Thinking about setting up as a management consultant?

It seems to be more and more in vogue to pack in the rat race and set up your own company, even (or maybe especially) in the current economic climate. Here are 10 things to consider before taking the plunge based on my experience to date.

1 Know what you want to get out of it
There are several good reasons for setting up a consultancy (and several bad reasons too!). You may be planning to build an empire, you may have a great business idea or you may be looking to semi-retire and to have the business as a hobby. Your purpose should guide all your decision making. For me the business is a way of making a living doing something I enjoy.

2 Make sure that you have a target audience
In the early days most consultancies rely on those contacts that they’ve built up over the years. But having a lot of contacts is not enough; they need to be able and prepared to buy from you. Whether or not your business will depend on your contacts, you need to sound out potential clients to check that your idea works with them before you commit yourself.

3 Make sure that you have something compelling to sell
You need something (or a service) that people will buy. Genuinely innovative services are rare, so most of us have to settle for an “angle” and our personal reputations.

4 Work out whether it will pay
In any consultancy you are selling your time, so the factors that really matter are how much of it you can sell and at what price.

5 Take advice from anyone who will listen
As well as speaking to potential clients, speak to as many people as you can who run their own businesses. They will be able to tell you all the things you need to get and do and where to get them. They will also be able to recommend banks, accountants, IT support, etc. They may even help you avoid the mistakes they made.

6 Be prepared to really learn about running a business
Many people go straight from being a corporate employee, to their own company and I have always admired their bravery. It is quite a step from the corporate culture to a small fledgling company – there is so much to learn, like how to set up a
company, how to trademark the name, legal and accounting requirements and dozens of other matters large and small.

7 Keep your costs under control
Whatever the scale of your ambitions this is a key discipline, especially in the early days. There are virtually limitless ways to spend large amounts of money: IT, office space, staff, design work, web site, marketing, stationery, professional fees and many more. On the other hand many of these costs can be avoided, postponed or minimised. So set a sensible budget and stick to it.

8 Network for all you’re worth
As well as working your contact list, take every opportunity to expand it – not just with potential clients but also with other consultants and freelancers. There’s a whole world of small agencies and freelancers out there and you don’t meet them until you’re one of them. They can be a source of business, a source of advice or a way of expanding your offer. One of my biggest surprises to date has been the amount of business that has come via referrals from and collaborations with other consultants and agencies.

9 Try to be patient
There will inevitably be times when it goes quiet or when clients take an age to make a decision on your proposal. Try to be patient and make the most of the quiet times to do networking or product development, or even some non-work-related activities.

10 Enjoy it
The decision to set up as a consultant is a life decision not just a business decision. There’s much to enjoy and if you don’t enjoy it then it’s not for you. There’s the freedom to do it your way and to escape from office routines and bureaucracy. There’s the huge satisfaction with every success (and the balancing disappointment when things don’t work out!). In my case I spend my time working with clients and on projects which is what I wanted to do. I work from home which means my work and home lives are more mixed up but they are much better balanced than before, as I can time-shift to spend more time with my family and still get the work done. Above all, my family tell me that I’m generally less stressed and a nicer person to live with!

© 2009 Tony Isaacs