If I Had to Start My Consulting Business From Scratch, Here’s What I’d Do
If you could ask a fortune teller to look ten years into the future at your business and ask what you could have done in the beginning to more quickly achieve success, would you do it?
For more than a decade I’ve owned a consulting company, and people have asked me how they can make their fortune in consulting. They want to know the secrets to success.
My business made it through the recession when companies were not building anything, particularly high-end spas, and therefore didn’t need my help. My specialty? Development of luxury resort spas. No kidding.
For years there was more work than we could handle. Seemingly overnight, that went down to zero. I persisted.
They all wanted to know: Would I share what I knew? What priceless bits of information have I learned? Could I shorten the learning curve and teach them how to start their businesses?
Those conversations made me think about what I would do if I had to start my consulting business again from scratch.
Though the list is potentially long and we could talk for hours and days about this (thus potentially disqualifying me from my dream of giving an 18 minute TED Talk), here are ten important things I would do.
Just for fun, when you get to #7 picture me as a skinny pirate.
#1 Learn about the business of consulting.
My background was in spa and hotel management, training and vendor sales. I assumed that the skills I gained from those jobs would directly translate into a consulting job so similar that I didn’t need to learn how to do it. Hah, wrong.
Being a consultant is very different from previous jobs where I excelled. Nobody told me this before I got started. It was my fault for not asking.
Continuously add to your expertise. Never stop finding great educational opportunities. Know what it is that you know well and where you lack in information. Add to your areas of specialization. Always look for ways to better serve your clients.
#2 Diversify your services and clients.
Drumroll please…diversify is the number one lesson I learned when there were zero development projects and therefore zero potential clients. Many consultants couldn’t financially endure the period when development stopped. I needed to pivot fast to survive.
You know the saying “don’t put all your eggs in one basket”? That’s so true. If your one source of income goes away, you’re done. If you diversify, you’re better protected.
A financial advisor will tell you how important it is to have multiple streams of income. (If you’re already financially independent for life you can skip this section.)
Quickly I assessed all the services to offer that provides value and for which I could get paid. Surely I knew how to do more than one thing. If you only know how to do one thing then refer back to #1.
I understood vendor sales and training, so I created services to provide to product companies. For the day spas that were struggling and committed to staying in business, I did on-site audits with step-by-step plans to improve operations and profitability. I got paid to edit textbooks and speak at conferences. I led a nationwide product launch and earned a sales commission.
Get creative. It’s possible to thrive, and all the work adds up.
#3 Identify your ideal client.
Get very clear about who your most desirable customers are, where they hang out, how to get in touch with them, and what their pain points are. What is their most pressing problem? Can you help them solve it?
They must value what you provide and be willing to pay fairly.
You can’t tell yourself that you’ll work with anybody who needs help. Realistically you won’t do so even when you’re building your business and have bills to pay. Again, be clear who you want your clients to be.
Determine what your ideal client’s needs are and match your services offered specifically to those needs. Otherwise, you risk creating a lot of services that people potentially are not willing to pay for, or you’ll attract people you don’t want to work with.
#4 Become excellent at prospective client interviews.
Lots of people need help. Be clear about that from the beginning. There is no shortage regarding need. You don’t have the time or resources to help everyone or talk at length to all prospects. Be helpful but protect your time.
What I’ve learned is that people needing help and people who see the value in paying for your time and services are two completely different things.
Have a system to quickly determine who qualified prospects are versus those who just want to talk about their dream, get free advice, and can’t get off the phone fast enough when you start to discuss fees.
Very important. Determine whether prospects are going to solve problems themselves or are looking for the cheapest solution or see the value in paying you what you’re worth to help them.
Learn which questions to ask to see if you have the ability to assist them and if they will accept advice. Listen to decipher what their needs are which may be different than what they think they are.
Be able to explain the services they need in simple terms. Most prospects don’t know what their exact needs are or how to meet their goals.
You have to guide them through this process without them feeling like they have lost control. If they’re coming to you for help, they already feel some sense of vulnerability.
