How to start a consultancy business
Could you make a living helping other entrepreneurs start and grow their businesses? Read our guide to launching a consultancy firm here...
To become a consultant, you will need to consider:
Whether you come to the decision yourself or you're forced into it by circumstances, starting your own business involves a lot of complex preparations and a great deal of strategic thought. For many, finding the right business idea or opportunity is the first and biggest challenge.
But often you needn't look further than your CV. Your professional experience, knowledge and specialist understanding can constitute a business opportunity with significant potential in its own right.
Not only can becoming a ‘knowledge worker' – that's a consultant, to you and me – mean the chance to earn a far better living than being someone else's employee, it can enable you to establish a thriving business with real capital value.
And the great thing about becoming a consultant is the low entry cost. It needn't involve an outlay of precious savings or expensive borrowings, which makes the risk much more manageable.
What skills do you need to be a consultant? What type of entrepreneur is consultancy suited to?
There are three simple steps to understanding what's involved and deciding whether consultancy is the right start-up opportunity for you. They are: know your product; know your market; and know your skills.
Know your product
First of all, you need to audit your knowledge, skills, experience and expertise. What have you learned in your career that you can sell to others? Do you really have a wealth of knowledge, accumulated over decades working in ever more demanding environments, or do you simply have the same couple of years' experience repeated many times over?
The simplest way to find out is to review your CV and list all the projects you've undertaken over the years: what you did, the outcome, and what you learned. Summarise this into a set of areas where you can provide useful and powerful insights to others. That is the product you have to offer.
Consultancy requires a wide variety of personal attributes that will make a real difference to your success. These are self-motivation, good inter-personal skills and confidence.
In start-up mode, you must be able to work alone and motivate yourself. Even getting up in the morning will be a challenge if your only incentive is your self-will! For many, the fact it's your own business you're getting up for is motivation enough.
But working alone demands more than just the skill to self-start. It also requires the ability to be comfortable in your own company and not feel isolated or lonely. Many projects offer little human contact for days on end. If co-workers' banter is vital to your happiness, consultancy may not be the right choice.
Good inter-personal skills
You will also need strong inter-personal skills. Some consultants' skills are so specialist, and in such demand, that they can get away with behaving like operatic divas. Under certain circumstances, these characters can achieve significant success. But in most cases their consultancies flounder.
The fact is, clients expect to be treated with respect. They know they are the paymasters, and they like you to acknowledge this fact in your dealings with them, just as they do with their clients. They may ask you to provide them with powerful insights, innovations or other interventions in relation to business help and advice, but they also expect you to do so with sensitivity.
“What have you learned in your career that you can sell to others?”
Saving their face while at the same time telling them they need to change is a skill requiring empathy and finesse. Clients rarely want this delivered via the sledgehammer of the unvarnished truth, even if they say they do.
You will need to balance these inter-personal skills with bucketloads of self-confidence. Your clients are buying your expertise. If you come over as unsure of the value of your experience, they won't buy from you. At the same time, you need to contain this self-confidence on the right side of the boundaries of arrogance, otherwise you'll end up back in the land of the divas.
In the early stages, you may have to fake some of this confidence. After all, if this is the first time you've encountered a particular combination of circumstances as a consultant, you're likely to be a little uncertain of your skills. Just convince yourself that if you're unsure, the client is even more unsure. Keep reassuring them (and yourself) it'll all be fine, even if you can see how easily it could all fall apart. Chances are, it'll be fine anyway.
Know your market
It's one thing having a long list of knowledge areas you're confident you can provide to others. The real question is, are they valued by the marketplace? Are you offering skills in the next big thing, or the last big flop? To successfully make this assessment you need to understand what's going on in the world around you. Ideally you want the skills you're offering to match a growing area of demand, where they will be in short supply and the competitive environment is at least manageable.
You must first analyse whether market trends indicate if your skills are strengths or weaknesses in relation to current and emergent environmental opportunities and threats.
Look at the next few years' likely socio-economic climate. Base your research on economic forecasts, legislative changes and imperatives, political developments and social and demographic trends. Take into account changing technology and its likely impact on the world around you.
