Business to Consider: Consulting

UPDATED: May 28, 2010
PUBLISHED: May 28, 2010

Consultants coach clients in everything from management and human resources to image, media and the best ways to implement computers/technology. Not only do consultants possess expertise in specific areas, they also must be able to impart knowledge and generate value for their clients.

If you’re interested in consulting, you first need to identify your strength or expertise and then consider whether there’s a market for it. If you really know your stuff and can clearly express your ideas, then your services should sell themselves. However, the greater challenge is finding and keeping a steady flow of clients. You’ll need to actively network, follow up and find new contacts, especially when you first start out. Experts agree you need to give yourself at least a year to do that to succeed. Prospective clients need to feel a sense of trust that their consultant has their best interests at heart. That doesn’t always happen right away.

Technology makes it easy for you to be available to clients in far-flung places. While good consultants make it a point to meet with clients in person, follow-up meetings and conference calls can often be done remotely.

Establishing your rates can be difficult. You can charge an hourly, project or even retainer rate. Really good consultants can charge fees based on the value and results they provide. For example, if a consultant teaches a company’s sales staff better strategies that lead to a 10 percent increase in sales, isn’t the consultant worth a 1 percent return on the increased profit?

Businesses are clearly willing to pony up the dough for results. Plunkett Research estimates 2008 industry revenues for management and scientific and technical consulting totaled more than $169 billion in the United States alone. The Bottom Line Don’t undercapitalize. While consulting doesn’t require significant startup costs, you still need to pay for living expenses while building your business. If you’re serious about a career in consulting, you will eventually need to do it full time to be more accessible to clients. You’ll need at least six months’ to a year’s living expenses.

Initial basic equipment costs will be for a laptop and updated software, a fax machine, additional phone line for said fax machine, a quality printer/scanner, postage meter and scale, a smart phone with a forgiving e-mail/minutes plan, and a digital recorder. All brand new, you could spend anywhere from $3,500 to $10,000 for all of it. However, most people already own several of these items and don’t have to start from scratch. Is It Right for You? Personality traits required: Confidence, persuasiveness, ability to speak well in front of groups and business owners, active listening, responsiveness.

Risks: This is really a sales gig in disguise. Regardless of your talents and knowledge, no one will hire you if you don’t sell yourself and regularly seek out new clients.

Potential income: Varies greatly depending on years of experience and expertise. The median annual wage for a management consultant as of May 2008 was $73,570, according to the U.S. Bureau of Labor Statistics. The top 10 percent make well over six figures.

Pros and Cons at a Glance 1. Low startup costs 1. Time-intensive to build client base 2. Improving businesses/individuals is rewarding 2. Methodical, active networking required constantly 3. Create your own hours 3. Travel often required 4. High potential income 4. BlackBerry addiction likely