Offering the best of both worlds, the role of a consultant helps you keep one foot in the corporate world while the other is free to roam, offering flexibility, challenge, and balance for your career and life. With the ongoing evolution of business, consultants are in demand more than ever across all segments, including strategy, technology, marketing and employee relations.
If you’re considering a career as a consultant, consider this a free consultation into what it involves, how to set up a business and attract clientele, best practices for project and time management, and how to set rates and establish cash flow. Just like the role of a consultant, this comprehensive guide is intended to give you the resources to apply to your personal situation to make an informed decision.
Consultants are experts. They use their expertise to help others build the businesses and the lives that they want to create. They may have an insatiable curiosity about an industry and want to share what they’ve discovered. Or they’ve already got their hands dirty, learned on the job, and want to share their experience.
We can all benefit from expert, outside opinion, someone who can see the things we miss and provide specialist analysis that we can’t create ourselves.
Every business is unique. Every life has its own special issues. The closer the consultant’s expertise to the client’s goals, the more willing they’ll be to buy that expertise—and the more they’ll agree to pay for it.
That’s why choosing a niche can be such a powerful strategy for a consultant: a fintech consultant or a creative consultant rather than a general business consultant.
A niche market will be smaller but there will be less competition and a greater willingness to buy.
Consultants sell valuable knowledge built up over years of study and experience. The effects of that knowledge can be millions of dollars in additional revenues, the turnaround of a struggling business, or the launch of a successful new product line.
Consultants make a difference.
Pricing that difference can be challenging. Some consultancies charge by the hour and others by milestone. Fixed fees are also common. How much to charge depends not just on the amount of work involved in a project but also on the value of the result. We’ll explain how to put a price on your expertise.
A consultant is an expert in their chosen field. But every field has more than one expert. What makes a client choose one consultant over another? How can a company executive know which consultant will give them exactly the advice they need?
Branding matters for consultants as much as it matters for any other kind of business.
Consultants need to show the unique way they work, the special results they can produce, or the distinctive knowledge that they offer. Find out how to make your consulting skills stand out.
Are you experienced, talented, and have a unique skillset that any organization would love to acquire? Would you rather work for yourself than someone else? Then you may want to consider becoming a consultant.
Fortunately, you’re not alone.
Consulting is a business that’s on the rise for both clients and the self-employed. In fact, research conducted by Source Information Services discovered that 42% of clients surveyed planned to bring in more consultants in the near future.
If being a consultant is starting to look more and more like a promising career path, then here is a guide to help you get started.
Marketing and promoting your services will only take you so far. When you don’t have clients approaching you about work, you will have to take the initiative to get new gigs on your own. Thankfully, there a number of websites available where consultants can find work.
While the websites listed above are great places to find work, consultants should also look at their established network. Whether it’s friends, family, college roommates, former colleagues, or your accountant, one of the easiest, and most effective, ways to find work is using your current network to find clients.
Also, don’t forget to ask your previous clients for referrals. Word of mouth will be one of the best ways to attract new customers.
Congratulations! You just landed a no client. What are you going to do to make sure that you retain their services?
Neil Patel, who used to consulting prior to finding success with Quicksprout, reminds us that consulting has a high churn rate. But, if you follow his advice, you’ll increase your chances of keeping them for longer.
Another tip from Neil is one that you’ve most likely heard numerous times before; you have to dress to impress. If you walk into a meeting wearing a pair of worn-out jeans and a hoodie, do you honestly think that the client is willing to hire you? Even if you are the most knowledgeable consultant that is being considered, you’ll probably miss out if the other consultants are wearing suits. Why? Because they come across as a professional who knows what they are talking about and should be taken seriously.
Neil states that once he began to dress to impress, he was able to charge more money, have potential clients listen to him, and even having individuals come up to him during conferences.
While you are getting paid for your services, you always have to remember that you were hired because you possess a set of skills that the client does not. In other words, don’t let a client tell you how to do your job. That doesn’t mean that you can do whatever you want, it means that you have a responsibility to what’s best for the client. But, you’re the expert and they’re not. To keep them satisfied, make sure that you keep them update with your progress and show them reports.