Next, look at the business trends. In what sectors are the most popular business start-ups? What are the major current business developments? What's the latest management thing? Which sectors seem to be enjoying robust long-term growth and which are declining?
Now consider the specific sectors where you have experience, and in which you want to work. At this point, take a broader view, and think about the consultancy sector. What are the trends here? What are people talking about, in relation to consultancy? Where's demand rising and falling? Are the type and style of offerings changing?
There are many possible sources for this information. Your bank can provide economic forecasts. The national press and popular culture – T.V. shows, adverts, films, music, magazines, even food fashions – can help inform you of social trends. And don't forget all the readily accessible desk research on social trends, like the Office of National Statistics' excellent Social Trends survey, conducted on behalf of the Government.
You can also source and discover business and sector-specific trends by evaluating desk data; regularly reviewing the business and management press; looking at business book publishers' new publications lists; and reviewing conference and seminar promotional materials, to discover popular topics. And don't forget polling business people you know for their views on the latest issues impacting on business as a whole, and on their sector and their business.
Making a decision
Once you've analysed your marketplace, overlay the skills and experience you plan to offer against these trends, and assess whether there will be sufficient demand for your expertise in the business community that you can target, given a sufficiently benign competitive environment.
Consultancy ideas: Getting your business started
One of the most important aspects of establishing and marketing yourself as a consultant is developing a ‘product' set. Clients have problems buying advice and expertise in the abstract form: they're much happier buying something specific.
You want to be seen as specialist, expert and knowledgeable. So package your expertise into ‘products' that clients understand and recognise.
If you have extensive facilities management experience, you may want to sell your ‘ PEAP® – Property Economics Assessment Portfolio' product. Or, if you're not an Organisations Development consultant, a ‘Human Resource Optimisation Package' .
A neatly packaged product concept, for which you've identified a market need, is far easier to consume than some generalised expertise. You may be able to offer the generalised expertise later, off the back of a successful ‘product' sale.
Getting the marketing right
The other aspect of selling skills you'll need to address is marketing. There are no short cuts here, though a successful marketing campaign needn't cost the earth.
However, your start-up budget is unlikely to run to a launch advertising campaign in the general business press or sector-specific specialist journals. Even given a lot of cash — unless you sustain it over time it is unlikely to yield results.
It's better by far to start the process by networking like mad. Contact everyone you know, and tell them what you're doing. This is likely to yield most of your early enquiries, particularly as you're going to be building on your current areas of expertise. You may well know your first client already: in some cases this may even be your last employer.
But effective networking is a powerful marketing tool when used, and it would be unusual if your follow-on work doesn't come from referrals from these initial clients or others you contact who know you and your capabilities.
What you need to buy
“It's better by far to start the process by networking like mad. ”
In terms of marketing collateral, you'll need business cards. Make sure they look high quality and expensive. Avoid using the printing machines at your local railway station. They look cheap because they are cheap, and they make you look cheap by implication. Go to the expense of using two colours: it looks more professional. It also looks better on your letterhead and compliments slips, which you will also need.
Next, you will want to invest in a web site. In today's business environment you are expected to have one, and most of your prospective clients will browse it to get an idea of who you are and what you do. Make sure it looks professional — not like it was designed by your friend who does this as a hobby!
Another way to promote your new consultancy business is to get articles published in leading journals in your chosen sector. This should cost you little but time (and it will take up a lot of that…), providing you are a confident author with something interesting to say. Don't expect masses of leads from your first few appearances in print, but such promotion will do your professional reputation no harm, and you can always re-use the material on your web site, in mail-outs to clients and prospects, and in new business presentations.
Tips for business success
Before you do anything, consider the following top tips:
- Know your product, know your market, know yourself.
- Make maximum use of all your personal skills, including marketing and networking.
- Get good, professional corporate design.
- Pay for a well thought-out web site.
- Ensure you get some good PR, even if you do this yourself.
Implemented with enthusiasm, commitment and care, these steps should lead to a successful and rewarding new business opportunity that's open to most people to get involved in, for a very low cost of entry.
This article was written by Ricky Coussins, principal of the marketing consultancy www.coussins.co.uk