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How To Start A Consulting Business On The Side

How To Start A Consulting Business On The Side

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How To Start A Consulting Business On The Side

How to start a consulting business on the side 1

Whether you’re looking to make a little extra income or gradually transition into starting a full-time business while still holding onto the financial safety net of your day job, there is any number of reasons why you’re looking into starting a consulting business on the side. 

The only question is, how do you make that happen?

Let me show you.

In this guide, I’ll draw on my own experience as a part-time marketing consultant to share with you six crucial steps to follow to make your consultancy side hustle a success.

Is Consulting a Good Side Hustle?

Starting a consultancy business can certainly prove to be a lucrative endeavor. 

How much do consultants make

Source: ZipRecruiter.

According to the latest data from ZipRecruiter, consultants in the United States make an average of $44 per hour, resulting in a national average of $7,596 per month for full-time consultants. 

Even though you’re only planning to launch your business as a side gig, those figures show there’s money to be made. If you only did three hours of consultancy work per week at $44 per hour, you’d bring in $132 a week or an average of $572 per month. 

Still, financial gain isn’t the only reason working as a consultant can be such a good side business.

It also gives you certain freedoms that your typical 9-5 may not, such as setting your own schedule and only working on projects that most closely align with your interests, passion, and experience. 

Of course, all those benefits only come once you put the work in to make your business a success, a process that can prove much more challenging when you’re already juggling the demands of your day job. 

To make life easier for yourself, follow these steps to start a successful consultancy on the side.

How to Start a Consulting Business on the Side in 6 Steps

1. Tackle the Basics First

Admittedly, the first steps towards starting your own business aren’t the most exciting, but they are essential if you’re going to do this properly. 

Here are four things you’ll need to tackle to lay the groundwork for your consultancy firm.

A. Business Structure 

To begin your journey as a small business owner, you’ll need to decide on a business structure

Though most consultants choose to launch as a sole proprietor, if you have goals to expand and take on employees, you may prefer a different business model, such as an LLC (Limited Liability Company). While you can hire employees as a sole proprietorship, the benefits of an LLC include personal liability protection which protects the owner’s personal assets in case the business is sued. 

Every state has different rules when registering a business name.

B. Insurance

Next, you will need insurance to protect your business if something goes wrong. 

Insurance specialists InsuranceBee notes that consultants need at least several different types of coverage, including: 

  • Professional liability insurance – Protects if you ultimately cost your clients money and are sued for negligence.
  • General liability insurance: Covers you if someone is injured or their property is damaged as a result of your actions.
  • Cyber liability insurance – Protects in the event of a data breach.

These policies aren’t just a good idea; they can also make a big difference when it comes to winning work, as most consultancy clients will want to know that you’re fully insured before they bring you on board. 

C. Licenses and Permits 

Do you know what licenses and permits (if any) you need to run a consulting service where you live? 

If not, see our comprehensive state-by-state guide to business license requirements to learn what licenses you’ll need and get those in place to ensure you’re operating per local laws. 

2. Define Your USP as a Consultant

Though it varies from niche to niche, competition in the consultancy industry is fierce. 

For example, almost 2 million people work as management consultants in the United States, while human resources consultants number over 129,000

With that in mind, there’s a crucial question you need to ask yourself:

“Why should anybody choose me over my competitors?”

To answer that question, take stock of your skills, experience, and area of expertise and consider what makes you unique as a consultant. 

Perhaps you’ve spent large parts of your career working in IT while also launching several businesses on the side. 

Could that serve you well working as an IT consultant for small businesses?

Maybe you’re a marketing expert with a background in the hospitality industry. Does that present an opportunity to start a marketing consultancy firm working with hotels, restaurants, and tourism companies?

The more niche you can get, the less competition you’re likely to face when finding clients. 

However, to fine-tune your Unique Selling Point (USP), you’ll also need to look at what the top two competitors in your sector are doing and how you could do it better. 

  • Can you produce faster results?
  • Can you generate a higher ROI (Return on Investment)?
  • Do you have more experience or qualifications?
  • Is there a unique approach you take that works consistently?

Use this process to come up with a short, catchy USP that defines how you can help your clients and why you’re the best consultant to do it. 

3. Decide how much you’ll charge clients

There are two things you need to consider when setting your consultancy fees: 

How you’ll charge, and how much? 

First, consider whether you’ll charge per hour, per project, or work with clients on a monthly retainer. 

Here’s where a little market research will go a long way in identifying the most common billing model in your industry.

However, there’s nothing to say you couldn’t give potential clients the option to choose any one of the three, enhancing your reputation as a consultant who offers flexible solutions tailored to client needs.

Whichever model you decide on, you’ll also have to figure out your rates. 

This isn’t the time to be plucking numbers out of thin air. 

Instead, pick up the phone or get on the Internet and contact your competitors, asking for quotes for the specific type of consulting services you plan to offer.

As a new business owner, you may not be able to charge top-level rates right away, but carrying out this research will give you a good idea of how to price your services, and you can always up your fees once your reputation grows. 

