Be an independent consultant

Overview

For many coming out of a corporate career, consulting is a high value way to leverage experience, knowledge, talents and skills, while sharing best practices. It’s an ideal activity for those who want a high degree of flexibility and control over their time, but want meaningful and gratifying work. And you can keep things interesting by working with a variety of companies or organizations. Consulting deliverables take many forms including analysis, guidance, recommendations and, potentially, interim assignments. Whether you’re considering becoming a consultant, or have already decided to pursue this direction, the information on these pages will help give you clarity and direction.

Am I right for this?

10 yes/no questions to help you determine if this is a good direction for you

Do I like to work independently?

Do I enjoy project work?

Do I like solving problems?

Do I like sales or business development?

Do I have a robust network of business contacts?

Am I self-directed?

Am I comfortable working with limited resources?

Do I have analytical skills?

Have I developed a set of best practices from my career that I can leverage?

Do I have the financial resources to weather the dry spells when client work slows down?

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If you answer six or more “yes,” this is probably a good direction to pursue.

Topics CEOs want help with

A business’s most powerful asset is its people. According to The Predictive Index’s 2021 AnnualCEO Benchmarking Report, CEO’s are looking for solutions in the following areas:

  • Talent optimization
  • Management
  • Purchasing new software or systems
  • Adopting new processes or playbooks
  • Human resources

Essential traits, skills and competencies of consultants

  • Subject matter knowledge (about a particular industry or function)
  • Strategic thinking
  • Research oriented
  • Analysis
  • Process and systems thinking
  • Communication
  • Consensus building
  • Questioning and listening

Functional areas for consulting

  • Finance
  • Supply chain
  • Technology
  • Procurement
  • Engineering
  • Operations
  • HR and talent development
  • Sales
  • Marketing
  • Leadership development

Top consulting businesses

* According to Entrepreneur.com

  1. Accounting
  2. Advertising
  3. Auditing
  4. Business
  5. Business writing
  6. Career counseling
  7. Communications
  8. Computer programmer
  9. Editorial services
  10. Executive search/headhunter firms
  11. Gardening
  12. Grantsmanship
  13. Human resources
  14. Insurance
  15. Marketing
  16. Payroll management
  17. Public relations
  18. Publishing
  19. Taxes
  20. Writing services

Q&A

Here are questions and answers that address common issues and concerns for those considering becoming an independent consultant.

Question

Do I have to specialize in a particular function or skill?

Answer

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.

Question

How should I charge for my services?

Answer

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.

Question

To what degree will I be competing with consulting firms?

Answer

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.

Question

Do I need to incorporate or can I function as a sole proprietor?

Answer

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.

Question

How much money should I expect to invest to get started?

Answer

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.

Question

How long should I expect it to take to generate revenue and business?

Answer

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.

Question

How do I handle taxes?

Answer

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.

Option Evaluator

Assess this option against the following eight criteria:

Option Evaluator Graphic

Additional resources

Next steps:

Step 1

Determine if it makes sense for you to become a consultant based on the “Is this Right for Me” section.

Step 2

Determine which area you want to specialize in.

Step 3

Optimize or create a LinkedIn profile, marketing yourself as an expert.

Step 4

Assess your network and contacts for consulting opportunities.

Step 5

Decide if you want to incorporate or function as a sole proprietor.

Step 6

Develop a simple website to market your services.

Step 7

Reach out to your contacts, announcing your plans.

Step 8

Identify a specific opportunity and develop a proposal.

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Get started

Talk to an expert. Explore the options. Dig a little deeper. See if this is right for you.