The post-COVID economy is a wake-up call. My full-time job could disappear any day. I’m not waiting around to find out when that will happen. I’ve decided to leave now and enter the world of consulting. How do I market my services cost-effectively? How do I find customers? I network through a professional society, and I’m considering putting out feelers with direct mail and phone calling, but I haven’t tried this yet. I’m also looking into hiring someone to do marketing for me. What do you think about this idea? I’m very good at what I do, but marketing isn’t my expertise. Think I can pull this off, Nick? Any help you can offer will be greatly appreciated.
You have identified the toughest problem in consulting: winning clients.
Start consulting by talking to friends
Your best marketing tool is your reputation. You need to learn how to leverage it by discussing your new business with potential clients — people you have worked with in the past who know the quality of your work. This is even better than networking through your professional society, which should nonetheless be part of your strategy.
You can further leverage existing contacts by getting personal referrals through your work associates: your co-workers, your current employer’s customers (don’t steal them — pick their brains), and the vendors you have worked with. These are the people you have depended on and who have depended on you. Go to them now.
Jump-start a consulting business
I’ll offer you one way to jump-start your new business that I’ve used successfully when launching new businesses. You’ll find a different version of this in Alan Weiss’s excellent book, Getting Started in Consulting.
A powerful marketing method is to poll managers you hope will give you consulting assignments — without asking for business. This is a kind of market research. Reach out first to companies and managers that know you. Explain that you’re considering going out on your own, and that you’d appreciate their advice and insights.
How to Say It
“I’m talking with a few managers I respect. I’d like just ten minutes of your time to answer three questions for me. (1) What kinds of work do you hire consultants to do? (2) What do you look for in consultants you hire? (3) What is the process a consultant has to follow to get your business?”
This is not quite a sales pitch, so don’t sell — not yet. Focus on requesting advice and insights. Use their answers to help you decide whether to make the leap. This approach has the added value of letting these managers know you may be available for assignments. If they are helpful, add this final question: “Is there any advice you’d give me about starting my own consulting business?” (Another is, “Can you suggest any managers or companies that might need services I’d be offering?”)
Getting advice vs. selling
Of course, these managers will read between the lines. They know you’re looking for clients. But you’re not putting them on the spot because you’re not pitching. It’s a fine line, so don’t cross it unless they invite you to. I find this approach tells me pretty quickly who my first prospects might be. Of course, some of these folks will not take the bait. Don’t force it! Thank them and move on to the next.
Beware of spending too much of your capital on third-party marketing services. They can blow through your budget very quickly. If you hire a marketer, make the compensation dependent on new sales. For a one-person consulting shop, the best marketers are really salespeople, and they earn commissions, not fees.
Earning seed capital vs. long-term marketing
The purpose of the polling method is to fund your new business with one or two purchase orders as quickly as possible. But it’s a rare newbie consultant that can keep building a business this way. Your next step is to begin the long, methodical process of establishing a presence and building a reputation.
Weiss offers suggestions about how to build a reputation, like writing specialized articles, doing speaking gigs, teaching, and many others. As an example, I wrote a book, and over a period of years it has yielded excellent results for my business. My book is the best business card I’ve ever had! It’s generated even more exposure as it led to radio, TV and other media appearances. The hidden message: The best promotion for your business takes time.
There’s no quick and easy way into consulting
Be careful about marketing by “putting out feelers” or by using mailings. You won’t be taken seriously. I get such junk mail all the time; I don’t even open it. Feelers are not serious attempts to get business. You must prove to a potential client that you can solve their problems and to do that you must show you know the person and their company. Junk mail proves you don’t know them.
I believe the best way to find new clients is to identify who you want to work for first. Determine what their problems are and be ready to outline how you would help make them more successful. This challenge is far more important than producing a resume or marketing materials that you broadcast widely. You’re more likely to win desirable business if you go after the right clients to begin with.
You’ve got a tough road, but it can be satisfying and lucrative if you keep your wits about you and don’t expect the world all at once. The main reason new consultancies fail is because once they’ve got a project or two going, they stop marketing and there’s no “next project” when the previous one ends. Watch your war chest; make it last. And when the wins come in, leverage them for more business. I wish you the best!
Have you ever hung out a shingle? How did you make the transition from employee to consultant? Do your skills lend themselves to consulting? What’s the most important factor in starting a successful consultancy? What’s the quickest way to failure?
