"Setting Up as an Independent Consultant"

"Setting Up as an Independent Consultant" By Jela Webb Introduction

The nature of the workplace has been changing, with organizationsslimming down and outsourcing many types of activities; this has givenrise to the loss of both job security and long-term employment.

Consultancy may be defined as 'providing independent services to meetclients' needs in exchange for a fee'. Consulting has become a viableoption particularly with the focus on the knowledge-based economy.

It is important to distinguish consultancy from contracting - aconsultant has much greater autonomy, often assisting more than oneclient at a time, often choosing the hours worked, deciding forthemselves whether to work on- or off-site and being responsible forthe final product or service.

The consulting industry is diverse and covers a wide range ofactivities. Broadly speaking it can be broken down into fourcategories:
1. Strategy firms
2. Full service firms
3. Boutique firms
4. Independents

This article will concentrate on 'independents' - more than 50% ofconsulting firms are 'one-man bands' and it is increasingly becomingan attractive proposition for many who feel that corporate life is nolonger for them. Whilst giving up full-time paid employment to set upas a consultant might be a daunting prospect, with proper planning anda methodical approach, you should be able to fully reap the rewards ofworking independently.

Keys to success lie in having the rightpersonal qualities and skills together with an understanding ofmanagement practices. Establishing your own consultancy is a risk and the pressuresassociated with it should not be underestimated. You will be stakingeverything on your own ability and must be able to deal with thedownsides as well as the upsides. There is no doubt that it can be arewarding experience but firstly ask yourself why do you want to setup as an independent consultant.

Reasons may include:
* Independence - however, working as a consultant will entail working with and for others so you still need to be able to work in or as part of a team
* Job satisfaction - wanting to do something in your own way and style will often lead you down the self employed (consultancy) route
* Achievement and success - there is a real 'buzz' attached to running your own successful business but be prepared to deal with the challenges this brings and equip yourself to deal with any difficulties
* Money - starting and running your own consultancy does not guarantee wealth. Starting a consultancy when you feel you have no other choice is a situation you should be wary of. Is consultancy for you? -

Consultants need an area of expertise - clients typically buy servicesthat they don't have 'in-house' so you need to think about what it isthat you are selling - clients are busy people so you need to make itquite clear at the outset what it is you can deliver and how it willbenefit them. Having an area of expertise may mean that you want toconcentrate on a specific discipline (e.g. organisational development)or in a specific sector.

If you limit yourself to a particular sectorthen do be aware of the impact of any industry downturn and what thatmight do to your own business. Some consultants prefer to market themselves as generalists where theysell a range of skills across the market. A word of caution: clientscan sometimes be suspicious of someone who purports to be able tosolve all their issues. If you feel that you are more likely tosucceed as a generalist then I'd advise you to sell your services asan expert in the client's most pressing area and introduce othergeneralist skills as the assignment develops.

Self-assessment - It is advisable to undertake some self-assessment and analysis beforeembarking on a new consultancy venture. Firstly assess your skills,undertake a self audit exercise - detail your skills (technical,business, leadership, selling, organisational) and attributes;consider how you might apply these in consultancy work.

Be honest andobjective; ask friends, colleagues and family members their opinion. Consider the type of consultancy projects you would like to work on -have you undertaken similar/relevant work before? Can you provideevidence of your ability? Have you published any work in relatedsubjects? Are you able to construct a portfolio of consultancyprojects, references and articles that can help you sell yourself topotential clients?

To run your own consultancy business you need to be pretty resilientand answer some searching questions honestly :- Are you realisticabout your own capabilities? Are you motivated and self-disciplined?Do you have a support network? Are you prepared to dedicate yourselffully to establishing the business? Do you have good interpersonalskills? Are you decisive? Do you cope well with stressful situations?Do you 'stick it out' when times get tough? Do you take advice andlearn from mistakes? Are you in good health? Do you fully appreciatethe risks in establishing your own consultancy? If you are able to answer affirmatively then you have got what ittakes to move forward. If not, don't despair - by thinking carefullyabout the areas I have highlighted you will have identified aspectsthat need to be worked on and where to focus your improvement efforts.

Marketing - Consultants also need to be able to promote and market themselves. Asan independent you will be responsible for your own marketing andalthough it is relatively straightforward to set up a soleproprietorship consultancy, establishing and sustaining businessactivity calls for marketing and promotion. Promoting yourself,persuading people to support you and winning clients is crucial tosuccess.

