* What certifications and special licensing will I need? Depending upon your profession, you may need special certification or a special license before you can begin operating as a consultant. For example, fund-raising consultants don’t need special certification, although you can become certified through the National Society of Fund Raising Executives. And in some states, you may need to register as a professional fund-raising consultant before starting your business.
* Am I qualified to become a consultant? Before you hang out your shingle and hope that clients begin beating your door down to hire you, make sure you have the qualifications necessary to get the job done. If you want to be a computer consultant, for example, make sure you are up to date in the knowledge department with all the trends and changes in the computer industry.
* Am I organized enough to become a consultant? Do I like to plan my day? Am I an expert when it comes to time management? You should have answered “yes” to all three of those questions!
* Do I like to network? Networking is critical to the success of any type of consultant today. Begin building your network of contacts immediately.
* Have I set long-term and short-term goals? And do they allow for me to become a consultant? If your goals do not match up with the time and energy it takes to open and successfully build a consulting business, then reconsider before making any move in this direction!
The dictionary defines a consultant as “an expert in a particular field who works as an advisor either to a company or to another individual.” Sounds pretty vague, doesn’t it? But unless you’ve been in a coma for the past decade, you probably have a good idea what a consultant is.
Businesses certainly understand what consultants are. In 1997 U.S. businesses spent just over $12 billion on consulting.
A consultant’s job is to consult. Nothing more, nothing less. It’s that simple. There’s no magic formula or secret that makes one consultant more successful than another one.
But what separates a good consultant from a bad consultant is a passion and drive for excellence. And–oh yes–a good consultant should be knowledgeable about the subject he or she is consulting in. That does make a difference.
You see, in this day and age, anyone can be a consultant. All you need to discover is what your particular gift is. For example, are you very comfortable working around computers? Do you keep up with the latest software and hardware information, which seems to be changing almost daily? And are you able to take that knowledge you have gained and turn it into a resource that someone would be willing to pay money for? Then you would have no trouble working as a computer consultant.
Or are you an expert in the fund-raising field? Maybe you have worked for nonprofit agencies in the field of fund-raising, marketing, public relations or sales, and over the years you have discovered how to raise money. As someone who has turned a decade of fund-raising successes into a lucrative consulting business, I can tell you that fund-raising consulting is indeed a growing industry.
Your idea may be the best one you have ever thought of, but there needs to be a market for your ideas. Someone must be willing and able to pay you for your expert advice.
In other words, who are your potential clients? Will you be marketing your consulting services to large corporations? Or will you offer a specialty that would only be of interest to smaller businesses? Perhaps your services will be sought after by nonprofit organizations. Whatever the case, before you go forward, make sure you spend time preparing both a business plan and a marketing plan. You won’t be disappointed with the results–especially when clients begin paying you!
Your consulting business will probably not require a large capital investment at first. In fact, if you are able to, you should consider operating out of your home. (Certain deed restrictions and local laws may prohibit you from doing this; check with an attorney before you proceed.)
There are many advantages to having a home office. Among them are:
* Low overhead expenses. You don’t have to worry about paying rent or utilities for an office; you will appreciate this feature until you establish a regular client base.
* Flexibility. There is little doubt that operating as a consultant at home gives you a great deal of flexibility. You can set your own hours and take time off as you need it.
* No rush-hour nightmares. For anyone who has had to commute to and from a job during rush hour, this will be a welcome change of pace.
* Your home office space will most likely be tax-deductible. The IRS has relaxed the rules for people who work at home, but check with your account or income tax preparer to see if you qualify for this deduction.
Employees
When you first open the doors to your consulting practice, you may be able to handle all the operations by yourself. But as your consulting business begins to grow, you may need help handling administrative details or help completing the actual consulting assignments.
You need to make some important decisions. For example, do you have the time it will take to make labels and insert your brochure into 1,000 envelopes? Can you afford to spend time doing administrative tasks when you could be using that time effectively marketing your services–and signing up new clients?
There are many options when it comes time to decide if you need help with your paperwork. For example, a quick look through the Yellow Pages will reveal a number of small secretarial support firms. The rates will depend on a variety of factors, including how large or small an organization it is and what types of services it provides.
While it will pay you to shop around for these types of services, don’t select a secretarial service just because it happens to have the lowest prices in town. Instead, ask for references, preferably from other consultants who have used their services, or from small-business owners. A good, reliable support service is worth the price in the long run.
There will come a time, however, when you may find it more cost-effective to hire someone to work in the office with you. Hiring a good administrative support person can sometimes mean the difference between success and failure–between obtaining more clients or constantly losing clients. There are some benefits to having someone in the office with you. Among them are:
* You save time and money. By having someone concentrate on the more routine tasks (opening the mail, filing, answering phones, etc.) you can focus all your efforts on recruiting new clients. Think about this: Would you want to lose a $500-a-day client because you were too cheap to hire someone to stuff your brochures into envelopes?
* You don’t worry about being out of the office. If you are a one-person operation, it’s hard to be out on the road marketing your services if you’re worried about clients calling–and only getting your answering machine.
* You have someone to offer another perspective. Sometimes it can be pretty lonely trying to do everything yourself. Having someone around the office during the day who can offer another perspective can be worthwhile.