Please, not more “consultants”!
In 2008, my former employer sent myself, and some rogues, to man a booth at a career fair held at a local community college. Ours was a dirty and unglamorous industry, so the many unemployed, and mostly fellow boomers, walked past our booth with never a second glance. The few who did approach our booth shared the same story: former do nothing managers, who shuffled money or counted beans, had been out of work 1-2 years. When asked what they had been doing in that time they replied “consulting”.
I work for a small oil company and consultants contact me all the time, to sell services or products. Or they connect on LinkedIn, and sure as the sun rises, they pitch their services the next day. We recently got some exploration acreage in a license round, and as usual, he emails congratulating us with the awards pour in, pitching services. Some sell general geology&geophysics, hoping that we need an extra hand. Some sell “silver bullets” for finding oil (ha, ha, anyone who has been in the business for two years know that these “silver bullets” are flybys). Some sell products that we know are…not very useful. Some sell useful services, but which we can do ourselves or already have consultants for. Some simply re-pack public data we already have. And, of course, a thousand varieties of AI and “digitalization”.
The point is: Most of these consultants are annoying, because they do not have unique selling points – or the unique sellig point is less than useful.
So, the first rule for a prospective consultant is to explain “why me” in plain English, no BS, just the true facts, maam.
During the last months I have specialised in a sub-field of geology, basin modeling. Because our company recognise that we need better in-house competence, and being so dependent on a…consultant. May be, one day, I will start my own consultancy in basin modeling, but first I need to become so good that I actually can say “you should hire me because….”
@Karsten: Hmmm… your description of consultants makes them sound a lot like most recruiters! Dialing for dollars.
There are actually some legit examples of both out in the world. You recognize them when they reveal that they recognize you because they’re not dialing for dollars — they actually know something about you!
Sure, there are many good consultants out there as well. Our company use some of them :) Here the point is that the OP should make sure to be one of them, not the dial-for-$ type.
I’ve got my own shingle. Realistically, without going into details, I doubt that I’ll ever work FT as a direct employee again.
The good thing is that, even when I was a FT employee, a former coworker from another company wanted me to do some PT design work for him, and that’s bloomed to a FT thing. Still working on getting more customers. Had a guy in LA who stiffed me for “just a small amount” – enough that the lawyer’s fees would eat up pursuing him.
In general, though, as I hear people glowingly discuss it, I am reminded of my late Harvard Business School Professor father recounting people saying “Professor Hunt, you’re one of the financial greats (and he was in his day), why aren’t you fantastically rich?”
His answer applies here. “Because I know why, on average, things don’t work out like that.”
There are some who make good livings as a consultant, and bully for them. But on average it’s very thin gruel. (A very capable metallurgist I know had their own company and I used them several times… but after their spouse left them they had to find a FT job because “I can’t survive as a consultant.”
@David: Your dad’s view is pretty much on the money. And your rundown on the consulting life, in general, I think is pretty correct, too. Most just scrape by.
Until my last FT gig, and now this, I used to joke that my consulting company really should have been named “Thin Gruel Consulting.”
David Hunt, from your posts, and articles I’ve read by you on another site, you strike me as a legit consultant who offers value-added services to industry.
Getting stiffed by accounts, waiting months to get paid, and running out of capital seems like the juice isn’t worth the squeeze. But the question for me begs, what sets consultants like you apart from the mostly donut dunker/LinkedIn pajama blogger consultants out there?
In general, I’ve had very few customers. Most are people I know directly.
For people I don’t know directly I’m thinking – once I can afford the legal fees – of rewriting my contract to have it be an escrow system. While the $600 I lost isn’t a huge amount, it’s also annoying and something I want to avoid in the future.
What sets me apart? Well, not sure. I know a lot of people who have skills who are consultants. That’s not really an issue – though I do understand there are people who are “consultant” just to put something on the resume as a filler.
I was very lucky in having this one FT customer even before I needed one. I had an expertise set that they needed, and they knew I had it.
SALES is the biggest bugaboo for me. I’m not a “natural seller” – I believe that my knowledge has value but am not a good pitch-man.
Very meaningful and helpful article at this stage of my life (starting a new venture at 79-years-old).
Excellent outline of the “networking and informational interviewing” process that I learned in 1978 and that works in consulting, employment, and life in general.