A new consultant may become involved in a good deal of speculativework in order to establish a client portfolio, sometimes you have to'speculate to accumulate' but be aware of offering too much for freeas you will run the risk of devaluing your services if you don'tcharge for them. It's a careful balancing act, which becomes easier asyou become more established. Most consultants will have contacts in their area of expertise fromtheir previous experience/employment and can target these for work.

I always encourage people starting up not to overlook existing contactsas potential future clients. Stationery, publicity material and business cards should be welldesigned and printed on good-quality paper. These days, with theadvent of the PC and suitable software, it is possible to produceprofessionally-looking material without going to huge expense. Other marketing-related activity might include speaking at conferencesand local business events, presenting to professional associations andwriting articles for relevant industry journals.

Local newspapers run'advertorials' in their business sections so you may want to advertisethe launch of your consultancy this way. Mailing packs can be distributed to potential clients - these couldinclude a CV, details of services offered, details of memberships ofprofessional bodies, details of previous assignments (opportunitiesmay have been possible whilst still in full time paid employment),details of any conference speaking engagements, published articles,references and feedback from previous projects.

Think about presentingthe material in a creative way - in an unusually shaped parcel or in atube (this happened to me once and was a real attention-getter!). The Internet provides opportunities to establish your own web site formarketing and promotional purposes. The investment in a web site canpay dividends and helps to present a professional image. Do you meetthe 'Google factor?' If a potential client types your name into asearch engine what results are returned?

Networking - Networking is very important and for most consultants it is the singlemost important business-getting tool. To succeed in consultancy youneed to establish a personal and professional network. It is noexaggeration to suggest that your network should be in the region of200 and needs to be nurtured and updated regularly. It is interestingthat whilst so much business (not just consultancy) is obtainedthrough networking, these skills rarely appear on any business schoolcurriculum.

You probably already have a personal network from: * Family * Friends and neighbours* Colleagues* College/university and a professional network from: * Previous employment * Conferences* Exhibitions* Trade associations* Business/professional associations* Contacts from presentations attended/given Make a list and start building and cultivating your network months inadvance of starting your consultancy.

Formal networking events can sometimes feel daunting, remember theunease that you feel is no different from how others feel - look outfor someone standing on their own, initiate an approach, ask themabout projects they are involved in, find common ground. Be sincereand don't be afraid to circulate; set yourself a target of makingthree new contacts at each networking event. Develop your 'elevator pitch': describe what you do and importantlyhow you benefit clients, in a couple of short sentences. Keeping in touch with many contacts is made easier with e-mail - anewsletter, a launch of your new web site or an e-Christmas card forinstance.

Chargeable Rates - The amount you charge a client will largely depend upon the market.Ascertain what the 'market rates' are and price accordingly. If youprice your services too high then you may not secure any work.Alternatively, if you price too low, then you may not secure workbecause you may give the impression of a cheap and not very valuableservice. How much can you charge? This is an age-old challenge for newconsultants.

The five-step plan below gives an indication of how youmight work out your chargeable rate:

1. Calculate annual household and personal expenditure (food, clothes, mortgage, holidays, rent, telephone, tax, pension, insurance etc.)
2. Calculate the income required to cover the above items
3. Add all the annual business costs to the income calculation
4. Divide the total by the number of days you plan to work each year
5. Add on the profit you wish to make (a margin of 15% to 25% is not unreasonable)

This will then enable you to work out your daily chargeable rate. Itis important to bear in mind that you will not be generating income onevery 'working day' of the year. There will be days when you need tobuild your skills, (attend courses, conferences, exhibitions, etc.),days spent on administrative matters, days spent on marketingactivities, days spent putting proposals together, etc. As a broadrule of thumb, I'd recommended using 60% of the available working daysfor fee income work and price your services accordingly.

Legal aspects and other requirements- Aspects that you need to consider are bank accounts, insurance, tax,VAT, national insurance as well as deciding what form the businesswill take - sole trader or limited company. It is best to seekprofessional advice. Write a business plan, set targets and goals and don't forget your owncontinuing professional development.

Summary- A single-person consultancy can be started relatively easily and atvery little cost. Give it some careful thought and planning - theissues outlined provide you with guidance, there is a good deal toconsider and it can be a very satisfying experience.

There are risks and pressures associated with it. You need to have the right skillsand temperament to succeed. It is important to assess your abilitiesand aptitude honestly before proceeding with your ideas. Do your homework, you are taking a chance; if after considering allthe issues, you feel you have a viable proposition go ahead - give it100%. Good Luck!

Useful links <http://www.imc.co.uk>
<http://www.mca.org.uk>
<http://www.top-consultant.com>
<http://www.bni.com>