Now that you have made the decision to open your consulting business, you need to get serious about how much money you will charge your clients. If you charge too little, you won’t succeed in business. If you charge too much, you won’t get any clients. So how do you find that middle ground that seems fair to everyone involved? One way to help you decide how much to charge is to find out what the competition’s rates are. A simple telephone call, asking for their brochure and rates, should do the trick. Then set your rates so that you are competitive with everyone else in the community.
Before setting your fees, make sure you have listed all of your expenses. There is nothing worse than setting your rates, having your client pay you on time and then finding out you failed to include several expenses that materialized. This brings up an important point to remember in every job you take from a client: Include a “miscellaneous” line item in your fee proposal. But don’t pad the miscellaneous figure to make additional income.
Most clients will understand that in every project, there will no doubt be additional expenses. Just be sure everyone knows upfront an approximate figure for those expenses.
Before you set your rates, find out what other consultants in your community are charging for their services. Sometimes a simple telephone call to another consultant’s office asking what their fees are will give you the answers you need. Or you may have to have a friend call and ask for their brochure, or any additional information they can collect regarding fees and pricing. If you live in a small town and there are no other consultants in your field, then rejoice and be glad, but set your fees at a reasonable level!
When setting your rates, you have several options, including hourly rates, project fees and working on a retainer basis. Let’s examine each one closely.
Hourly Fees
You need to tread carefully when setting hourly fees, because two things could happen: A) Your hourly rate is so high that no one could ever afford you (therefore no client will ever knock on your door). B) Your hourly rate is so low that no one will take you seriously.
Keep one important rule in mind when establishing your fee, no matter which structure you decide on: The more money people pay for a product or service, the more they expect to get for their money. In other words, if a client agrees to your hourly rate of $400, then you had better give $400 worth of service to that client every hour you work for them.
Some clients prefer to be billed on an hourly basis, while others hate the idea of paying someone what they perceive to be too much per hour. Those clients usually prefer to pay per project.
Project Rates
When working on a project rate basis, a consultant normally gets a fixed amount of money for a predetermined period of time. A few of my fund-raising clients actually preferred to be charged this way, so it wasn’t unusual for me to charge $36,000 for a one-year project in which I consulted them on how they could raise money. Because of the amount of money involved, most agencies preferred to be billed on a monthly basis. This worked out fine until I realized that many agencies were late paying their monthly bills.
Because of this, I decided that all future clients who wished to be billed on a monthly basis would pay the first-month fee and the last-month fee at the signing of the contract, which meant that if the agreed-upon amount of the project was $36,000, to be paid on a monthly basis, I received a check in the amount of $6,000 before I began any work ($3,000 for the first month’s fee and $3,000 for the last month’s fee).
Retainer Basis
Working on a retainer basis gives you a set monthly fee in which you agree to be available for work for an agreed-upon number of hours for your client. While in the ideal world you would have a dozen or so clients who hire you and pay you a hefty sum each month (and never actually call you except for a few hours here and there), don’t get your hopes up. Most companies that hire a consultant on a retainer basis have a clause in their contract that prohibits you from working for their competitors.
Working and getting paid in this method certainly has its advantages. You are guaranteed income each month, and when you are starting out in your consulting business, cash flow can be a problem. Some consultants actually offer a percentage reduction in their fees if a client will agree to pay a monthly retainer fee. The average income when a consultant is paid on a retainer basis is $3,500 per month.
If your consulting business has no clients, then you have no consulting business. But you must remember that selling your consulting services is not the same as selling a car or a house. In the case of the car or the house, the customer is probably already in the market for one or both of those products. Your job, then, becomes harder, because you are marketing your services to people who may not even be aware that they need those services.
There are a variety of methods you need to become both familiar and comfortable with in order to begin attracting and keeping clients. Let’s look at some of the more conventional ones that are being used by many consultants today.
Advertising
The limits you place on advertising your consulting services will be directly tied to your advertising budget. If you are lucky enough to have a very healthy advertising budget, remember that you don’t have to spend the money on ads just because you have it to spend. Advertising can be very expensive. Clinton W. Cimring, Florida, consultant advertises through a new method of online marketing known as search engine optimization. In fact, Cimring claims to have coined the term back in 1996 when he began his first consulting operation, The International Cimring Group, Inc. “SEO is probably the best most effective way to advertise right now. With declining push advertising methodologies, alternative pull marketing strategies like search engine optimization are coming back on the scene. Done right, SEO will only present an initial up-front cost, but then grow exponentially with the way search engine algorithms work. It has the largest ROI out of any medium available today,” he says. Cimring is currently the senior partner for one of the largest top SEO or online advertising firms in the world according to Topseos.com, Search Engine Partner.
Other consultants, such as Marissa S. Smith, NY, depend on word-of-mouth. “The best form of advertising [for my business] has been word-of-mouth and recommendations from other people,” she says.
Before you spend any money, start looking through professional journals and newspapers relative to the fields you specialize in. Take some time and examine ads that have been placed by other consultants, and then carefully determine how effective you think their ads may be. Then design one that suits you best.
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