One thing I’d suggest is, instead of ending with “Can you suggest any managers or companies that might need services I’d be offering?” I’d end with “Can you suggest any managers or companies that could give me further insight about consulting in general or about (a specific topic the person mentioned). I wouldn’t expect them to need my services, or know anyone who does, but I’d definitely like to get more information about (the topic).”
If we ask someone (especially someone who doesn’t know us all that well) for a direct referral for business (or employment) most will be hesitant at best (I know I would be). But if we ask for a referral for “more information” or for advice or guidance, and if people like us and trust us, they will be more likely to refer us to folks who would likely need our services, or who would know those who do. It’s a small but vital point. If you refer me to an associate with the understanding that it’s me looking for business and I turn out to be a jerk, that’s on you and you’ve damaged your relationship with your associate. But if you refer me to an associate with the understanding that it’s me looking for information or advice, and I turn out to be a jerk, that’s on me and you’ve preserved your relationship with your associate (“Wow, I’m sorry Chris was a jerk; he seemed okay to me. I guess it’s a good thing I didn’t refer him to you to pitch his consulting services. Thanks for letting me know.”).
Very good turn of phrase.
@Chris: I yield to your suggested question! It’s more nuanced than mine.
Consulting sounds glamorous, but it isn’t an easy role. I was thrust into it by way of a major layoff.
Consulting is a feast or famine occupation. During feast, you’re working 80 hour weeks to satisfy your clients. During famine, you’re lucky to put food on the table. Then there is the issue of getting paid. It is normal to wait up to 4 months to get your invoice paid. In my case, most of my clients paid within 6 weeks, so I counted my blessings.
Having been a consultant for 17 years, I’m happy to be employed again.
Henny Youngman had an opinion piece in the NYT in 1990 entitled, “Nem Die Gelt (Take the Money),” building on his answer to an up-and-coming comedian who asked, “Mr. Youngman, what’s the secret to lasting?” His advice: take all profitable offers if you have the time. Stay busy and keep the money coming in.
If you have another stream of income (part-time job, speechifying, product to sell) that will be a big help. Low living expenses are also a big help. Running out of money sucks.
@JR: Your comments remind me of an engineer friend of mine, John Draut, and his method for quoting jobs. I placed John multiple times over a period of many years. At one point he started a legit consulting business and he had a rule of thumb about how to price a fixed-cost project. That is, a job which did not pay by the hour.
“Figure out your own costs including estimated hours it will take. Double that. This will generally yield a decent profit for you. But also add another one-third to the price.”
I asked him, “Why the extra third?”
“That’s to cover your own screw-ups.”
I’ve actually used that rule and it works pretty well!
With companies laying off more executives, there is a glut of “non-consultant” consultants out there. All you have to do is look on LinkedIn. Many will show they are doing consulting when actually they are just looking to fill the void on their work history while they look for a full-time job. It’s easy to spot the real consultants from the ones who just are filling the void. Here are the tips I give my unemployed clients who are serious about starting a consulting business:
1.Incorporate your business.
2.Build a website.
3.Accumulate success stories even if they are projects from your full-time employment.
4.Decide what industry/area of need you are going to consult in.
5.Have a very clear and focused value statement that will show potential clients what their ROI will be.
6.Get referrals and recommendations from as many executives as you can (coworkers, customers, vendors) that you have worked with.
7.Follow the advice of Alan Weiss.
8.Network, Network, Network. Consulting is a relationship business.
@Tom: Good list! Unfortunately, “just say you’re currently a consultant!” is one of those bits of throw-away advice that career counselors offer to unemployed job seekers. A good way to check out a “consultant” is to look at (1) and (2) in your checklist.
The key is something Nick mentioned — you have to enjoy marketing yourself and networking. Then you have to figure out how to do it (branding yourself, developing a marketing strategy and sales program). Then you have to actually do it, spending at least 1/4 of your time on it if you’re busy, perhaps 1/3 to 1/2 of your time when billings are slow. If you cannot make that commitment, don’t bother because you will not succeed.
We could have a whole other discussion about strategies and tactics (for example, I am now grappling with the challenges of not being able to conduct my longstanding, and successful, mode of in-person connecting due to the pandemic; but I have my doubts about all the online stuff, like Linked In, that other CONSULTANTS are hawking.)
