Six Steps to Starting a Consulting Business

Step One: Knowing What a Consultant is and does A Consultant is a person who has a type of knowledge and experience that helps other businesses to better the products or services they offer. Ask yourself the following questions: Do I have an intimate understanding of a product, service, job, or industry? Is this knowledge/experience in great demand? If not, is it unique enough that a small segment will pay a premium for it? Have I been exposed to many different work environments? If not, have I experienced one or two in great detail? More Important: Have I participated in, or observed, the making and implementation of many business decisions-both good and bad? Most important:-do I have definite ideas about how I would have handled them? (Hint-If you have a good track record of predicting the outcome of a given decision in your field, you have the judgment necessary to consult in it.) Am I a self motivated person? Can I work without a regimen someone else imposes on me? Do I understand the difference between working for someone else and working for myself, and am I willing and able to undertake the extra load? (If you don't understand the last part of this question, talk to other Consultants or Entrepreneurs-they'll be happy to explain the difference!) Do I understand that different Business Environments have different procedures, protocols, and practices of their own? Am I willing to adjust to the Consulting environment? If you can answer "yes" to all of the above, a career as a Consultant is within your reach. Step Two: Figure out where your Clients are, and how you'll get a hold of them Getting and keeping clients is the hardest part of Consulting! Setting up and publicizing your practice can be learned by rote-and truth be told, are easier than portrayed. To paraphrase Vince Lombardi, getting clients isn't everything, it's the only thing. The six best ways to find clients are : Personal contacts within your industry. A well established network of people who know and respect your abilities is, and always will be, your best source of work. The first step toward starting your practice is to put out the word that you're going out on your own. With an excellent reputation and strong network, "the word on the street" alone will bring in work. (A large number of Consultants have for clients companies they dealt with as employees-as a lot of companies hire past Consultants as employees.) Publications in Trade Journals and Periodicals. There are tens of thousands of these-one for every profession (legal or illegal) you can imagine. They all have to put out issues on tight deadlines. Most of them-in spite of their tremendous influence-are small operations with small staffs. Translation: you can reach them, write for them, and get a nationwide audience in doing so. As in academia, publication carries a great deal of prestige in the Consulting world. It establishes you as an authority-and generates calls! Speeches to Conventions, Trade Associations, Chambers of Commerce, etc. Even more than publication, public speaking establishes you as an expert. Those that attend industry meetings are likely to be those who have the "pull" to get you hired-and you get to "showcase" you personal style to these decision makers. Contact your local Chamber of Commerce (see below) and local conference & seminar providers to get on their panels and speaker's lists. Display advertising in the Trade Publications mentioned above. A well respected Trade Pub is read cover to cover-including the ads. Don't be intimidated by a lack of Graphics ability here. Most Trade ads are very simple, and you can design one with Presentation or Word Processing Software (Many pubs will even design a simple Box Ad, in a standard Typeface, at no extra charge.) Call the Display Advertising department of the pub-they'll be happy to help you out. Press Releases to Trade and Local Papers. Every local paper has a business page with news of local business people and their achievements. Get a publication? A new Client? Your Rolodex or Contact Management Software should have the name of every Business Editor in your region, and every one of them should get a release when your business does something newsworthy. If your a "networking" type, and want to keep your business local, join your area Chamber of Commerce COC membership gives you access to a second "network" which is a.) very organized, b.) committed to the growth of new business, and c.) provides a number of services-among them group insurance, the rental of their mailing lists, monthly networking sessions, and discounts on seminars. Step Three: Do an "Information Interview" with AT LEAST two Consultants: AT LEAST one in your field, and AT LEAST one outside it. Pay them for their time if necessary. Vermette's Law: There's the way you're told things work and they way they really do work. The purpose of these informational interviews is to bridge that gap. If possible, do them with friends or referrals of friends. If not, make sure the interviewee won't be in Direct competition with you. This guarantees you accurate advice (potential competition isn't going to be inspired to give you tips and tricks of the trade.) Be sure to ask questions about organizational setup and