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8 Steps To Becoming a Consultant

So you think you want to be a consultant?

People shift from being full time employees to becoming consultants for many reasons. For some, it’s been the dream for awhile. You want to build a thriving business, be your own boss, and believe your experience in whatever field you have worked in is something others will benefit from, and pay you for.

For others, you see consulting as an opportunity to work fewer or more flexible hours. You have growing children, or an eye toward retirement, but still want to work for the next several years while also having time see your kids grow up, travel or enjoy hobbies.

But for many, the move to becoming a “consultant” follows months of fruitless job searching and dwindling unemployment and severance benefits. Your savings account is shrinking. You may be over 55, and feel that age discrimination may be impeding your ability to find meaningful full-time work. In that situation, consulting can be the ideal way to bring in much-needed cash, perform meaningful work that keeps your skills fresh, and have updated experiences and accomplishments to talk about if and when you interview for the full-time job you really want. And ultimately, you may be so successful you discover you don’t want a traditional full-time job anymore!

As someone who has moved back and forth throughout my career between being a full-time marketing communications leader within organizations and running a small independent consultancy, these are the tips and tricks I’ve discovered that make the transition to consulting more successful.

Networking and visibility are you top jobs when starting a consultancy, whatever field you are working in.

1. The day you decide to be a consultant is the day you start looking for your first clients. I see so many people who leave a job (voluntarily or involuntarily) and say “I’m going to take a few weeks off, and then start developing my consulting business.” This is the wrong move. Your
   skills and connections are freshest once you announce you are leaving a position and in the first months after you leave your full-time job. People are most interested in helping you in those first few weeks. Taking even two weeks “off” during those few months is a bit of a mistake. You will have plenty of down time in the months ahead. Needless to say, it is not a fatal blow if you decide to take a couple of weeks off — but my advice? Plan a two-week hiatus for six months from now.
2. You need an elevator pitch on Day One. Even if you don’t know exactly what you will offer as services as a consultant, you can certainly develop three or four talking points that combine what you are good at, and how that could help potential clients. That “elevator pitch” may change over the next few weeks or months, but being able to tell people at your going away
   party or when you see them at the park or grocery store what you will be doing is imperative. You need to exude confidence, and a plan for success from the outset. If you need help developing that elevator pitch, there are books or career counselors who, for a relatively inexpensive fee, can help you develop such a pitch. Friends in your line of work can offer insights.
   Or contact me, and I can help you for modest sum.
3. You are always “on” as a consultant. What do I mean by that? I mean that you never know who you will run into at the drug store, talk to at a get-together (on Zoom or in person), or encounter on social media. So, you need to look your “business-casual best” when you are out and about. No dirty t-shirts, unwashed hair, weird comments or post on social media, etc. You also need to be comfortable answering the simple question: “What do you do for a living?”. If the topic comes up (and it always does), deliver your elevator pitch in a conversational way. I don’t mean that you should be trying to sell everyone you meet to hire you (this isn’t a pyramid scheme you are promoting!). But being comfortable delivering your elevator pitch in an upbeat, successful-sounding manner that is appropriate to the social setting you are in is key.
4. Networking is Job One as you launch your consultancy. Launching a consulting business is a lot like looking for a job — but with far less commitment on the part of the person hiring you . This makes it easier for those with whom you are networking to think both about their own potential needs, and others with whom they have spoken who might need the types of services you are offering. A person may be feeling overwhelmed with all the work they have on their plate, but have never thought about offloading some of it to someone before they met with you. If they have some budget discretion, you could be the answer to their prayers. If the person you are networking with knows a new project is on the horizon, or he or she is currently developing an RFP (request for proposals), you may suddenly find yourself being able to bid on a new project that you never would have heard about if you hadn’t networked. Networking is extremely important to becoming a successful consultant. If you really, really hate networking, consulting may not be for you. In your early days, having a meaningful networking conversation with 2–3 people a week is probably a reasonable minimum goal.
5. Visibility is a close second to networking in terms of consulting success. You need to be seen as an expert at what you do. That means posting on LinkedIn frequently to keep your name in front of people, joining professional organizations and volunteering on their committees, presenting at professional events, and, potentially, writing about issues in your field on place like Medium or Substack and promoting what you write on social media.
6. You don’t need a website on Day One, but you do need an up-to-date LinkedIn profile. I’ve seen people expend a lot of energy, time and money in the early days of their new consulting career developing a website, thinking this is key to their longterm success. Websites do not generate clients. Networking and visibility generate clients. And your immediate goal is to network! Do not use “I need to work on my website” as an excuse to avoid networking! That said, you do need somewhere to send people who ask for more information about your background and experience. So spend some time updating your LinkedIn profile. Some version of your elevator speech should appear in the “About Me” section of LinkedIn. And your current job is not the job you just left, but it is the job of “President” or “Founder” or “Principal” of your new consulting firm. A link to your updated LinkedIn profile can then appear at the end of your email signature, on your virtual or physical business cards, etc. If anyone asks for a link to your website, simply say “I’ve been so busy pitching and working with new potential clients that I just haven’t had time to get my website up yet!” Sounding busy and successful is more important than having a website during your early days as a consultant.
7. Develop a name for your consultancy, corresponding email address, and business papers. Your consultancy needs a name. Don’t spend tons of time thinking about this. You aren’t Amazon. It’s fine to simply call yourself “Julie Rafferty Design” (if that’s your name and business). Frankly, that’s what most people do. It’s clear, professional, and doesn’t run the risk of seeming “too cute.” You then need to reserve the URL for some close variant of that name so that you will have it for your website down the road, and so that you can set up a new email address for yourself that isn’t a gmail address Your email address should end in whatever the URL of your website is: so for me, for example, my company name is Rafferty Communications Strategies and my email address is julierafferty@raffertycommunications.com The person you hire to develop your website can help you identify and reserve a URL for the site and set up your email.
8. Sometime in the first three months you will want to develop a simple website as a sign that your business is a going concern. But you should not spend your first two months working on it beyond getting the URL and email address established (unless you have absolutely nothing else to do on a Saturday or Sunday!). And PLEASE, if you don’t know how to use simple website development tools, don’t waste time learning how to make your own site. You are almost guaranteed to spend many hours doing this and still wind up paying someone to make something better in the end. Pay someone to develop a simple site upfront that you can easily update. It’s likely that you can find someone to do that for a few hundred dollars. Most likely, they know how to reserve the URL you want for your website and can handle that and set up your email address for you too. Your time is better spent networking.And while your website should be professional looking, unless you are embarking on a consultancy as a web developer, a simple five -page website will suffice. Those five pages are:
   (1) home page; (2) bio page that includes your picture and background on your experience and skills; (3) a list of services you provide; (4) a list of clients (in the early days, you may want/ feel it is appropriate to list your last couple of employers with brief description of what products you delivered and services you performed, and (5) contact information. Once you have written your elevator pitch and updated your LinkedIn profile, producing the copy for this simple website will be a snap. Your email address should end in whatever the URL of your website is: so for me, for example, my email address is julierafferty@raffertycommunications.com