Hang on because this isn’t touchy feel good; you must find out early on if a prospect has access to the financial resources to get through their entire project and beyond. This is critical. Find out where the money is coming from and when will they have access to it. Determine if they can pay you and everyone else involved including staff payroll. No money equals no project.
If they do not have adequate financial resources, do yourself and them a favor and do not encourage them to hire you and spend money they don’t have. Be responsible and do the right thing.
#5 Be able to answer the following questions without hesitation.
First of all, I’m surprised by how little time people spend interviewing consultants. Perhaps they don’t know what questions to ask. I can speculate, but I honestly don’t have the answer to this.
Everyone, without fail, wants to know about the money part. What’s it going to cost?
Be well prepared with answers. Don’t think avoiding answering is part of your strategy because that’s annoying. If you stumble through your answers, you’ll sound unprepared and unprofessional.
- How much do you charge?
- How do you charge? By the hour or project?
- What do you think my project is going to cost?
- Will you give a discount, negotiate fees or accept a credit card?
- How long will it take for you to complete the work?
- Can you give me a proposal and when can I expect to receive it?
You won’t be able to answer some of these questions without more information. You can’t determine cost without knowing the scope of work and the time involved. Needing more information may be the honest answer to some questions.
#6 This is a sales job.
Understand that the job is as much about sales as it is about doing the actual work. If you don’t like sales and networking or think you’re not good at it or are not confident in your abilities, then this will be a barrier to success. It’s not impossible, but you’ll have extra obstacles to go through.
You’ll need to be able to talk with strangers, gain their trust, and convince them that they should spend money on your services even though you provide no guarantee of a successful outcome. How do you feel about that?
You have to go out and get the work first before you can do it and get paid. There is no payment for all the hours spent “drumming up business.” Frankly, in the start up phase, most of your time will be unpaid.
This may be surprising if you’ve been an employee and you’re used to plenty of work given to you and a paycheck arriving like clockwork. If you have no experience being on the giving end of the sales process, then this new realization can be startling.
People hire and work with people they like and trust. It’s that simple. Being an engaged listener and having empathy for their needs and situation plays a big part in this.
Having a genuine interest and a personality style that connects is more critical than a lengthy bio and impressive client list.
It’s important to understand that at times the sales and decision-making process is emotionally driven rather than logical. Let that sink in if you base your sales strategy solely on logic.
#7 Be Lean and Mean.
Be a skinny pirate. Arrr Arrr. Just kidding. Set up the business to be “lean and mean” was the best advice I received while transitioning from working with a consulting company to going out on my own in 2008.
It was an architect who told me to be efficient and prudent with expenses. Specifically, don’t pay for a fancy office, lots of expensive equipment or furniture, and plenty of staff payroll. I’ll never forget those wise words. It has saved my company more than once.
I got a virtual office address and worked from home, bought a mid-priced laptop, and business cards. I hired a website developer and someone to legally create the corporation. I paid an attorney to write a Consulting Agreement contract that I’ve used ever since. A professional photographer provided a great headshot that lasted many years.
In 2009 I saw companies and competitors lay off employees or go out of business. For years they spent money as if sales would always be booming. Some of the newly unemployed or vastly underemployed were my friends.
Even during the most prosperous years of consulting earning six figures, I’ve run my business lean and mean. Arrr Arrr.
#8 Have a realistic financial plan and budget.
Surely there are experts with this advice. The problem is that I never heard it even though I would end up saying those words to every client. I wouldn’t have known where to start anyway. I didn’t know what to expect for revenue. Being a financial whiz at work didn’t translate to my own financial plan.
To become a consultant, I gave up the stability of many years of being employed by companies. Having worked my way up to a higher salary with each move, I was well compensated and didn’t worry about paying bills. I had a stable paycheck and great benefits.
Life dramatically changed when I became an entrepreneur. I’m not complaining and wouldn’t go back and change it. Almost every change was positive. However, if I were starting from scratch, I’d do it with a lot more money saved to cover months when there was little or no income.
When you’re working long and hard, and money is going out but not coming in as quickly, it gets very stressful. I can’t highlight that enough.
How many months can you survive while you’re building the business but not being compensated? Even if you’re working long hours and very diligently, at what point will you run out of money? Even now, the thought of that causes me to lose my breath.
