You’ve likely been managing your own personal finances for years, so it might be tempting to just apply the same principles you use for your personal finances to your business. But there are important differences to consider.
Few jobs are as vaguely descriptive or can be as broadly applied as a consultant. It’s defined by the dictionary as “a person who provides expert advice professionally.” From the artistic realm to IT—there are experts in every field who are paid to give their feedback, share their expertise, and consult with clients.
So, if you want to build a profession out of consulting, it’s difficult for us to advise on the specifics (considering each branch will have slightly different paths to follow). However, we can generally speak on starting a consulting business, particularly from the legal and liability perspective.
Are you on the right track towards success? Keep reading to see whether or not you’ve checked off all the right boxes.
How to start a consulting business
Before you begin consulting clients, it’s important to establish that you are worthy of the title. Whatever you’re an expert in, you better be able to back it up with know-how, industry experience, a fantastic resume, amazing skill set, or the impressive clients you worked with and helped reach their business goals. Although degrees and credentials are compelling selling points, being able to point to concrete examples of projects you’ve worked on is a persuasive pitch.
To do this, you must define the focus of your type of consulting. In addition, you need to establish that there is, in fact, demand for your expertise. Doing so will help you stand out amongst the crowd and put you in a better position for success.
Moving forward, be sure to keep the following tips in mind:
#1: Register your consultation business
In order to be paid for your counsel, you’ll need to register with local, state, and federal authorities by paying all of the fees, as well as filing for your business license. Failing to do so will result in time-consuming paperwork and costly fines.
Before you register, you’ll have to speak with a CPA—another consultant—and figure out what would be the smartest business entity to file under for tax purposes. You’ll likely choose between a:
- S Corp
- Sole proprietorship
Once this is completed, you will have to request an Employer Identification Number (EIN). This is the reference that both federal and state governments use to locate your business.
#2: Build client rapport
People pay you serious money for your services. You have an extremely valuable job—you’re worth the expense. However, it’s an entirely other matter to take on a client when you don’t have the time or the expertise—and are doing so just to generate business.
When offering advice, rushed or ill-conceived recommendations don’t just come at the cost of upset clients. Consider how when people follow your guidance, their livelihood and financial future are in your hands. And it doesn’t just represent their prosperity, but their families’ and coworkers’ as well.
As such, with each client you take on:
Be honest about your qualifications for each job. This means speaking openly about your knowledge of industry trends, updates, and changes. If you’re an IT expert, you’re on top of the latest laws, cyber threats, cloud updates, and software trends. If you’re an environmental consultant, you probably follow environmental laws and regulations, the latest in sustainable technology, and more. Detail where you’re competent and where you’re uncertain.
Treat them with the same enthusiasm and professionalism as the last. As a consultant, it can often feel like you’ve dealt with every problem or seen every situation there is to consider. In these cases, you may skip steps or gloss over information, resulting in a poorly thought-out recommendation. By stepping in with the same vigor for each client, you can avoid careless mistakes and boost your client satisfaction.
Simply put, if you are taking people’s money, you need to be giving them valuable skills in return. And one bad tip could really mislead them.
This brings us to professional liability insurance.
#3: Purchase consultant insurance
You’re not a fortune teller (probably). It’s inevitable that you’ll get some things wrong. Even though clients innately understand this, when a lot of money is on the line, people are more willing to play the blame game. And in a litigious world, this poses serious risk for your company. If financial losses occur based on recommendations you gave, you could be accused of negligence and undelivered services. But if you had a Professional Liability Policy, your legal expense and damages could be covered.
Professional liability insurance was quite literally created for consultants. Also known as errors and omissions insurance (E&O), it’s meant to shield those who provide professional advice, from their suggestions being used against them. There’s a problem with your typical professional liability insurance though. If you’re an independent consultant on a freelance basis or are brought in by clients at the last minute, you’ll still be paying for your policy even when you’re not working.
Fortunately, there’s Thimble’s Consultant Insurance.
Professional liability and General Liability Consulting Policies with Thimble aren’t your ordinary insurance policy. Instead, it’s an affordable on-demand option that lets you instantly purchase a plan—by the hour, day, or month. Purchase a business insurance policy the moment you need it, save money when you don’t.
Once you’re covered from liability, it’s time to start selling.
#4: Market yourself
To establish your business, you need to make a concerted marketing push—expend every avenue available to you in order to build your brand and enlist clients. As with most businesses, it’s essential that you remain patient, fearless, and persistent. Expect rejection and a lot of it.
For every hundred noes, you might get one yes. That’s fine. Each yes snowballs, particularly if you do a good job. That said, utilize the following marketing tools to get that snowball started:
Build a professional website. This is especially important for consultants claiming that they’re valuable experts. A shoddy and dated website is one of the quickest ways to make your target market think you’re running a scam.
Use SEO best practices on the website. This means creating a blog filled with keywords, advice pieces, and other content that pushes traffic and establishes your authority as an adept in your field.
Take advantage of social media. Platforms like LinkedIn provide free marketing opportunities. For a consultant, it can be especially effective to create a YouTube channel that’s chock full of:
- Discussions and vlogs of industry trends
Utilize your network. Chances are, you have plenty of experience and business contacts in the industry. Lean on them to get the word out or to speak on your behalf. Offer discounts or gifts for referrals to quickly grow your client base.
Starting your consulting business
With the information you’ve gained from this guide, you’re one step closer to starting your freelance business. Just remember to:
- Register your consultation business
- Build client rapport
- Make sure you have business insurance in place
- Market your practice
Do this and watch your in-person or online consulting business grow. It might be a slow process, but as you scale, you’ll learn the value in building strong relationships with your clients, patience, and always striving to learn more.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.