Many people fantasize about becoming a consultant but their inner voices hold them back. Often those inner voices are just plain wrong. Here are 7 myths that often prevent people from becoming independent consultants.
Many of the conclusions below are based on an independent survey of 200 successful independent consultants. (The report's Executive Summary is available for free on my website.)
1. To succeed you must develop a detailed business plan.
This certainly makes intuitive sense, but it is simply not true. Two-thirds of "The Consulting 200" did not have such a plan when they began their business. They started working with a client and then figured out by trial-and-error how to acquire more clients.
Of course, if they needed to raise money from a bank or a venture capitalist, they would need such a plan, but that's just not the way new consultants fund their businesses. They rely on severance packages, personal savings, or their spouse's income.
2. Before starting your consulting business, you should make certain you have purchased disability, liability, and errors and omissions insurance.
Of The Consulting 200, 70 percent began their business with no disability insurance, 73 percent had no liability insurance, and 86 percent had no errors and omissions insurance.
These, of course, are all very good things to have, but new consultants typically do not have money to fund them. Instead, they self-insure and wait until their business income can afford the cost.
3. You can't start a consulting business unless you can afford to continue to fully fund your retirement.
Saving for retirement did not scare off The Consulting 200. Of course, it would be nice if you could launch a new business and continue to fund your retirement.
But only 22 percent said they contributed fully to a retirement plan during their first year of business. Instead, they waited until their business income enabled them to start funding their retirement again.
4. You won't be able to support yourself in your first year of consulting.
You should probably be prepared to cut your expenses or dig into your savings until your consulting income rises. However, a surprisingly high 74 percent of The Consulting 200 were able to support themselves from their consulting work during their first year as an independent consultant.
5. I have to be an experienced marketer and salesperson in order to succeed as a consultant.
Most of The Consulting 200 were not experienced marketing and sales professionals. They learned how to market and sell.
Most leverage the trust they have with those in their network. Eighty-three percent reported that more than half of their business comes from word-of-mouth referrals rather than through direct marketing.
6. Clients won't respect me if they know that I work from my home.
Very few of The Consulting 200 had offices outside of their homes. Most enjoyed working out of their homes and did not find that their clients minded.
I know from my experience that many of my clients are envious that I work from an office in my home. When I meet with clients, it is on their turf, not mine.
7. No one will hire me as a consultant because I have never consulted before.
Having a list of satisfied clients is very important, but it is not a barrier to entry. You undoubtedly have many people in your network (e.g., former employers and former co-workers) who can provide you with testimonials and introductions.
Hopefully, I have de-mystified the process of becoming a consultant. If you have the will, there is a way. But you really have to want to be an independent consultant. You will probably have to work harder than you did as an employee, but it won't seem hard because you are doing it for yourself.
Some Things to Keep in Mind:
- Forget about the insurance, the separate bank accounts, and the website. These are all very important, but not critical. There are only 2 things you need in order to become a consultant: a client and a way to get another one.
- Marketing and sales are not rocket science. You can learn how to market and sell. The key to marketing is to do things you like and are good at. For example, if you are a good writer, you should write articles. If you are a good speaker, you should be speaking in front of your prospects. If you are a good networker, you should be meeting prospects and people in your network regularly.
- You may need help. Invest in yourself by hiring a coach or mentor to help you at the start.
- Tell the world. Put a stake in the ground. The first thing you need to do is send an announcement to everyone you know telling them you are a consultant and the kinds of problems you solve for clients. A printed card would be nice but a simple email message will suffice. This is probably the best marketing you will ever do and could easily lead to most of your business in your first few years.
© Copyright Bruce L. Katcher, Ph.D., 2012. All rights reserved. Used with permission.
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About This Author
Starting a Consulting Business Expert Bruce L. Katcher, Ph.D. is an Industrial/Organizational psychologist, president of Discovery Surveys, Inc. and Executive Director of The Center for Independent Consulting. He is author of "An Insider's Guide to Building a Successful Consulting Practice" (AMACOM) and "30 Reasons Employees Hate Their Managers" (AMACOM). Reach out to Dr. Katcher for consulting assistance at BKatcher@CenterforIndependentConsulting.com, 781-784-4367, on LinkedIn at Bruce Katcher PhD, or on Twitter @BruceKatcher.
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