09 Oct How To Build A Consulting Business
In large part driven by the digital economy, the demand for people with specialized skill-sets is rapidly increasing. The flexibility and high earning potential of starting a small consulting business and selling your expertise is one of the smartest businesses you can launch. You can start small and over time, as both your experience and network grow, you can expand your client base as slowly or quickly as you want. There are many in-demand consulting niches, but you can “consult” on anything as long as you can add value – and it’s important to note that the idea of “adding value” is entirely relative to the client. You don’t need to be the world’s expert on anything to be a consultant, you just have to help someone do something they can’t do.
Here is a list of the fastest growing consulting niches if you are looking for an area to specialize in. I have been fortunate to enough to be involved in three successful consulting businesses – including one that I worked at, and then two that I have helped found and build. I currently own part of a business strategy consulting firm and a digital marketing agency.
I have made a lot of mistakes trying to launch my consulting businesses and learned a lot. Here’s what I recommend if you want to start your own consulting business.
1. Add value. Pick something you know how to do well and try to sell your expertise to one person.
I picked digital marketing and my first client was a Chicago law firm who were trying to get more clients. I found the job posted on Craigslist, Googled the law firm, found that their website was terrible, and then emailed them. At the time I had very little digital marketing expertise, but I could quickly tell that I knew more than this law firm and could add value. That is all I need to do to become a consultant. It ended up being a successful partnership where I rebuilt their website and helped them build Google Adwords campaigns to get more clients. I worked super hard to add value and make the client happy.
I knew that if I did a good job for the law firm I could use them as my first “satisfied” customer testimonial to sell to others. I also asked the partners if they knew anyone else who needed similar help. Within months I already had 3 clients. Today I have over 50 across my businesses and employ other to manage the relationships – but I started super small. There are a million places to find your first customer, but I recommend finding someone who is already in your network or closely connected to you. Even doing the consulting work for a family member or close family friend can help open doors.
2. Master your pitch. Build a simple introduction email to get potential clients to pick up the phone and call you.
I pretty much use the same email language to get clients that I started using over 5 years ago. I worked hard to develop an email template that clearly describes what I do, who I have done it for, and how I can specifically help the potential client. Remember since consulting is about adding value I always try to start adding value in my pitch email. You should try to leave the impression that you will be helpful and add value. Here is the exact email that I sent to the law firm that got me my first client:
Mike, I am confident I can get you more clients and make it easier for potential clients to find your website when they are searching for personal injury attorneys in Chicago. I did an initial analysis and discovered that your website is seen less than 5% of the time on Google when someone is searching for a personal injury attorney in Chicago. I can maximize your firm visibility on Google and get you in front of at least 20% more potential clients with a limited investment. I can also get them to call you and price an engagement based on the number of client leads generated for you. Oh, I also noticed that the following two links on your website are broken and you haven’t yet set up a Google business page map listing which will make it easier for you to be found (click here to sign up in less than 5 minutes). I am available to connect via phone at your earliest convenience. I look forward to hearing from you. Thanks Mike.
Pretty short and to the point, with very little technical language he couldn’t understand. I had previously done digital marketing work with an agency, but never had my own client. This email got the law partner to pick up the phone and call me. He wanted more clients and I told him how I could get them. I also offered a few recommendations so he not only knew I took the time to look at them, but I also wanted to help.
3. Learn from others experience. Work with someone who knows more than you and has had success as a consultant.
It is well studied that if you spend a lot of time around successful people you are more likely to become successful yourself. This is because our mind picks up on other peoples language and behaviors without us evening realizing it. You literally become more like the people you are around. If you want to increase your chance of success then find an expert and offer to help them, or partner your unique skills up with theirs. I had the fortunate opportunity to start a company with two previously successful entrepreneurs. So why did they decide to start working with me at the age of 26? They are both in their 50’s and as a Millennial digital native I brought the knowledge of digital to the table. They needed my experience and I need theirs. It has become a life changing opportunity for me. I encourage you to find someone who has become a successful consultant and offer to help them. Ask as many questions as you can.