how they got started. Also get, if possible, copies of their Promotional and Presentation materials. It will give you a model of how to create your own. Different Consulting fields have different sets of written and unwritten rules (as any business environment does.) Go into this issue in depth with the Consultant in your field. In particular, ask: What are the going rates in the field? What is considered "acceptable" in approaching potential clients? What has worked for you? What hasn't? What kind of Promotional material do clients expect, and what formats are they in? What kind of Presentation materials do clients expect, and what formats are they in? What kind of Computer setup is needed? What kind of programs do you use? What billing methods are common? What expenses can I charge for? Do you need any licenses,, etc. from the various governments and trade associations? If so, how do you go about getting them? What are the common problems you tend to run into? What people or situations should you be wary of? Getting the "Rules of the Road" in the beginning will a.) give you an added appearance of professionalism, b.) put potential clients at ease, and c.) keep you from potential pitfalls! Step Four: Ignoring "The Discouragement Fraternity" Occasionally you will meet someone who is a member of what Robert Ringer calls "The Discouragement Fraternity". They will go to great lengths to tell you how tough the business is, how hard it is to get started, how tough the regulation is, how tough the IRS is, etc., etc. and etc. I concur with Robert Ringer's analysis of these individuals: they need to make their achievements seem bigger than they are by making them appear harder than they were. Consider the advice of such people in light of their motivation-if you consider it at all. Step Five: The Tax/Legal Setup Relax. This is the easy part. In the following order: Talk with your accountant-or one recommended to you. To make it very simple, you a.) keep track of ALL your revenues and expenses, b.) keep your business and personal finances separate, c.) fill out "Schedule C" and related forms at Tax Time, d.) fill out related State Tax Forms, e.) pay any "Professional Service Taxes" your state requires, f.) pay your Federal Taxes quarterly, and g.) pay YOUR OWN SOCIAL SECURITY TAX AT 15.4%!!! (When you were a hired hand, your employer paid half and you paid half. Now you pay the whole thing.) Don't panic. These are no different-and no more difficult-than the administrative headaches you've handled as a Manager or Supervisor. Don't be intimidated by them. Call or visit your Town or City offices to ask about zoning and licenses-and to fill out a "Fictitious Name" or "DBA Certificate", if necessary. In most cases, this is a simple process as long as you a.) won't have customers and Fed Ex trucks blocking the street, b.) don't hire anyone, c.) don't manufacture anything, and d.) are a "Sole Proprietor" as opposed to a Partnership or Corporation. Contact your State Department of Revenue about Income and Service Taxes. Also call the D.O.R. of any state you intend to do business in. If you have a "Business Presence" in that State (as defined by that State), you'll have obligations similar to the ones of your home state. (This is definitely an area in which you want your accountants' help.) Contact any State Agency having jurisdiction over your field. If you're in such a field, you know it-and know who to contact (because you've had to deal with them before.) Initially, consult with a lawyer only if you have one you know and trust. As a Sole Proprietor, you don't need a lawyer to set up your practice. You'll need one when: You decide to change the form of your practice (i.e., to a partnership or corporation) You decide to change the nature of your practice (expansion into manufacturing, distribution, etc.) You're confronted with a legal document or situation you don't understand You need to confront a serious infringement on your Intellectual Property Someone you're dealing with is using a lawyer Someone threatens legal action against you and refuses to deal with the situation in another manner. You're sure that the "ounce of legal prevention" is worth the "pound of legal cure" (as measured in weighty billable hours.) Or you could abide by Robert Ringer's dictum-that the only time to use a lawyer is "when you want to back out of a deal but are reluctant to do so on your own." Step Six-Ignore anything a "How-to" article like this tells you if what you're doing is working There are many reasons we go into this business. The reason most of us stay in it is because of a streak of individualism runs through us. We're not satisfied with the way things are; we want to make them better. If you're finding clients-and "helping them to better the products or services they offer"-then I have something to learn from you. Truth be known, we all have much to learn from each other. See you in the field. ©1993 Charles E. Vermette. All rights reserved. The author is not licensed, and not engaged, in the business of dispensing legal or accounting advice. Individual situations should be discussed with professionals licensed in the fields and geographic areas in which the reader conducts business.

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