There are other instances of when you may have to fire a client. For example, you may have a client that you get along with personally, but they never pay you on time. Even after you’ve brought this to their attention, they continue missing the due date. If you don’t want to do damage to your cash flow, you’re going to have let that client go and move on to someone who does pay you on-time.
To avoid potential headache clients, ask any in your network if they have worked with them in the past. Or, just Google their name or business and see what comes up. Does their website look fishy? Are there complaints about them of message boards? Did they leave an inappropriate Facebook status bad mouthing their ex? Look for any red flags prior to working with a client – also do the same on your end.
No matter if you have the same candidate for years, have had to let them go, or can’t accept a project because you don’t have the time or experience, you should always have the best interest of the client in mind. While you may have have disagreements or face roadblocks, you have to be a professional. If you fire a client, refer them to another consultant.
One of the most difficult tasks that independent consultants must handle is managing their time and projects. Besides being disciplined because you’re working from home and control your schedule, you’re also at the mercy of customers. This can be a problem because your clients don’t care how much work. They care that you get their project done when they need it. And, because you don’t want to run into a situation where work dries up, you keep taking on more projects.
Because you’re juggling multiple clients, projects, and deadlines, how can you manage everything and still be productive?
For starters, you may have to decide whether or not you want to live that lifestyle. If you don’t mind working that much, you can take on as many clients as you like. If you do run into any roadblocks that prevents you from completing a project, be honest with the client and explain the situation.
To help make you more productive and manage your time more efficiently, you can also try using some of these powerful project management tools:
This is one of the most popular project management and collaboration tools available where you can assign tasks, exchange ideas, and manage deadlines.
An easy-to-use project management tool that allows you to assign due dates, create checklists, upload files, and create individual boards for either clients or team members.
This popular note-taking app can used to keep your career, and personal life, in order by creating tasks, taking notes, and capturing web pages. You can even turn your notes into slides with Evernote’s Present feature.
This free app was created with freelancers in mind. You can use it to create contacts with project info, manage tasks, track your progress, and upload files.
This project management can assist consultants because it focuses on scheduling. In fact, it will automatically create schedules based on project priorities. It also comes with time and task tracking.
You can use Podio to stay organized by managing and discussing specific tasks on a single page. It also has a simple drag-and-drop interface and can be customized to suit your needs.
Real-time project management tool that allows you to break goals into tasks, instantly communicate with team members, and transform emails into tasks. Wrike integrates with Google Drive, Word, and Excel.
This tool provides Gantt charts, client progress reports, visual milestones, the ability to automate recurring tasks, daily outlooks, and the power to assign tasks.
You can use this tool to collaborate with team members or clients in real-time through in-line commenting, Gantt charts, and email notifications. It also integrates with Google Drive and Dropbox.
There’s a handy time tracking tool if you need to track the time you spent on a project, as well as reports that describe tasks and calander summary of upcoming tasks. Due.com also integrates with Basecamp.
If you ever do get overwhelmed, you may want to consider outsourcing some work. You can use some of those same freelancing sites, like Upwork, to find an assistant or another consultant looking for work to help lessen the burden.
One of the most common, and important, questions that consultants ask is how much money do they make? If you have a salaried position, a consultant could make anywhere between $28,000 to $131,000 – depending on what area of consulting you focus on. If you’re out on your own, you the short answer, according to Stephen J. Freidl, would be a mix of “whatever the market will bear” and “how busy you wish to be.” However, it’s not uncommon for consultants to work by the hour, on a retainer, or by fixed-project rates.
Before you decide on a rate, it wouldn’t hurt to do a little research and find out what other consultants are charging. The easiest way to go about this is seeing if they have prices listed on their website or asking for a brochure. You could even ask clients or fellow consultants at industry events what the normal rate is for consultants or take a like at sites like Careers-in-Business. This should help you establish a rate that will be competitive. If you’re just starting out though you may want to consider having lower rates until you have some more experience.
