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If you’re an expert in some area, then you can probably use your vast knowledge to make money as a consultant. In order for consulting to payoff, you must treat it like what it is—a business.
The fact is that many companies find that it’s less expensive to outsource services from experts rather than keeping people on staff fulltime. In the long run, consultants are less expensive to hire because they are not employees, which means they work for a specified, limited length of time, aren’t benefitted and have to pay their own social security taxes. (When someone is an employee the company pays half of their social security tax and the employee the other half).
Here are ten tips towards creating a consulting business that, if properly nurtured, can pay you a steady, lucrative income. As a consultant, you are your own boss, which means in order to be successful you will have to be self-motivated. The only way you’re going to get paid is if you put the effort into establishing, developing and expanding your business.
Define Your Consulting Specialty
Consultants are experts. What are you an expert in and what credentials do you have that make you an expert? Do you know a lot about IT security or financial planning or public relations? Maybe you’re an expert in buildings and facilities, employee productivity or surveillance. Perhaps you have an extremely specific area about which you know just about everything. This can be anything from airport security to making and maintaining the ice at hockey arenas. Here are some questions to ask yourself in terms of determining if you’re ready to become a consultant.
What degrees do you possess related to the field?
What advanced training do you possess?
How may years have you been working in the area? Five is really the minimum.
What type of reputation do you have—local, regional, national or international?
Have you written about your area or been interviewed about it?
What projects have you worked on or what companies have you worked for that you can highlight to impress clients?
Are their any regional, national or international companies or professionals who can vouch for you?
What Makes Your Consulting a Proprietary?
In order for you company to be a proprietary it must be distinguished from all others in the field. You want to set yourself off in a positive manner from all other consultants. Here are a few things to do in order to determine what makes you unique—a proprietary.
Study the other consultants in your field and determine what makes them unique, if anything.
What have you done that’s different and how does that affect your consulting?
Do you have a philosophy that separates you from the competition?
Do you have a system, strategy or method of working that makes you unique?
Have you worked on, spearheaded or developed a groundbreaking project in the area?
Once you know what makes you different and in some way better than anyone else, you need to sell it.
Create a name for your business and a tagline that express the special nature of your enterprise.
This in not about trying to be everything to everyone nor is it about limiting your possibilities. You are trying to establish a consulting identity that will make people say, “Call that person, the one who does that! No one else does that!”
Perform the Basic Steps Needed to Create a Business
Setup your consulting business as a business. This will give you credibility and it will help you when it comes to filing taxes. Here are some basic steps to take.
Create a business checking account.
Dedicate one, specific credit card to company expenses only.
Discuss your company with an accountant who works with small businesses. You’ll want to know how to pay quarterly taxes, what is deductable, social security responsibilities and how to structure your company as a legal entity.
Discuss your company with an insurance agent regarding liability, health and disability insurance.
Establish a business address, a direct phone line and an online presence. Do not use your home address as your business address even if you have a home office. Instead, use a postal box, which will put a safety buffer between your personal and business lives.
Develop a company logo and stationery. It does not have to be fancy, but it does have to be professional.
Have business cards printed.
As a Consultant You Must Have Opinions
Consultants are consultants partly because they have strong opinions, unique ideas and vast experience. Your opinions are one of your major assets that you can utilize to differentiate yourself and create your niche.
Use the Internet to Establish Your Expertise
There are a few ways to do this. The fact is the Internet is a relatively inexpensive, often free, way of getting your word out and establishing a credible presence.
As mentioned before, establish a professional website.
Create a daily blog.
Write articles and publish then in free article directories.
Utilize social networking sites.
Create a monthly newsletter that people can subscribe to for free.
Create press releases on a monthly basis.
All of the above must be SEO (Search Engine Optimized) to give you the best chance of coming up on the first page of a search engine. If you aren’t on the first or second page of a search engine query, then you really don’t exist. People rarely go past the second or third page of any search they perform on the Internet.
Create Your Home Office
Establish a space dedicated to only your consulting business. This will allow you to focus on the work at hand and it will also provide you with tax benefits.
Network as Much as You Can
That means with potential clients, others in your industry and those in related areas of your field. There are many ways to do this.
Join national, regional and local professional organizations for your field.
Join a local group of consultants that meet on a regular basis. You’ll discuss the business and may even end up partnering on larger projects. (If a group does not exist, then start one.)
Speak to businesses and other local groups about your area of expertise.
Attend conferences as a participant, workshop leader or speaker.
Create a monthly newsletter that people can subscribe to for free.
Offer a free initial appointment with new clients.
Secure an Anchor Client
This is not the easiest thing to do but once you are able to establish an anchor client, you’ll have some room to breathe. An anchor client is someone who is with you for several years and provides you with about 25% of your yearly income. Along with helping establish your financial foundation, this client affords you credibility and they can be valuable as reference.
Charge by the Hour
Do not charge by the job. You’re bound to lose money. Charge by the hour. Your hourly fee is based on many factors, including what the market will bear, what others are charging, how much experience you have and the area in which you are consulting. Build into your hourly fee payments for social security, taxes, business overhead and any insurance.
With this in mind, if you charge $100 per hour, you are not clearing $100 per hour. Once you deduct all expenses, your actual profit from that $100 would be somewhere around $50 to $60.
By becoming a consultant, you are saying that you are a professional and that means that you must act that way all the time. The fact is you are your business.
Treat each client with respect.
Do your work on time.
Communicate, communicate, and communicate some more. Clients like to know what is happening and when it’s happening.
Deliver what you say you will and more. Going the extra mile can result in more business and great references.
Continue to expand your client base.
Reconnect with former clients every three to six months. Remind them that you are around.
After a project is over write the client a note regarding it. It can suggest follow up projects, let them know that you’re available and simply continue your professional relationship.
Be professionally proactive.
In Consulting Discipline is Key
When you become a consultant, you’re making a commitment to creating a viable business. Your success is really up to you in terms of establishing your business, generating clients and income and completing all projects in a timely manner. Once you develop a reputation as an expert with something positive and unique to offer, you’ll be on your way as a topnotch professional consultant.