While it seems common sense now, it didn’t occur to me in the beginning that there is a time lag between when you get a new client and when you get paid. You’re busy completing the work yet depending on how invoicing goes and how quickly it gets paid (or not) there still could be months with no income.
Start your business with enough money saved to cover at least six to twelve months of personal and business expenses. Believe me, that time and money will fly by very fast! Save your money when you’re doing well.
Have a realistic budget and know exactly how much money you need every month both in income and for expenses. I can’t emphasize that enough. The most stressful part of consulting is that you can’t count on steady work regardless of how good you are.
Do all you can to prevent getting caught off guard when it comes to your finances.
#9 Protect your time and energy.
Think about why you want to be a consultant. Many people would say that they have a desire to help people or to use their knowledge in a new (less stressful, less corporate, less time consuming, more financially lucrative, let’s be honest here) job. Fair enough, that’s what I’ve heard the most from those wanting to transition into consulting.
What’s the issue? Being helpful and using your knowledge superpowers for good is enticing. It just feels so wonderful. Helping many people is why you got into this in the first place. Right?
But, it takes a lot of time and energy. Why? Because there are countless people, businesses, associations, and groups in need with endless opportunities for you to share all your wonderfulness. You have great intentions. It’s easy to say yes too often.
We can’t create more time. Nobody, no matter how rich or famous can do that. We’re all equal. Hallelujah! We can outsource tasks but can’t add more hours to the day. Many people already lead energy-zapped exhausted lives.
Listen up! Be insanely protective of your time and energy. You can only do so much. Why? See the previous paragraph. You’ll create better work, have healthier relationships and be less stressed when you’re rested and have a life.
Sometimes that means saying no. By the way, I’m speaking to myself here. It’s something I’ve struggled with for a very long time.
If you’ve ever said, “I don’t have enough time,” then I suggest going through the daily exercise of mapping out how you’re spending your time.
I use a weekly calendar with the days planned in 30-minute increments. Log everything you do for the week. When you realize where your time is going, you arm yourself with the ability to make adjustments.
Time blocking is the tool I use the most to help with completing goals and being time efficient. Look it up. I swear by it. Wish I would have known about it years ago.
#10 Work with a coach, mentor or accountability partner.
Working alone can be lonely especially if you’re accustomed to having coworkers to brainstorm and share work with. There are days when you may talk to pets and whomever you’re watching on TV more than humans. Many years ago my sister pointed out that I talk to myself a lot. I had no idea.
Without a boss to report to, performance evaluations and bonuses to strive for, holding yourself accountable with time spent, goal setting and meeting deadlines can be challenging.
Find someone you trust who can regularly help you stick to your plans and goals. Both people committing to a consistent schedule needs to be a priority.
Once a month calls work great!
For discussion during the calls:
- This is what I’m working on right now.
- These are my goals and deadlines.
- This is what I’m committed to completing before our next call.
- These are my challenges and how I’m addressing them.
- I need advice or resources for these things (add your list here).
- Hold me accountable to these things (add your list here) for our next call.
I’m an entrepreneur. It’s hard work. It’s more stressful than I expected. Most of my clients have been amazing to work with. But not all of them.
I did get what I asked for though which was to continue to share my knowledge with people in an industry that I love without corporate politics and countless wasted hours of useless meetings.
Before starting consulting, I expected that my personal and work life would be much happier and infinitely more productive without those politics and meetings. Without a doubt, I was right. I don’t miss the corporate world.
For all the glorious benefits (like being in control of my schedule, no traffic or commute to work, and receiving delightful boxes of free of spa products) that it brings, being an entrepreneur is not easy or for the faint-hearted. It can be unpredictable and scary. Still, I wouldn’t trade it. I love the freedom too much.
If I had to start my consulting business from scratch, I’d definitely go for it. It’s a thrilling ride. Choose clients wisely, and you’ll enjoy most of your days. Many clients become friends.
Hang in there when the going gets tough because at some point it will. Save your money. Remember why you decided to do it in the first place.
Enjoy the freedom it brings. Having your own consulting business allows you to spend time with those most important to you and do the things you love. You can’t put a price on that.
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