Hello, future consultant! So, you've decided to take the plunge and start your own consulting business. Congratulations! It's a thrilling journey filled with opportunities to make a real impact on your clients' lives. But, we get it; the excitement might be tinged with a bit of uncertainty.
That's completely normal. Starting anything new can be daunting, but fear not! In this guide, we'll dive into the nitty-gritty of launching your consulting venture with confidence.
What is a consultant and what do they do exactly?
First off, let’s define what consultants are and how they operate within various industries. So you can better interpret the tips covered below.
Simply described, consulting is the act of providing expert knowledge and/or advice in some form - in this case to businesses in a particular sector, in return for payment.
As consultants are usually experienced industry professionals with specialised skills and expertise, their services are in high demand. Typically from companies in need of bespoke help and solutions for a certain area of their business or project. In order to become more successful and achieve specific business objectives.
A quality consultant may have the power to unlock new markets, complete vital product development or create a winning strategy for ambitious companies and organisations looking to gain an advantage over their competitors. Amongst many other functions and benefits.
Commonly they’re called in to assess projects and give directive feedback, and also they sometimes work directly with in-house teams to deliver the execution of their recommendations.
See these examples of the most successful consultants in history to learn more about the use-cases of consulting and to gain inspiration for your own business.
Consultants are used by a wide range of typically high-end industries and professions.
However the five industries spending the most money on consulting are: Financial Services; Public Sector; Health & Life Sciences; Manufacturing; Energy & Environment.
According to research done by global research company, Source, $155 billion was spent on consulting by companies around the world in 2018.
In 2022 in the UK, the public sector, i.e. the government, awarded private firms £2.8bn of consulting contracts. A rise of 75% from 2019, according to data from Tussell Ltd. This was mainly due to the ringintion of the economy after Covid of course however, in 2022 Deloitte alone was awarded £278m in government contracts.
Needless to say this kind of spending on private consulting by the public sector causes a fair amount of controversy and speculation. But regardless of the ethics or transparency behind it, these figures show that the market for consulting services is absolutely on-fire.
So then, let’s read the following tips to learn how you can take advantage and start a stellar consulting business.
1. Define Your Niche: Where Your Expertise Meets Their Needs
First things first: what's your area of expertise? Defining your niche is crucial. This is where your unique talents meet the needs of your potential clients. Focus on what you're passionate about and where you excel. Whether it's marketing, finance, HR, or technology, hone in on that sweet spot. This is how you'll stand out in a sea of consultants. Remember, you don't have to be a jack of all trades; being a master of one is more valuable.
For example, our accountants at Crunch are leading experts in small business accounting. And they have unique knowledge on how to integrate cloud-based software into businesses’ financial management systems to save them time and money.
So our brand-ID and business development reflects this. Hence we’re highly successful within our relevant niches.
2. Craft Your Value Proposition: Show Your Worth
Now that you've found your niche, it's time to craft your compelling value proposition. This is the answer to the question: "Why should clients choose you?" Communicate the specific problems you can solve and the benefits of working with you. Highlight your track record, case studies, and client testimonials. Show them that investing in your consulting services will lead to tangible results and a high return on investment.
You can use one of these fantastic and proven value proposition templates from leading business consultant Geoffry Moore, startup advisors Venture Hacks, serial entrepreneur Steve Blanks and the powerful workflow management tool Monday.
Be sure to read the article to understand which kind of template is right for you.
Here’s an example of what a strong value positioning statement looks like:
3. Know Your Target Audience: The Key to Effective Marketing
Knowing your target audience inside out is essential. Tailor your marketing efforts to speak directly to their pain points, desires, and aspirations. Identify where they hang out, both online and offline, and be present there. Use social media, networking events, and industry conferences to research what common issues they need help with, and how they would expect a consultant to do that. Remember, it's not about casting a wide net; it's about reaching the right people with the right message.
You need to ascertain what specific problems they have and how you can solve them. A good tip is to study your future competitors’ online marketing and see what messaging they use.
What USPs do they offer?
What are their most popular/heavily promoted services?
What feedback do their clients give them?
These are just a few of the questions you should consider and investigate.
