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Starting a Consulting Business - SCORE 13.01
July 29, 2021
Two women having a meeting
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Why work 8 hours/day for someone else when you can work 16 hours/day for yourself?


This brief highlights the personal issues to be considered in becoming a consultant.

What does it take?

The two biggest surprises for a consultant are:

1) You will only spend 1/3 of your time consulting with another 1/3 selling and the balance on administrative and wasted time.

2) Your technical skills will not be your biggest asset.

Technical skills are required, of course, and often help get you in the door, but the long-term customer relationships on which a consultant depends are built on one thing only: customer relations.

But it takes more than good customer service and technical skills: one must be a self starter, require very little supervision, and the ability to keep on task without a boss looking over your shoulder.

Further, working at home can be a wonderfully comfortable and productive work environment, but it's not meant for everybody. Distractions abound — spouse/children, the television, that really comfy couch — and it's really easy to burn tons of time without getting anything done. Working by yourself requires substantial time-management discipline.

Though some consultants prefer a solitary work-at-home existence, it doesn't have to be this way. Many consultants spend much of their time on the road, with plenty of human contact, and you can tailor your practice to have whatever mix you like.

Job security

The short answer is that you don't have any.

Consultants — even good consultants — are often considered a necessary evil by customers who use them, and it's exceptionally easy to stop using one. It does

The best way to approach this is to diversify — if you have only one ongoing project, you can find yourself out of work with no more notice than the time it takes the phone to ring. By being aggressive about finding more than one customer, and even making it a point to value a backlog of work, you have a fighting chance at dodging the vaporizing-customer bullet.


Your references are your reputation in the consulting world. Most consulting work comes by referral not advertising.

If you conduct yourself properly, you will accumulate a list of customers who will speak well about you: in many cases these will be your best source of new business, and in any case they have a name: your references. No matter how renowned you are for your technical skills, it is hard to overemphasize just how important your references are to a successful consulting practice.

Most questions to your referrals will not touch on the technical, most are about the relationship.

Housekeeping and Paperwork

If you don't have a mechanism for dealing with invoices, your checkbook, and your taxes, you'll surely go out of your mind. You will spend 1/3 of your time with the two issues of Time Billing and Finances.

Capturing your billable time [vs. non-billable] and converting to a customer friendly invoice is time consuming. Further separating your personally and business finances is crucial to providing a legal barrier between your business liabilities and personal liabilities.

Annually you will address the issue of taxes which are much more complicated for consultants, because Schedule C (Income from Self Employment) is much more complicated than Schedule A (Itemized Deductions) or separately in your LLC or corporation.

Time and Project Management

This is a very hard problem for a true consultant. Your schedule is largely at the whim of your customers, and many consultants find that it's a feast-or-famine existence.

Unlike corporate employment, where your boss gets to make these priority decisions, one customer rarely cares that some other customer also needs your attention. In many cases you can simply schedule the work ("I can do that for you by next Tuesday"), but consultants involved in day-to-day work cannot really expect a customer whose whole business needs your service NOW to just wait a week for you to show up.

Though your customer may very well understand that you're busy, are dealing with some other customer disaster, or you have to stay home with a sick child, one cannot escape the reality that a consultant who is not available has less value than one who is.

You have to decide how much of your life you're willing to be consumed by your consulting practice, and you may decide that the always-available treadmill is just too stressful — this is a completely legitimate decision.

Finally making the Leap

It's important to handle the obvious financial considerations first: have a nest egg in the bank, arrange for health insurance, and create an office to work in. This all takes more money than you think, and cash flow issues are always more difficult than you expect.

Many consultants get their start not by diving in, but by dipping a toe in the water. A bit of work on the side is a great way to get a feel for the business and see if it's really right for you.

Though the extra income will be nice (and is often the main draw), the primary benefits of these early contracts are usually not financial. Do you have the ability to manage your time without supervision? Are you able to treat customers like customers? Are you able to think well on your feet without a boss to fall back on? Can you earn a reference?

Most beginning consultants don't realize how important these non-technical factors are, and some have taken the full plunge only to find out that they were simply not cut out for consulting for whatever reason. Failure is usually a very painful experience, and starting slow may help avoid this.

Your SCORE counselor can assist you with developing a business plan [marketing, sales, finances, etc] and put you in contact with other counselors or local professionals that would help you with that decision

Additional suggested references:

Do an Internet search on the field that you wish to consult in, for example “personal financial consulting”

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If you would like to request a Cincinnati SCORE counselor, please click here


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