Another task to accomplish before you set your fees is to list all of your expenses. This will also give you a better understanding of how much money you’ll have to charge so that you can pay all of your bills and have a little something leftover. The last thing that you want is to have a rate so low that you can’t pay for overhead like insurance, rent, utilities, or office supplies. For example, if your total expenses are $3,500 per month, then at least you know that’s the minimum amount you have to bring in.
After you’ve checked out the marketplace and taken a closer look at your expenses, it’s time to settle on a hourly, retainer, or project rate for your services.
Hourly fees can get a bit tricky. Some are too high while others are too low. If it’s too high, clients won’t be able to afford you. If it’s too low, you won’t be taken seriously.
Since you already listed your expenses, you could add that and your salary together (your salary could what you previously earned or what your competitors are charging), multiple that figure by a 10% or 20% profit margin, and divide that figure by your billable hours to determine your hourly rate. It doesn’t really matter how you determine your hourly rate. Just know it’s pretty normal for consultants to double that figure so that they can cover their overhead.
Remember, if your rate is higher than others, the clients who hire you except you to be worth it.
This type of payment is a monthly fee. It averages around $3,500 per month, that you and the client agree on. The catch? You have to be on-call for the client for a specified amount of time each month. This can be rolled over into the following. This is a common form of payment for consultants since it gives clients access the consultants whenever needed. And, consultants like this form of payment since it is a steady stream of monthly income.
The only drawback is that you’ll most likely have a clause in your contract that prevents you from taking on additional jobs from competitors.
If you’re just starting out, project rates may be difficult to determine at first since you may not know how long projects take and how much your hourly rate is. Once you do figure this figure out, you can add 10% to your monthly rate. Let’s say you do decide to go with a project rate. Just know that this is a fixed amount that you’ll be paid for a specified amount of time, usually monthly.
At some point you will have to raise your rates. This can be uncomfortable if you have a solid rapport with current customers. But, if you’re great at your job, you customers will realize that you’re in demand. If you’re in demand, you have to raise your rates. When you do raise your rates, give your customers notice, at least one billing cycle, and be modest.
Also remember that you can have different rates for different customers. For example, your longstanding customers, should be charged lower rates than the client you just acquired last week.
After you have set your rates and have clients lined up, it’s time for you to get paid for your consulting services by sending your clients an invoice. An invoice is important. It’s how you’re going to paid what you’re owed by a client for the work that you just completed.
While invoices can vary from person to person and industry to industry, they typically include:
Even if your invoices contain the components listed above, you’ll want to create a more professional invoice that will help you stand out from the other invoices piling up on your client’s desk. And, that will probably improve your chances of getting on time.
Creating professional invoices is just one part of getting paid for your services. You also have to ensure that you’ll get paid each and every time that an invoice due date approaches.
There are two final points that you should keep in mind when it comes to invoicing. Number one; don’t continue working for a client if they don’t pay you. You could use that time working for a client who does pay their bill. Number two; if there is any intellectual properties involved, such as copy or software, that will belong to the client. However, you should hold onto the property until they have the invoice in full.
Despite all of the planning and experience, there will be times when things will go wrong. This is especially true if you’re just starting out as a consultant. If that’s the case, you may want to ask for help and consider finding a mentor.
A mentor is someone who has the experience to know what has worked and what hasn’t for their consulting business. Because of this, you can exchange ideas with a mentor, along with receiving advice, feedback, and an objective point of view.
You can find mentors by asking your professional network, reaching out to an industry leader, or even hiring a mentor – which is pretty much what you, as an consultant.
Of course, mentors aren’t the only individuals you may have to seek advice from. When starting out you may need to seek the advice from accountants and attorneys if you need financial or legal assistance. This will ensure that you can get your business properly established and maintained, along without having to worrying about being penalized.
In short, you’re not an expert at everything, and asking for help can help your career. If you aren’t familiar with something that is outside of your field don’t hesitate to seek the advice from an expert.
If you have any further questions regarding consulting, you should turn to the resources listed below:
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