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Starting your own consulting business?10 tips for creating a 6-figure income

by Ros Cardinal on July 15, 2013
Business

Maybe, like many people, you are working in a relatively senior role in the corporate world. You don’t mind your job, but you have been hankering to get out and join the world of consulting. As someone who made the leap and created a six figure income in my first year, I’d like to share some of my tips for success:

1 – Find your niche.

You will only be really successful if you can find the sweet spot where the following 3 things intersect. Something you love and are passionate about. Something you are expert in. Something businesses are prepared to pay for. If you only have one, or two you will never be as great as you could be. Of course it is fine to do some assignments that don’t meet all three, but the bulk of your work should hit the sweet spot.

2 – Be an acknowledged expert in your field.

Are you asked to speak at conferences and events? Do people in your industry know who you are? Do other businesses come and chat to you about something you are working on in your current field for your employer? Have you won awards for your work? Any and all of these are confirmation you are considered an expert. It is really hard to break into consulting without expert status.

3 – Understand how to run a business.

This one is a given, but you would be surprised how often it is brushed over. It takes work to run a business. There is accounting, administration, social media, insurance, marketing and many other necessary tasks. When you start out, you won’t be able to afford to outsource all the things that need doing. If you cannot manage the finances of your business you will eventually fail. I remember someone (no longer in business) telling me that she kept her receipts in a shoe box and gave them to the accountant at the end of each quarter. Between accountant visits she had no idea how her business was going. You need a good accountant, but you need to understand your business too.

4 – Start small.

I work from an office at home and my overheads are negligible. My face to face work is done on client premises, or at hired venues. I have seen many of my peers leave corporate life and from day 1 rent an office in the CBD, hire an assistant and lease a fancy car. Some fail, some do ok, but all their income is being sunk into overheads.

5 – Work as an associate for another firm.

It doesn’t need to be full time, in fact you need to leave time to work on your own business. Being an associate gives you an income stream while you get established and could become a long-term mutually beneficial relationship. Of course, you need to be absolutely ethical about their clients. You may want to consider how you might deal with a situation where a client says to you “how about we cut out the middle man and you contract directly to us”. It happens. As a consultant your reputation is everything.

6 – Build your networks.

Let people know you are setting up a business. Join new networking groups. Offer to speak at local business events. Become a mentor. Give generously and it gets returned – yes, really. I have obligation free coffee chats with people in my networks and more often than not it leads to work, or a referral. Recently I met a contact for a coffee and we brainstormed some ideas for a project she was working on. A couple of weeks later she called to say the Executive team had signed off on the scope and asked me to be the strategic consultant to the project. A nice piece of work in return for an hour of my time. Of course you need to value your time and not have endless coffees with people who are clearly just after free consulting. This leads me to my next point.

7 – Charge what you are worth.

It is tempting to start at a low rate. I did. I thought if I could undercut the market then I would get more work. What it does though is indicate to clients that you are not as good as consultants who charge more. “You get what you pay for”. I realised pretty quickly that I was undervaluing myself and I put my rates up to where they should have been. My exception is the not for profit sector, where my reward is seeing my clients succeed. My NFP clients know they are getting me at an exceptional rate and often provide referrals.

8 – Spread your client load.

It is not helpful for a consultant to work full time with one client. Apart from all the tax implications, if you are reliant on one client what are you going to do when the work runs out with them? You need to have a range of clients with others in your pipeline and if you are working full time you won’t have time to generate new relationships. My rule of thumb is I shouldn’t be getting more than 40% of my income from any one client. When that happens I know I need to start cultivating new relationships.

9 –Invest in your learning.

You are truly adding value for your clients if you are up to date with the latest in your industry. It costs money to go to conferences and accreditation programs, and to be a member of professional bodies, but investing in your knowledge is the best investment you can make. Get a mentor or a coach. Never stop learning!

10 – Don’t panic.

There will be ups and downs. You will win some contracts and not others. Your diary for the next quarter will be almost empty one minute and full to capacity the next. You need to be secure in your ability and confident that the next opportunity is just around the corner. Love what you do and have fun!

Ros Cardinal

Rosalind Cardinal is the Principal Consultant of Shaping Change, a Hobart based consultancy, specialising in improving business outcomes by developing individuals, teams and organisations. Ros is a solutions and results oriented facilitator and coach, with a career in the Human Resources and Organisational Development field spanning more than 20 years.  Ros brings an energetic and proactive approach combined with a wealth of knowledge and experience. Her expertise spans leadership development, organisational culture, team building, change and transition management, organisational behaviour, employee engagement and motivation, strategic direction and management.

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Ros Cardinal
Rosalind Cardinal is the Principal Consultant of Shaping Change, a Hobart based consultancy, specialising in improving business outcomes by developing individuals, teams and organisations. Hobart, Tasmania.
 
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