How to Start Business Consulting

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Business consultants, also called management analysts, advise organizations on becoming more efficient and profitable. The U.S. Bureau of Labor Statistics expects demand for consultants to grow 19 percent by 2022, or much faster than other fields. However, while anyone can call themselves a consultant, success hinges on finding a gap in the market -- and convincing clients that your skills will get the results they want.

Gain Relevant Experience

Build your resume by working for several years with an established firm in your chosen specialty, such as human resources, information technology or management, says the U.S. Bureau of Labor Statistics. Then you can hit the ground running with the contacts and experience needed to start a business. For example, retired systems manager Karen Aboud started her consulting work by advising small and mid-sized retail merchandisers, The Toronto Globe & Mail reported in April 2011. When Aboud's former employer let clients access its computerized inventory and sales system, she offered to train them on it, which expanded her business.

Tip

  • Gain an edge with additional training and certification. One of the most important credentials is the Certified Management Consultant designation from the Institute of Management Consultants USA, which must be renewed every three years, and shows that you meet basic professional standards.

Assess Your Skills

Once you're ready to start a business, decide what aspects of your education and background make you better than your competitors. Without superior knowledge and skills, you'll have a hard time finding work. For example, when engineer Vince Socci started his consulting business, he chose to emphasize his track record of developing electromechanical systems. In doing so, Socci made his services more attractive to clients, he says, in a May 2011 lecture for the International Electrical and Electronics Engineers Consultants Network of Long Island.

Choose a Business Structure

Choose the corporate structure that best serves you and your clients. About 70 percent of new businesses operate as sole proprietorships -- which is the simplest structure to run, but makes you legally liable for what you do, advises the U.S. Small Business Administration. You may prefer to organize as a limited liability company instead. As part of that process, you'll have to register and license your business, which becomes another indicator of professional credibility.

Develop a Proper Billing System

Decide how clients will pay you. Some consultants focus on billable hours, like attorneys, while others charge a monthly retainer or set fees for specific projects, reports Entrepreneur magazine. Whatever system you devise needs to establish a self-supporting business in a year, says author and Summit Consulting Group president Allen Weiss, in an interview for Bloomberg Businessweek's May 2011 article, "Why Self-Employed Consultants Fail." Otherwise, you may not generate enough income to sustain the business.

Warning

  • Be selective about how you spend your time. Taking on work for companies that need major remedial help will distract you from approaching higher-level project opportunities that command better pay.

Obtain Appropriate Insurance

Safeguard your business with an errors and omissions policy to protect you from professional negligence claims. Otherwise, you might wind up paying large legal bills or judgments, even if the claim has no merit. This coverage is separate from general liability policies for injury or damage that you, your employees or your products cause to someone else, advises Forbes magazine. Also, get a business owner's policy that covers interrupted earnings, and company cars or property. If you hire employees, you'll need a worker's compensation policy that protects them against job-related injuries, too.

Market Your Services

Don't wait for clients to knock on your door. Find them by identifying gaps in the market, and moving promptly to fill them. Enterprise management professor Chris Castillo followed this method in creating a customer relations management software system for smaller firms that his client's large employer wasn't willing to serve, states The Globe & Mail article. Also, show why your hiring suits the client's needs, asserts Entrepreneur magazine. For example, if he's a poor communicator, explain how the company benefits once you help him overcome that problem.

Promote Your Credentials

Create written works like brochures, magazine articles and newsletters to help establish you as an expert, and generate leads for your business. Another tool in this effort is the white paper, which briefly outlines a problem, and then proposes a solution. Show your expertise by regularly writing and posting white papers on your blog or website. Make public appearances part of your networking efforts, too, suggests Entrepreneur magazine. Cold call or set up meetings with local decision-makers -- such as your chamber of commerce president -- and ask if you can speak to their group. A well-received presentation may generate many additional word-of-mouth referrals that you can turn into future consulting opportunities.

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