4. Build Your Brand: Create a Memorable Identity
Your brand is more than just a logo and colours. It's the personality and reputation of your business. Create a consistent brand identity that reflects who you are and what you stand for. This includes your website, marketing materials, and even how you interact with clients. A strong brand builds trust and credibility, making it easier for clients to choose you over the competition.
A good example of a highly successful consultant with excellent branding that strongly conveys his ethos, skills and services is Mike Arauz, founder of the legendary New York-based consultancy firm, August. Which helps leading organisations build great teams.
He’s also a well-known public speaker and coach, and he smartly uses talks and educational seminars to effectively market his business.
Speaking in-person at these kinds of events provides a powerful and direct demonstration of his expert knowledge and wisdom. A real-life, material example of exactly what value he can bring to his clients.
If you take a look at his website http://www.mikearauz.com/, you’ll see that it’s exceptionally well designed for branding purposes. It starts with a clear and motivating mission statement - telling exactly what he does and why he does it. Then it features the social-proof in terms of glowing testimonials from clients and evidence of his skills with videos of his speaking.
By presenting himself as an educator and advisor via his public speaking, Mike brands himself as a trusted authority and teacher held in high regard by large business-savvy audiences.
You might not be able to draw in crowds of hundreds or thousands just yet. Vut you could do something similar by creating a series of YouTube videos or podcasts that you can add to your website and share on social media.
Take a look at this article for more tips on branding a consulting business.
5. Price Your Services: Finding the Sweet Spot
Pricing your services can be tricky. You want to be competitive, but you also need to ensure your expertise is appropriately compensated. Don't undervalue yourself, but avoid overpricing and scaring potential clients away. Research industry standards, analyse your competitors' rates, and factor in your level of experience. Remember, it's okay to adjust your pricing as you gain more experience and recognition.
Secondly, you need to decide what pricing model you will choose. There’s typically two main options - time-based and value-based. Essentially, with time-based pricing you charge for the amount of time the work will take to complete. And for value-based pricing you charge according to the estimated value the work will add to the client’s business.
Let’s compare the advantages and disadvantages of each.
- Time-based pricing
Implementing hourly rates for consulting services promotes meticulous time monitoring, which proves beneficial in assessing the duration of individual tasks.
In instances where a project extends beyond the initial estimation, you still receive compensation for the additional time invested. This stands in contrast to alternative pricing models where such extensions might go uncompensated due to inadequate project scoping and delineation of supplementary work.
Clients frequently exhibit caution toward the variable aspect of hourly charges. This apprehension could lead to a reduced client influx, stemming from concerns about surpassing their budgeted expenses.
Hourly pricing may not be conducive to effective budget planning. For instance, clients retain the prerogative to halt a project midway. Consequently, accurately forecasting the final contract amount becomes challenging. This unpredictability can potentially disrupt cash flow management.
- Value-based pricing
Embracing a value-centric strategy enables the possibility of commanding elevated fees. Clients can readily perceive the tangible and substantial worth of your services, fostering a heightened willingness to invest accordingly.
Your operational time becomes a less critical factor when your ability to effect transformative outcomes for clients takes precedence. Departing from the conventional time-dependent payment model facilitates this shift in mindset.
Not all clientele may resonate with this approach, as it resonates more profoundly with substantial enterprises and might have limited applicability within the realm of smaller businesses.
The methodology lacks precision—it contrasts with the straightforwardness of hourly rates and fixed pricing structures. Value-based pricing relies significantly on subjectivity, entailing a diligent pursuit to ascertain the optimal value figure, which, in itself, demands substantial effort.
For a detailed explanation of consulting pricing methods and how to implement them see this guide.
6. Create Effective Proposals: Win Clients Over
Your proposal is your chance to make a strong impression and seal the deal. Keep it concise, tailored to the client's needs, and showcase your understanding of their challenges. Outline your approach, deliverables, timeline, and costs clearly. Use visuals, charts, and data to make it engaging and easy to understand. And don't forget to follow up to demonstrate your eagerness and professionalism.
Below we’ve outlined the components of a well-constructed consulting proposal. Which adheres to a captivating and coherent framework.
Initiate your document by extending a courteous salutation to your client.