Do I need to incorporate or file formal business papers?

People may be wondering whether they need to set up their consultancy as a formal legal business, LLC, etc. Frankly, I think this depends on what you plan to do as a consultant. If you will chiefly be developing written marketing materials (for example), don’t have employees, and are working out of your spare bedroom, it may be simplest to bill your first couple of clients using your social security number (clients will then provide you with a1099 Form for tax purposes at the end of the year) rather than expending the energy to create a formal company of some sort. This way, you can see if you like consulting work and are making it a going concern. I see this as being a little bit like your website. Your website may get more elaborate in the months ahead as you do more work and acquire more clients. And at that point, spending more time and a little bit of money filing those business papers will be a good investment, too.

Of course, if your new gig involves providing services or producing a product that has risks involved with it, developing a corporate entity that separates your business dealings from your personal assets will be imperative. Again, I’d encourage you in this circumstance to be in touch with an attorney — or network with others working in a similar field and get their advice as to how they have set up their businesses. Among other things, your conversations may lead you to discover they have some additional work they’d love to get your help with!

How do I set fees?

There are a couple of strategies to setting fees. A simple place to start is to take whatever your current hourly rate as an employee is/was, and double it. Why double it? Because you are paying your own expenses, health insurance, and other benefits. And because you aren’t guaranteed 40 hours of work every week.

You may also be asked what your “day rate” is, depending on the type of work you do. In that scenario, take that doubled hourly rate and multiply it by eight. So if your hourly salary in your current job is $25/hour, your consulting rate would be $50/hour, and your day rate is $400/day.

Another strategy is to talk to a few people who do similar work to what you plan to do, and ask what they charge. That may help you adjust your fees up or down depending on what the market seems to be paying.

Some consultants work with clients on a retainer basis. In this circumstance, clients agree to pay so much per month for a specific period of time to deliver specific ongoing services. The best way to do retainer work starting out, in my opinion, is to set a fee and state that it is based on a set number of hours of work each month. If you work more hours in a given month, the fee for that month will increase to pay for those extra hours. If you work fewer hours, you will still be paid the monthly retainer, but the hours can be rolled over to the next month. (This is very similar to how cellular phone companies have charged for minutes in the past, so it shouldn’t be an unfamiliar concept to a potential client). This type of arrangement guarantees you a set income each month — but be prepared to work lots more hours in some months!

In my field (marketing communications), some consultants charge by the project, while others charge by the hour. Charging by the project can be riskier when you start out. You don’t know how long a project will take, and are unfamiliar with a new client’s expectations. A good middle ground is to offer a nonbinding estimate based on how many hours you think the project will take, but then asking to be paid based on an hourly fee for the number of hours you actually work on the project. In this way, the client has a sense of what you will charge, and is incentivized to work with you efficiently to keep the project on budget. If you and the client both work efficiently, the client pays less. And you can be on to the next project. On the other hand, if the client makes lots of changes and work takes much longer than anticipated, you won’t find yourself working for pennies.

To make this scenario work for all involved, you need to keep close track of your hours, and let your client know when they are nearing the agreed upon number of hours/cost for the project. No client wants to be surprised at the end to find out they owe more!

What about taxes?

Once you begin consulting, you need to make sure you keep track of any and all expenses and are paying taxes on a quarterly basis on whatever income you are generating. Otherwise, when tax season roles around you will have a rude surprise — both in terms of the money you owe and any penalties that may accrue from not having paid enough money up front.

I strongly recommend hiring someone to do your taxes if your business takes off. Similar to a website and filing business papers, paying a relatively small amount to have an expert file tax returns and provide advice on how to minimize your taxes is far better than spending hours doing the tax work yourself. And it leaves you more time to network, network, network!

If you liked this piece, or would like help in promoting your business, feel free to be in touch!