It’s also worth noting that any fees you do charge will also have to cover your expenses. If you’re paying for software, marketing tools, or other essentials, work out how much they’re costing you each month.

Consultancy Pricing Calculator

If you’re struggling with this task, using a consultancy fee calculator will make life easier.
 

4. Plan Your Time

The biggest challenge in starting a consultancy business on the side is finding the time to get everything done while still keeping up with the commitments of your full-time job. 

This is where it’s worth paying attention to when you’re most productive. 

I’m one of those annoying “morning people,” so I love getting up early and putting an hour or two into my side businesses each day before clocking into my regular job. Still, if it takes you lots of time and caffeine to get motivated in the morning, that may not be the best approach for you. Instead, you may find that working on your consultancy gig as soon as you get home from work or late at night when the kids are tucked up in bed is a better option for you. 

It’s also a good idea to look at whether there’s any downtime in your day job that could be utilized for working on your side hustle

I don’t recommend using lunch breaks to call clients as there’s always the chance that if you’re on lunch, so are your clients. The last thing you want is to spend what little free time trying to reach people who aren’t available. That said, lunch breaks can be a great time to do research, work on client proposals, or carry out marketing tasks. 

Whenever it may be that you plan to work on your business, the key to success is consistency. 

If you’re going to get up early, do it every day, or at least on a regular schedule (say Monday, Wednesday, and Friday). 

If you’ve decided to wait until late at night, be sure you’re not tempted to stay on that comfy sofa watching Netflix when you’re supposed to be growing your business. 

Don’t forget about the weekends either. 

The reason you don’t want to call clients during your lunch breaks is the same reason you won’t have much success reaching them Saturdays and Sundays:

They won’t be there.

Most of the business owners you want to connect with are spending the weekend with their family or out on the golf course, so they’re unlikely to want to hear your pitch at 3 PM on a Saturday. 

However, if you can use your weekdays for client communication, that gives you as much of the weekend as you’re prepared to sacrifice devising and implementing solutions for your clients.

5. Use Essential Consulting Tools to Make Life Easier

One simple yet effective way to reduce the amount of time it takes to grow your consulting company is to invest in tools and software that can streamline and even automate many of your regular processes. 

Consuling Tools

With Ignition, for example, you can quickly and easily create effective proposals that potential clients can review and sign, create automatic billing and payment processes, and connect with a host of third-party apps to put a whole host of recurring tasks on Autopilot. 

Hubspot Software

Elsewhere, Hubspot‘s impressive Customer Relationship Management (CRM) platform will save you lots of time and headaches when it comes to tracking and managing your relationship with existing and potential clients. 

Consulting CMap Software

Alternatively, you can check out CMap, a complete project management solution for consultants that combines a CRM with resource management, bookkeeping, invoicing, and more, giving you everything you need to succeed as an independent consultant in one beginner-friendly platform.

6. Find Your First Clients

Here’s where the real fun begins, finding those first paying customers for your part-time consultancy business.

As most successful entrepreneurs will tell you, this requires a combination of different offline and online marketing strategies. 

At the very least, you’ll need an attractive website that demonstrates the USP you defined earlier, showcasing your skills, experience, accomplishments, and, where possible, testimonials from those you’ve worked with in the past. 

Whether you build this yourself or pay someone to do it for you, ensure search engine optimization best practices are followed to ensure your site appears in Google result pages for relevant terms and delivers optimum user experiences. 

Elsewhere, you’ll benefit from a fully-optimized Linkedin profile and effective use of Linkedin Messenger to reach out to potential clients. 

Away from the digital realm, get business cards printed and hand them out at industry networking events, making sure to follow up with those you connect with after the event is over. 

Speaking of networking, those in your inner circle can be an invaluable source of referrals, so don’t neglect to give them your business card and ask them to recommend you.

Finally, never underestimate the value of advertising on marketplace sites such as Upwork and Fiverr. 

Although you’ll certainly find better-paying gigs elsewhere, top business consultants on Upwork charge up to $150 for a one-hour consultation, making it an ideal way to get those first clients while the rest of your efforts are taking shape. 

Other methods you may want to include in your marketing plan include: 

  • Email marketing
  • Social media marketing
  • Starting a blog to demonstrate your expertise and boost SEO
  • Other forms of content marketing such as podcasts and YouTube videos.

How to Start a Consulting Business on the Side: Final Thoughts

So, there you go, everything you need to know to start a successful consulting business without giving up the 9-5.

As you’ve learned by now, the process isn’t much different than becoming your own boss in any industry and requires just a few simple steps, including:

  • Tackling the basics such as insurance, licensing, and your business structure
  • Defining what makes you unique from other consultants and making that USP central to the marketing strategies you use to attract clients.
  • Managing your time effectively, picking the right moments to work on your business based on client availability and your own productivity. 

Of course, you’ll find all this much easier by putting it together in a comprehensive consulting business plan. 

If you don’t yet have one, see StartUp101’s guide to business planning.

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How To Start A Consulting Business On The Side

How To Start A Consulting Business On The Side

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