actually implement. A business may ask for your counsel regarding the health of its business, but you may also follow up with the implementation of your suggested plan.

• To oversee business development
  When entrepreneurs decide to start up a business, they might ask a consultant to oversee their business’s development.

Depending on your niche, you might advise on entering the market or provide financial oversight.

Whether you are ready to open your consulting business tomorrow or you are just beginning to think about it, it’s important to understand what consultants specialise in so you can define where you fit in the market. Putting some work into identifying and analysing your target market is also valuable.

How to start a consulting business

Once you’ve pinpointed your consulting skillset, it’s time to take the steps to actually become a consultant. Here’s where you need to start:

1. Research certifications

Having certifications can help attract clients. The certified management consultant (IMCA) certification is awarded to consultants who have met global standards of performance in technical competency, ethics, consulting competency, project management and personal conduct.

2. Take care of your finances

Create a budget that lays out all your costs. You may decide that you need additional capital to be successful. You may be able to raise this through a loan, from investors or even via crowdfunding. Before trying to raise funds ensure you know exactly how you want to use them and how they’ll support the growth of your consultancy operation. Traditional investors and lenders will likely want to see your plans.

A problem many consultants face is separating personal finances from business finances when they first start. To avoid spending mishaps, implement ways to distinguish your business costs from your personal costs, such as opening a business bank account.

3. Register with Revenue

Whether your consulting business is going to be your main income or a side hustle, you’ll need to ensure you have everything in place with HMRC from a tax perspective. All businesses need to be registered in one sense or another. If you’re a sole trader it may just be a case of registering as self employed to declare income outside of that which you earn in any salaried positions. This means you’ll need to complete a self-assessment tax return. You may wish to instruct an accountant for this.

Depending on your business structure you may need to, or benefit from, registering as a partnership or limited company. There can be advantages in registering as a limited company instead of a sole trader, especially if the business will generate a high income. Seek professional advice on the most appropriate and effective structure for your consultancy firm.

4. Set your consulting fees

What are customers willing to pay for your services? This is an important question to hash out at the beginning. There are different consulting fee models, but you ultimately want to base your rate on your clients, the services you offer and the time a proposal takes.

After you determine your fees, you need to select a payments system that allows your clients to pay for services. Many consultants use invoices to bill clients for the hours worked. With a robust invoice system, you can fill out your client’s information (which is saved in a customer directory) and send the billing statement in seconds via email.

5. Create a business plan

Now it’s time to write a business plan. Your value proposition and target market are the base of your plan and should be highlighted at the beginning of the document.

From there, you want to create a plan that includes a competitive analysis as well as financial considerations, which include the cost of your consulting business and your forecasted profit.

Take note that business plans change over time and that’s okay. Don’t be afraid to modify your business plan when long-term goals evolve and new opportunities arise.

6. Create a marketing plan

Because the consulting business is competitive, a marketing plan is crucial. Networking is the best method to secure consulting work. You want to become a reputable source whose opinion is valued in the industry. To do so, you have to constantly network and build loyalty among your client base

TOOLS TO RUN YOUR CONSULTANCY BUSINESS

There are some basic tools all consultants need to get their business off the ground.
A system that gives you the ability to easily organise your time and book in clients is one. Managing your availability is a key component for a consulting business. Take your appointment system online and enable clients to book and change appointments for added efficiency. If you are working in partnership with other consultants or have a team, a combined and accessible booking system helps avoid diary clashes and booking errors.

Ensure you have a system for invoicing and the ability to take payments in whatever format customers wish to make them. With simple free software you can securely transform your computer into a payment card terminal. You are then equipped for remote billing and to take credit and debit card payments over the phone. Affordable handheld card machine technology can also enable you to take in-person payments.

HOW TO STAND OUT ABOVE THE REST

Anyone with knowledge in a specific industry might try their hand at consulting, but expertise alone won’t make you successful. Effective consultants have an appetite and drive for excellence, which allows them to stand out above others.

Don’t let the competition or market saturation scare you away from the profession. Here are a few ways to separate and elevate your work.

Find ways to exploit knowledge gaps

Each industry has unique challenges, which is where opportunity lies for consultants. Being able to provide answers to tough questions in the industry isn’t easy but it does guarantee success.

Focus on your clients, not the cash

Each client has a unique story, and it’s important for you to invest in the entire landscape. Let the client’s challenges motivate you rather than the money being offered to solve them.

Sell your results, not your services

The proposal you create to win a client should be based on your previous results. To win their business, show them how you have helped solve a problem similar to the one they’re facing.

Constantly question your value proposition

The value you add to your client’s business is the ultimate measure of success. Be sure to constantly check in on the work you’re doing and be sure it is unique among competing consultants in the industry.

Stay organised

Keeping your cash flow organised and orderly might sound simple enough, but a small slip up can lead to a major headache. By learning how to manage your invoices effectively, you can decrease the risk of error and improve your business cash flow.

CREATE A MARKETING PLAN

One of your main focuses in the start-up stages of a consultancy firm is going to be in finding customers. A marketing plan will help with this.

Your marketing plan should cover an analysis of your potential clients. Once you know who you need to try to get your message to you can assess where they hang out and are most likely to receive it. Because you have already nailed down a business plan you should already have a good idea on some of this and on what it is you’re going to be telling new clients i.e., what you can do for their business and why you’re the best person for the job.

Marketing includes every avenue of presenting your offer to potential clients. Networking is a great marketing tool for consultants and you may include in-person networking in your plan. Networking can also be done via online channels, such as LinkedIn. Consider writing and posting articles that establish you as a thought leader in your industry and be sure to connect with people who already know about your skills, such as previous colleagues or employers.

A great looking website and strong social media presence across other appropriate platforms are also key marketing tools. Twitter can be a valuable message spreading tool for a consultant. Building a business blog can also help demonstrate your credentials and help you benefit from organic search traffic (that is, people searching for the service you provide rather than you by name) to uncover new clients.

Traditional advertising and PR, especially in trade publications, may also be valuable as a consultant.

GET STARTED AS A CONSULTANT

Consultancy work is something that can quickly grow from a side-line into a major earner if you want it to. It can equally be a way for a long serving professional to continue to use their skills during retirement.

Whether you want to build a highly profitable small business of your own or just want to employ your skills in a useful and satisfying way, setting up as a consultant is a great option.