I recommend getting a mentor with score.org – I have such a mentor and it is great. My going into business plans are on hold for now as I have a great job. I still want to go into business.
There’s not much to add to Nick’s take, and input from others.
One consistent point is that starting and driving a consulting business is best done via personal contacts..i.e your network which you must grow and sustain.
Consulting’s got a strong networking foundation. but remember good networking is about giving as much as getting.
With that in mind using my IT world as point of reference, if you look, often you can find “business incubators” funded by local governments and/or are inside universities. If they hit into your subject matter expertise, you can be an advisor (which will be gratis). This is a worthwhile use of your time helping others. Admittedly this is an IT thing from my experience, I don’t know about other professions, but I think it’s not rare for SMB incubation and help.
But in so doing, you move past usual networking dialogue into “talking shop”, keeping your brain alive, building your network, and if applicable, likely networking with the local investor “angels”. Impress them. They know people, they know companies and they know who needs help, & they know companies they invest in that they will insist on bringing in absent expertise. You need income, you need to move on, so use your time wisely, but this kind of time usage beats handshaking at networking get togethers.
I agree with others, to paraphrase, every unemployed professional is a consultant. If you research consulting companies you’ll get vocationally oriented definitions and pitches. HR consultant, financial consultant, IT consultant etc.
I’ve worked in corporations which brought in consultants..and I’ve worked in projects in which we tried to sell product/services to consulting firms. My simple definition divides consultants into 2 flavors..1) those that review and recommend and deliver pounds of paper of what you should do & walk off with your check..2) and those that do that, plus take responsibility for what they recommend & execute. a fancy way of saying they get gigs. The check comes when you deliver.
#1 is nice work if you can get it, but it’s done. (I’ve been in a company that paid $ for that and been on the receiving end of their input)
#2 as an individual, is a feast or famine biz model. Especially starting out. And most successful when you have street cred and your network is heavy with advocates and referrals. Absent them, the feast brings in money, often good money, but while you’re literally consumed meeting your commitment. no one is lining up the next one. so it’s famine whilst you beat the bushes for the next gig. repeat repeat.
And to do so you walk a fine line about providing enough info to a prospect to demonstrate you know your stuff, but not so much info they can take your plan, spec, design & hand it to a preferred 3rd party, or simply do it themselves.
As a recruiter I’ve met a lot of consultants. I mean people with their own shingle, who’d welcome getting off the aforementioned roller coaster. It grows old and over time, the idea of a steady income and someone else worrying about marketing and management gets to look pretty good.
So going it alone can work well if you have a rock solid network of referrals and advocates, great street cred, and a good combination of subject matter expertise, marketing ability and management, wrapped in patience and enough financial wherewithall, go for it. The patience is you may need to develop the aforementioned network and Marketing know how and simply to try it to see if it works.
I’ve also met & listened to investor angels. Their advice is well founded. Plan worse case. The one’s I’ve heard expect it takes about 3 years at least to break even. they are underwhelmed by instant success plans.
Call yourself what you will, run yourself like a new business. Starting from ground zero, cover yourself for 3 years. If you are a rocket and take off, great, no harm done. If you plan to be rocket and you’re not..well you’re back knocking on websites and job boards for a job.
The good news is that networking your doing for your business will also serve you well if you decide to step of off that merry go round.
Great thoughts here, Nick. Starting by doing research is great, both to learn and to get your name out there. And because as a consultant you have to listen a lot more than you probably did when you were hiring the consultants.
I’ve worked most of my career as an employee but have also run two of my own companies and the aspect I think I underappreciated was how much work it takes to get the work. Seems obvious, I know. If you can engineer it, starting your business with a few clients lined up makes a huge difference and not just in cash flow. The energy and confidence you’ll bring to your work and selling subsequent clients will be entirely different. Until you have clients you’re a potential consultant, and that’s a painful period. Another aspect of going out on your own is mindset. Seeing yourself as a consultant can be very different than seeing yourself as running your own consulting company. I’ve seen it in my clients and have found for myself that it’s important to define who you want to be and do the things you need to do to be that. It isn’t always easy, but most of us would never go back.
My question for those ethical and legitimate consultants (and for that matter, ethical and legitimate professional sales people) is the issue of shady clients, and/or prospective shady clients, who intentionally and unabashedly pimp you, and rob your time by attempting to gain “free consulting”?