Business Passive

5 Tips for Building a Killer Consulting Business

In some ways, consulting can sound like one of the easiest businesses to start. You presumably already have the expertise and the industry contacts… all you have to do is line up some gigs, right?

There’s some truth to that, but of course it’s never that easy. Here are five tips I’ve learned about starting up a consulting business.

1. Find a way to exploit specific knowledge gaps.

Your prospective clients likely aren’t lacking smart or opinionated talent–if they were, they would want to hire a full-time employee, not a consultant. Rather, they seek outside expertise because they’re exploring unfamiliar problems, markets, or methodologies. They need objective insight that their in-house people can’t provide. That’s where you come in.

Successful consultants fill pressing knowledge gaps. Case in point: My firm, which helps customers create value and cultivate a competitive advantage on the back of emerging tech markets and trends. My clients don’t hire me to provide raw data on technology; they have plenty of that. Rather, they need help translating it into actionable strategies, creating cutting-edge products and services, or adapting businesses and brands to new spaces. So that’s the niche I try to fill.

2. Focus on relationships, not revenues.

This is a business based on relationships. The wise consultant always listens before she speaks. Never talk costs before first discussing your clients’ specific needs and objectives. For reasons both practical and political, few businesses actively look to hire consultants on a regular or recurring basis, so knock on many doors, make a point of keeping in running contact with connections, and above all else, maintain good rapport through your work. Reputation is everything, and it’s vital to stay on clients’ radars.

Remember, opportunities typically come in the wake of new ventures or sudden, pressing issues. That’s when you want to spring to mind as the perfect person to help. You must cultivate personal networks and strive for face-to-face interaction at all costs.

3. Sell results, not services.

Price by the hour and you’ll be viewed as a commodity. Instead, keep clients laser-focused on the lasting value you create, and bill based on scope of work and end results. Never discuss whether your firm will be used, but rather how, and provide a range of possible cost scenarios and value-adds, starting with your baseline requirements.

4. Employ a flexible structure.

Some consulting businesses gross millions from ongoing monthly retainers. Recurring retainers make sense when the consultant is providing ongoing services (e.g., PR or marketing support, which is more of an external staffing function than consulting). But if you’ve done your job right, you’ve solved the problem–so be ready to move on.

Business will wax and wane. And because no two projects are alike, you must remain flexible by cultivating a freelance support network. Use contractors from varied industries and disciplines who can introduce additional expertise and perspective. This approach also lets you reduce overhead, minimize risk, and better staff projects to meet clients’ needs.

5. Always be closing.

To succeed as a consultant, as much time must be devoted to acquiring new business as performing assigned tasks. I’ve found that the average time from initial contact to engagement can sit between six to 36 weeks, and close rates hover between 10 percent and 20 percent. Any downtime should be reinvested into business development.

With thousands of established, independent, and home-based businesses now vying for visibility, partners are ultimately buying into you and your vision as much as the actual services. Presenting a mix of case studies, testimonials, and client showcases can also prove a powerful business driver–prospective employers want to see what you’ve done, so they know what you’re capable of doing.

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