4. Get paid as much as you can. The risk of asking is often worth it, but learn to read the client to win the business.
The real key to profit maximization in the consulting business is charging as much for your time as you can. This is a mistake I made when starting a consulting business – I simply didn’t ask for enough money until I had a lot of clients. The main reason I didn’t ask for more money was because I was worried about the risk of not winning or losing the business. When I had enough clients to keep me busy, I finally didn’t worry about winning a project and start asking for a lot more in fees. When a prospective client would ask about why I was more expensive than other consultants I was able to defend my fees by showing them strong client testimonials (with tangible results) and telling them that my services were growing in demand.
I stopped being worried about losing a potential client opportunity, because there is always another opportunity if you seek one out. I also started to value my time a lot more. When I was 22 I would stay up all night and work on weekends and even vacations. Now I don’t want to hustle as hard, so I want to get as much money for my time as possible. I value it more. Sometimes you just have to ask – but you need to read the situation and be somewhat reasonable with your ask. My first client, even though I helped them get a lot of new business, were only willing to pay me $3,000/month no matter how well I did for them. Whereas I recently acquired a client where they really wanted to work with me, so I asked for a very high fee, with profit sharing opportunities. I got the client. Whether you want to be a millionaire millennial or make a bit more money, starting a consulting business and maximizing your fees are essential.
5. Pay for good advice. It’s worth investing in expertise.
This is a lesson that it took me awhile to learn and I made a few mistakes just because I didn’t have the legal expertise to deal with some client contract issues. I should have just paid an attorney with expertise in contract law, but I researched the issues myself and thought I understood the issues well enough to move forward. I was wrong and made a huge mistake in a client contract that caused me a lot of extra work and hassle down the road.
Just like you are trying to sell your expertise, you should invest in others who have the expertise you need. Of course most entrepreneurs like to do as much as they can on their own, but there are limits. Great entrepreneurs and consultants know when to trust other experts. I now have even trivial contracts reviewed by a lawyer, use an accountant, and pay for specific industry expertise to streamline my own learning. One recommendation – as a consultant you don’t always have to pay for expertise, you can barter your experience for someone else’s. This is super common and you can get a lot of knowledge and services this way. I recently offered the owner of the dog walking company I use SEO help in exchange for free dog walks. Consulting is all about the exchanging value.
6. Manage your expenses well and take the right deductions.
The best part about starting a consulting business is that you can deduct your business expenses on your taxes, but one of the worst parts is figuring out how. For some reason a lot people I have met who started their own consulting businesses have gotten into some financial troubles with their businesses. Often they simply didn’t pay enough taxes, didn’t pay their quarterly taxes, or they over calculated their tax deductions. I don’t blame them – most of the information I’ve seen on how you should manage your consulting side business finances is super confusing. A word of advice – hire an expert. A good local tax accountant who specializes in working with consultants can be your greatest asset. It’s worth shopping around for one – they will likely know the rules, the loopholes, and even share strategies for better expense management. I personally use Quicken Online and their mobile app to track my consulting expenses and then use an accountant quarterly to estimate my taxes.
7. Learn when to say no and prioritize opportunities. Also learn when to chill out. It will only make you more successful and happy.
Once I started building my consulting business I tried to get as many clients as I could and I tried to make every client as happy as possible. I never said no and this was a mistake.After a few years I burnt out hard. Clients are tough and since they are paying you for your time and expertise, they will try hard to get as much for their money as they can. Lean how to set boundaries with your clients – the “customer” is not always right and your clients can even be unhappy sometimes. They likely will respect and appreciate the boundaries you set, as long as you are adding the value they paid you to add. Remember as a consultant you are selling your time and every extra hour you spend on one client, you can’t spend on something else.
I have so much fun building and growing my businesses, but I have to step away from them to recharge even if it means having to say no to clients or great opportunities. As you build what I hope is a successful and profitable consulting business, I encourage you to remember that there is more to life than making money. Just as you hustle hard to get paid as much as you can for your time, it’s also important to give away that time to the people and causes that matter most to you. There have been many academic studies and articles show that people who take time off are more successful than those who don’t. Learn how to say no and watch your business grow. I wish you the best of luck in building a successful consulting business. Let me know how I can help either in the comments, via email, or @millennialmoney.
Join the Millennial Money Crew of 5,000+
GET NEW POSTS & EXCLUSIVE CONTENT