Setting up as a consultant.
A consultant provides, to clients, professional advice or services that the clients do not wish, for whatever reason, to provide for themselves.
Advantages of setting up as a consultant
By setting up as a consultant, you have:
the ability to work on areas and issues of real interest to you
the flexibility (within limits) to determine when and where you work
the challenge and excitement of running your own business
independence from other people--not having to work for someone else (apart from your clients!).
Disadvantages of becoming a consultant
You could face:
loneliness and isolation if you set up on your own
the lack of a regular income and other company benefits
difficulties in separating work and home life
a lack of job security.
1. Determine your area of specialisation
What kind of consultancy services will you offer? Describing yourself as a 'management' consultant is too broad if you are setting up alone. Determine what your market is now, what you want it to be in the future, and how you will get there. Examine your strengths and weaknesses [SWOT analysis]; choose one or two areas of specialisation based on experience. What it is that should attract clients to you as opposed to another consultant?
2. Carry out market research to decide your unique selling point(s)
Find out what opportunities there are within your chosen specialisations. These could relate to filling a gap in regional or market coverage, or providing a better or more personal service at lower cost. You will need to be able to make an assessment of:
* the market there is for your specialisation and how much is it already being satisfied
* the competition, by researching their products and services and, more importantly, customers' views of them
* threats to existing markets and opportunities for new markets.
If the market looks to be small or overcrowded, in what other directions could your knowledge or experience be used. Be wary of trying to compete on price alone or of setting up at all if you cannot identify something you can provide that is not already being offered cost-effectively. If necessary, go through the market research process again.
3. Work out a charging strategy
Research market rates in your specialist area and the relevant geographical market--one source might be the Institute of Management Consultancy's Management Consultancy Fee Rate Survey (see Useful addresses). Offer a discount on the market rates to:
* compensate clients for the risk in employing you rather than an established firm
* reflect your lower overheads.
Do not charge too low a rate, however, as it is difficult to raise rates later if you discount too heavily at first. Remember too that clients like to feel they are receiving advice that is good value rather than cheap: clients are suspicious of cut-price consultancy.
Calculate a realistic number of fee earning days. Exclude time for holidays (including public holidays), sickness and time spent marketing your services, attending courses, etc. Calculate your fees on the basis of 180-200 working days per year.
4. Plan your marketing strategy
List your particular selling points. Put yourself in the position of a client trying to decide whether to employ you or an established consultant.
Register with consultancy directories and agencies.
Join a professional organisation, a network or other professional group of consultants.
Write papers for publication or presentation at a conference.
Give talks to appropriate local groups.
Get in touch with recent contacts.
5. Secure your first client
Before you do anything else, find your first client. If you do not have a contract or potential contract from a former employer, trawl every existing business contact. Securing the first client will:
* make it easier for you to market to prospective new clients
* firm up your ideas about the type of business you want to become
* provide income.
6. Write the proposal
A winning proposal needs to show:
* knowledge of and experience in the area in question
* understanding of the client's requirements
* creativity and innovation in approaching the project.
The steps to ensure a comprehensive approach include:
* beginning by showing evidence of the three factors above
* carrying out research--with key people as well as consulting relevant library information
* showing creativity--in laying out ideas and possible solutions
* detailing your Unique Selling Point--what sets you apart from the rest
* addressing the competition--not by emphasising their weaknesses, but by focusing on your strengths
* clarifying your strategy--where you will take the client and how you will get them there
* determining costs and proposing budgets
* organising the proposal so that it is a document with some bite to it
* writing a summary and putting it at the beginning
* writing objectively, clearly and simply.
Check your draft proposal with a friend or colleague if possible.
7. Negotiate the contract
The contract is the vital stage which secures your client and determines the nature of the work to be done. It will also specify how you will be paid--by performance, percentage or daily rate--and what kind of expenses will be permissible. Coming out with the contract you want is down to your negotiation skills; there are always some areas for adjustment, just as there may well be some which are non-negotiable. It is important to be able to 'read' these in advance. Don't appear greedy, but don't be a soft touch either.
8. Conduct the assignment
Key steps to success include:
* keeping to budget and time
* understanding the client's organisational culture and language
* ensuring relevant staff are involved and consulted
* holding regular feedback sessions with your client
* maintaining a professional approach.
Dos and don'ts for setting up as a consultant
Minimise your start-up costs and keep a very tight control on outgoings for at least three months. Put everything possible into your first contract: maintaining excellent contacts with that client is the easiest way of securing new business.
Be tempted to set up a business or incur any costs until you have secured your first client.
Underestimate the costs of setting up or the delays in receiving payments from clients.
The top consultant: developing your skills for greater effectiveness, 4th ed, Calvert Markham
London: Kogan Page, 2004
Getting started in consulting, 2nd ed, Alan Weiss
Hoboken NJ: John Wiley, 2004
Skilled facilitator: a comprehensive resource for consultants, facilitators, managers, trainers and
San Francisco Calif: Jossey Bass, 2002
Ultimate consultant: powerful techniques for the successful practitioner, Alan Weiss
San Francisco Calif: Jossey Bass Pfeiffer, 2001
The business of consulting: the basics and beyond, Elaine Biech
San Francisco Calif: Jossey Bass Pfeiffer, 1999
Successful consultancy in a week, John Wilson
London: Hodder and Stoughton, 1999
Concise guide to becoming an independent consultant, Herman Holtz
New York NY: John Wiley, 1999
Institute of Management Consultancy, 3rd Floor, 17-18 Hayward's Place, London EC1R 0EQ
Tel: 020 7566 5220 www.imc.co.uk
Management Consultancies Association, 49 Whitehall, London SW1A 2BX
Tel: 020 7321 3990 www.mca.org.uk
* What plans do you have to maintain and develop your expertise?
* What advantage can you offer over the competition?
* Think about networking with, as opposed to competing against, the competition.
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|Title Annotation:||Checklist 093|
|Publication:||Chartered Management Institute: Checklists: Small Business|
|Date:||Oct 1, 2005|
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