Small Business 101: Should You Become a Consultant?

For many professionals looking for a change or those with specialized expertise, becoming a consultant is a popular career path. Advantages of hanging out your shingle as a consultant are low start-up costs and capital requirements. Before you start a consulting business, be sure you are cut out for it.

Be Realistic about the Work. For many people, the appeal of becoming a consultant is being your own boss, setting your own hours and deciding who to work for and when. While all of that looks good on paper, in reality, if you are going to make your consulting business a success, you will have many bosses (clients); the projects you take on may have deadlines requiring long hours, even when you'd rather not be working; and you may, to keep the wolf from the door, have to accept business you'd prefer not to.

Evaluate Your Skill Set. To be an effective consultant not only must you have expertise in your field, but you need a myriad of other skills, including the ability to listen well, to analyze and evaluate business problems, to do research and find workable and acceptable solutions to those problems, to clearly communicate the solutions, and to assist in their implementation. Self confidence is a necessity, as is the willingness to sometimes tell clients what they don't want to hear. You also need to be a capable salesman (see next point).

Be Ready to Sell Yourself. At least until you have established a reputation in your field of consulting, you may have to spend more time than you'd like bringing in business. Therefore, if you are not comfortable marketing yourself and your expertise aggressively, consulting may not be for you. Traditional advertising on the internet, in newspapers and in industry publications certainly can be one of your marketing tools, but networking and one-on-one contacts probably will be your best marketing strategies, since consulting is a personal business in which rapport between you and the client can be critical. Have business cards with you at all times and spread the word to friends, relatives, former colleagues, new acquaintances, your accountant, your attorney, etc. about your new consulting business and your interest in referrals. Also, get active in the local business community and with business groups whose members might be potential clients.

Get to Know the Other Consultants. Even if they compete with your new business, other consultants can be a valuable resource, so go out of your way to introduce yourself. Over time, friendly relations with other consultants may become mutually beneficial, since they may refer projects that they don't have the time or expertise for to you and you may be able to return the favor. Other consultants also may be an excellent source of pricing information, which can help you decide how best to value your services.

Be Prepared for the Nitty Gritty of Running a Business. Even a simple one-man consulting business requires organization and attention to detail. You will need to decide what business structure to adopt. In addition, initially, you may have to handle all administrative tasks, including keeping the books, sending out invoices, managing accounts receivable, paying monthly expenses, paying yourself, handling taxes and so on. While none of this is terribly difficult, it can be time consuming, demanding and not much fun.

Don't overlook licensing or regulatory issues. Depending on your industry, a license or some other form of accreditation may be required to act as a consultant or advisor. Even if you aren't required to have accreditation, it may be a competitive necessity, since your resume will be an important marketing tool initially.

Sources:

www.consultantjournal.com, Becoming a Consultant FAQ

John Riddle, http://www.businessknowhow.com/StartUp/consultant.htm, Start a Consulting Business

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