Be an independent consultant

Not necessarily, although if you position yourself as a subject matter expert in a specific area or function, clients will be more likely to seek you out for that expertise. Many of the skills required to be an effective consultant are non-function specific, such as information gathering, listening, analysis, problem solving and consensus building. You have the authority to position yourself and your deliverables; what matters most is that you can help clients uncover and solve their business problems.

Fee models vary, depending on the nature of the deliverables and relationship with the client. You can charge by the hour, the project, or based on performance. If your fee is project-based, it’s important to accurately estimate the amount of time and resources it will take to complete the project. If the client requests revisions, and it takes more time to complete than what was originally calculated, you may lose revenue. When establishing your fee structure, it is advisable to determine a model and amount that works for you and your client.

As an individual consultant you will likely be targeting a different type of clientele than an actual consulting firm that has multiple employees, and, presumably, the resources to support them. Your target market will be smaller businesses, which would not be of interest to a larger firm, giving you an advantage at landing those accounts. You will also be able to deliver work at a lower cost than a larger consulting firm, and in that respect, be a more desirable option for the client.

A corporation may have tax advantages, and provides protection for you as an individual against liability. Depending on the nature of the consulting you’ll be doing, you may or may not need to incorporate. Many independent consultants function as sole proprietors and can benefit taxwise without the cost of incorporating. However, if you want to reduce your risk dramatically, incorporating may be the best route to go. Talking with an attorney and accountant will provide the most complete information for making this decision.

The initial business costs as an independent consultant are very low; you are the primary asset and besides your experience, knowledge and insights, you won’t need very much capital. You will want to invest in marketing materials, which can be quite affordable. An optimized LinkedIn profile, a one-sheet describing your services, and a consultant’s resume is all you need to get started. You won’t need an office, unless you can’t work from home or are far more productive in a professional environment.

Acquiring clients is one of the biggest challenges you will face. Personal and professional connections are vital. If you have a deep network that you can utilize, you will dramatically accelerate the process. It will take an average of six months on average to build a strong pipeline of opportunities, and anywhere from one to six months to land your first client.

Whether you decide to operate as a sole proprietor or become incorporated, you will need to pay taxes. You are required to pay estimated taxes quarterly; if you wait to pay them at the end of the year, you may be subject to penalties. Check out Tax Implications of Being an Independent Consultant for more information.