In recent years, consulting has been a buzzword in business. As companies have downsized, they have increasingly outsourced projects and jobs to consultants, many of whom have been the victims of downsizing themselves.
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Contrary to conventional wisdom, not every downsized employee can or should start a consulting business. The reality is that consulting businesses are just that – businesses. Like any other business they require a significant amount of dedication and business savvy to be profitable.
Before taking the plunge into consulting, here are questions that need to be addressed:
Do you need a license or other special certification?
Depending on the type of services you provide, some states may require a license or a special certification. In addition to the cost of obtaining the license or certification, you may need to meet coursework or seminar requirements. While some consultants, such as fundraising consultants, aren't required to be certified by law, they will still need certification in order to be competitive in the marketplace.
Are you qualified to be a consultant?
Consultancy may seem like a great way to make a living following a career setback. But somewhere along the way you need to ask yourself whether or not you are actually qualified to be a consultant. Keep in mind that your clients will expect you to be the expert. Being conversant in a subject area is a far cry from expertise. Unless you are absolutely confident in your ability to offer expert advice in your subject area, you may want to reconsider another vocational goal.
Are you prepared to market yourself?
Self-promotion is the lifeblood of consulting. You may be the world's leading expert in your subject area. However, you'll never make a dime in consulting unless you are able to market your services to the right people. As the owner of your consulting business, you will need to learn how to advertise, market, and network. At first, it may feel awkward "tooting your own horn" to prospective clients. But keep at it – it will get easier!
How much will you charge?
Deciding how much to charge for your services is crucial to the success of your consultancy. When you worked for an employer, the employer most likely provided fringe benefits such as health insurance and retirement benefits, as well as the overhead costs involved with running the business. As the owner of a consulting business, you now need to cover those costs yourself. As such, your fee schedule needs to reflect the added financial burden of your new business. Start by surveying how much other consultants are charging for similar services and decide where you want to be priced in the marketplace. Also, plan to charge on an hourly basis rather than a project basis.
Should you ever not charge for services?
Despite the need to charge a fair price for your services, you should consider offering free initial consultations to prospective clients. Increasingly, free initial consultations are becoming the industry standard. But more importantly, a free, no-risk consultation will give you an opportunity to establish trust and lay the building blocks of a successful long term relationship.