Adding a personalised touch will distinguish your proposal from generic counterparts. Treating your proposal like a personal letter evokes trust and helps cultivate a rapport.
Here use a couple of lines that illustrate the essence of the project - the challenges involved and solutions you will provide.
Consider this segment should captivate and entice the client. Condense the problems confronted by your potential client and the value your consulting services can bring. Express gratitude for their consideration and provide a brief preview of forthcoming proposal content.
Introducing yourself and your business with a sentence or two is also advisable. While the proposal should not be centred around your consultancy, a brief section showcasing your merits and outlining why the client should select you can be included. This emphasises your core strengths and qualifications, even if you've previously introduced them during initial interactions.
3. Project Scope
Subsequently, integrate three to five bullet points that cover the specific tasks or actions integral to achieving the envisioned outcome. This section lists the actions required for executing the previously outlined project.
For instance, if you're contracted to evaluate a client's marketing strategies, this segment would include details such as the duration of calls or office visits, the frequency of calls or visits per week, and the length of each engagement. Elaborating extensively on the project scope can mitigate future obstacles for both you and your client.
Outlining the core objectives of the project. Focus on persuading the client about the project's value. What transformative outcomes do you envision for your client post-engagement?
Unlike the next "Deliverables" section, which spotlights the tangible end products, the objectives section emphasises the general and ultimate result.
List the distinct deliverable(s) the client will receive upon completion of the project. This segment catalogues the specific, tangible "products" that will emanate from the project. While the project scope focuses on the "how," deliverables explain the "what."
The deliverables could consist of a comprehensive analytical document, a presentation outlining recommended alterations.
Set out a chronological framework for each task delineated in the "Scope" section. This builds clear expectations and boundaries with clients for when within the project certain actions should happen.
Detail both general and precise project dates and deadlines. Whether it's in-person visits, document creation, or follow-up correspondence, strive to capture every plausible date within your proposal.
Proceed by disclosing your consulting fees, inclusive components, and your preferred payment method and schedule.
Should a specific payment platform be recommended, add these details here. Likewise, if a deposit is mandatory, ensure this information is communicated.
This segment orchestrates a direct request for your prospective client's endorsement. Allocate space for recording the date, their name, and signature.
Incorporating this within the proposal streamlines approval, even if the client is still deliberating. Make it easy for them to buy your service by prompting for an agreement whilst the inspiration is strong.
9. Subsequent Steps
Conclude by embedding a compelling call-to-action within your proposal. Present your email address for further communication. Deliver a clear roadmap for progression.
Although each proposal should be tailored to individual clients, crafting an entire document from scratch each time can be labour-intensive. So try these templates for convenience.
8. Network Like a Pro: Build Lasting Relationships
Networking is the lifeblood of a consulting business. Attend industry events, join professional organisations, and connect with potential clients and partners. Remember, it's not about collecting business cards; it's about building genuine relationships. Be a valuable resource to others, and they'll be more inclined to reciprocate.
Here are a few basic points on effective networking:
- Build a targeted list of potential clients and contacts who might be interested in your services.
- Find out where you can connect with them, either online or in person at events etc.
- Build a relationship gradually. It’s best to do some outreach to warm-up your contacts prior to talking business. You can do this by commenting on their social posts or sharing their content for example.
- Be easy to communicate with. Have contact details and deeper information about your business ready to share or direct people to.
This networking guide specifically for consultants is a good resource for further advice.
Starting a consulting business is an exciting and challenging journey. Embrace the ups and downs, learn from your mistakes, and adapt your strategies as needed. Stay persistent, and remember that success doesn't happen overnight. Keep your focus on delivering value, and your consulting business will thrive.
You've got this, future consultant! With determination, passion, and these tips at your disposal, your consulting business is bound for greatness. Furthermore, with Crunch’s awesome accounting software, unique resources and online community behind you, you can turbo charge your trajectory to success.
Access all this and more by signing up for our totally free accounting software or app.
You can also read our helpful post on how to find work as a new consultant or our customer stories from Crunch clients who’ve leveraged the power of our software to build successful consulting businesses.
So, take that leap of faith and watch your dreams take flight! Good luck!