How to Start a Business Consulting Firm
Consulting exists because an individual or a firm offers expertise in a field that another individual or organization is not able to provide, solve, or achieve for itself. Clients hire and pay consultants to help them get from point A to point B. According to Consulting.com, “consultants pull from their niche experience, industry understanding, and problem-solving abilities to offer valuable advice to a specific type of client or group of people.” So, before you consider how to start a consulting business, it is critical that you are confident that you have something to offer that someone else is willing to pay for. If you do, then a well-executed marketing plan and excellent sales skills should provide you with a rewarding career in consulting.
I have been in the consulting business in some form since I sold my manufacturing business in 1999. I worked for several years as a sole proprietor, then spent four years providing consulting for an agency of the U.S. government. For the past 11 years, I have served clients throughout the world as a Principal Consultant for Cayenne Consulting. If I were to start over today and launch a new consulting firm, I would prepare a modified business plan, and these are the steps I would undertake before I took on my first paying client.
Define My Niche or Area of Specialization
Before I can begin to help clients get from point A to point B, I need to decide the areas in which I will provide advice. In doing so, I will consider my experience, skills, talent, and perhaps most important, what I love. I need to think this through carefully because I want to be very specific in terms of the service I offer. Starting a management consulting practice that helps clients achieve their goals sounds good, but that is neither a niche nor an area of specialization. Helping family practice physicians implement an electronic medical records system is an area of specialization. Coaching accountants and lawyers on ways to increase their businesses through professional sales techniques is an excellent niche for which there is substantial market demand.
Describe My Target Client
Having defined my niche, now it is time to decide whom I intend to help. In determining my target market or target customer, I will consider some or all of the following:
- Will I provide my services virtually or face to face?
- Can target customers afford my fees?
- Will my clients come from one industry, one geographic location, and do they have one specific need?
Having answered these questions, I can now describe my target customer. As you will see in the paragraph on marketing, this step is critical. Why? Because you cannot have an effective marketing plan unless you know who you will be marketing to.
Validate or Confirm Market Opportunity
I am off to a solid start. I know what I am going to do, and I know whom I am going to do it for. Sounds good, but before taking the next step, I want to confirm that the demand for my service exists. When I am talking about sports with my neighbor, my opinion is sufficient to carry on a discussion. However, when I am committing to a new business, more than my opinion is required. In addition to validating a market opportunity, this is an excellent time to determine if my prospective target customers are able and willing to pay the fees I intend to charge. I can do hours and hours of secondary research online, but, really, the only way to confirm that there is a match between my niche and my target market that I can monetize is to speak directly with prospects either by phone or in person.
To get my consulting business properly launched, I need two things: equipment and other tools.
- Equipment is straightforward. Initial equipment needs will include:
- Office space – home office, coworking space, leased space – enough to accommodate my team and me.
- Office furniture.
- Technology – Laptop, phone, software, a service to securely transfer large fies, high-speed internet connection.
- Optional – vehicle.
- Other Tools will include:
- Branding – Firm name, logo, address, title (It is okay to look established.)
- Website, email account, business cards, emailable brochure.
- Staffing Plan – How many, when, staff functions, recruiting, HR, compensation.
- Templates for proposals, email marketing, agreements, etc.
- Capital – Early on, I will need cash flow as, at this point, it is all going out, and nothing is coming in.
Develop a Winning Marketing Plan
Now that I know who my target market is, I must decide how to do the marketing to reach them. It is critical that at the earliest time, I create awareness for my firm and me. After all, I am going to need a steady stream of prospective clients. Shelby Larson, writing in Entrepreneur has some excellent suggestions, and I have included some of them along with several of my own:
Sales Prowess Comes Before Consulting Prowess
In anticipation of new leads coming in every day, I must know how to turn these leads into paying clients. I realize that many of these leads will not be able to afford my fees, and some will even want me to provide my services for free. Since I won’t consult for free, I must be able to close the prospects that I have determined need me and can afford to pay me. I will do this by:
- Responding to leads immediately
- Being a world-class listener
- Fully understanding the prospect’s needs
- Being polite and professional
- Building rapport
- Having empathy
- “Joining” the team
- Explaining the process
- Discussing timing and fees
- Responding to objections
- Following up
- Once the prospect says “yes,” stop talking
Time to Engage
Now that I have completed or accomplished each of the steps provided above, it’s “showtime.” That means I am ready to engage my first client. I am proud of how I have established a professional consulting firm and have confidence that I will be able to serve my clients well. I will be equally proud when time after time, I am able to provide each of my clients with the outcome that we both envisioned as the consulting engagement began.
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