You put a lot of blood, sweat and tears into your career. Now you’re thinking about how to start a consulting business on the side to cash in on those years of acquired knowledge. Your ability to predict trends, offer research and provide key advice is a much-desired asset to businesses. Market yourself to the right clients and your consulting side business can even turn into a full-time gig.
Some of the top consulting businesses are in fields that include accounting, public relations, human resources and even gardening.1 Whatever your expertise, you can design your consulting business to offer valuable insights to your clients.
Read on for a little consulting advice of our own. Learn how much you can make as a consultant after zeroing in on your value proposition, market knowledge and business structure.
What does a consultant do?
Consultants are professionals who provide expert advice to individuals and other businesses. That advice can include:
- In-depth reports written from an experienced point of view on subjects relevant to the client.
- Objective analyses of the client’s operations based on the consultant’s expertise within the industry.
- Personal opinions guided by experience on how the client should operate.
Businesses use the advice and insight they gain from consultants to drive strategic decisions and improve their operations. For example, a company might hire a marketing consultant to help them improve their visibility. The consultant examines the current marketing strategy and provides experience-based support to improve it. The business pays the consultant a flat fee or an hourly rate in exchange for expert advice.
How much do consultants make?
The average pay rate for independent consultants is about $43 per hour, though it can differ significantly depending on the specific industry and the client’s local market.2 Some consultants make $50 or $60 per hour or more.2 Consultants who work part-time as a side business, even as little as 20 hours per week, could bring home nearly $900 per month before taxes, based on the average pay rate.
Working as a consultant, you can make a profitable enterprise out of sharing your expertise with others in your industry. Here are five steps to get started.
1. Create your value proposition
What skills and knowledge do you have that could be valuable to others? Do you know your way around business operations, technology, finances, communications or other specialized fields? Determining the area you’ll consult in is the first step to figuring out how to start a consulting business on the side.
Once you know your consultant specialty, create a value proposition to communicate your services and worth to potential clients. Ask yourself questions like:
- “What am I offering?”
- “Why will clients hire me?”
- “How do I stand out from competitors?”
The answers will give you direction as you create a clear, concise message that effectively explains your services and why clients will want to work with you. From there, you can examine your industry to see how your consulting business fits into the market.
2. Research your market
Once you know what services you’ll offer and how you’ll pitch them to clients, you’ll need to analyze your market to get a complete picture of your business environment. Market research will help you understand the industry’s needs, how you stack up against competitors, and what your clients want from consultants.
Such research will include reading reports, articles and trade publications relevant to your industry, and speaking with other experienced professionals. You can also solicit feedback from your personal and professional networks to help you refine your value proposition, business plan and strategy.
When you better understand your market, you can use that information to build a portrait of your ideal client. Knowing their needs, goals and demographics will help as you more thoroughly define your business structure. It will also help you price your services and develop promotional strategies for your business.
3. Design your business structure
Like any other professional venture, starting a consulting side business, means meeting specific requirements and regulations. You’ll need to properly structure your business to achieve your goals and follow state and federal rules.
One step to consider is incorporation. Incorporating your business can add legitimacy to your operation, making it more appealing to potential clients and limiting liability.3 Additionally, you could see tax savings as an incorporated business. Many independent consultants choose the limited liability corporation (LLC) route.
You’ll also want to ensure you know all relevant tax responsibilities related to running a consultant side business.4 As an independent business owner, you’ll be responsible for properly filing business taxes, but you can also deduct things like home office equipment and health insurance. You can even deduct the cost of advertising to help spread the word about your business. All of these deductions can help you maximize the value of your enterprise.
4. Market your business
Now that you’ve successfully defined your consulting role and educated yourself on the market, it’s time to let prospective clients know you’re available. Even if you have a vast network of colleagues and contacts you plan to pitch, marketing can help you grow your business and expand beyond your existing circle.
A solid social media presence, email lists and a specialized website can all be effective ways to market your consulting business.5 Across all these avenues, maintaining consistent branding and having valuable content can help your consulting business be more unique and appealing to potential clients.
Your website should showcase your expertise and highlight your professional approach, with testimonials about your successes. It’s important to regularly update your website and social media profiles to remain relevant to your industry and show your clients and followers you’re proactive about continually strengthening your expertise.
5. Protect your business
Finally, having the proper insurance for your new consulting side business is essential. Whether you plan to work a few hours a week or ramp up your business until it’s a full-time venture, insurance can provide consultants peace of mind and protection from financial losses.
Thimble’s Consultant Insurance is a customizable package of coverages that financially protects your business from common risks. Like a well-thought-out business plan, it covers you for many scenarios, including third-party liability claims and errors and omissions. Download the Thimble mobile app or click “get a quote,” and you can be covered by the job, month or year well before the ink is dry on your first contract.
Sources:
- Entrepreneur Bookstore. Start Your Own Business.
- ZipRecruiter. Independent Consultant Salary.
- Legal Zoom. 5 Reasons Consultants Should Consider Incorporating.
- TurboTax. Tax Topics for Freelancers, Contractors and Consultants.
- Constant Contact. Marketing for Consulting Business: The Best Tips and Techniques.
