10 Tips on How to Start a Consulting Business

Tim Berry

Tim Berry

Tim Berry

4 min. read

Updated February 8, 2024

Are you considering starting your own consulting business?

I’ve been there. In fact, I left a very good job as a vice president in a market research firm to go out on my own as a planning and market research consultant, and, after some rocky months at the beginning, I made that work.

Becoming a consultant was how I made a living for 12 years between leaving Creative Strategies International and creating the product business for Palo Alto Software.

Considering becoming a consultant? Here are 10 tips:

1. Take it seriously

Do it right. Stay mindful of the old adage about a consultant being somebody who is between jobs. Avoid making that impression. Have a website and business cards. Establish a social media presence as a consulting business. Don’t let your clients or potential clients doubt you.

2. Never apologize for being on your own

If you work out of the home, or a small office, don’t pretend. Take meetings in your clients’ offices.

My favorite client, who was responsible for a serious portion of my consulting income for 12 years, once told me that “I like the single shingle consultant, because I don’t want to pay for overhead, and I want to deal with the person who does the work, not the person who sells.”

He was a powerful manager in a large enterprise, and had budget to get brand-name consulting, but preferred the expertise over the overhead.

3. Start with a consulting contract from the employer you’re leaving

Most successful consultants started out with one big reliable client, which is most often the last employer. If that’s not working out, you can vastly reduce your risk by finding the one big client you need to survive.

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4. Plan for late payments

I needed a bank line of credit to survive when big companies paid late. And I couldn’t hassle my clients, because they had signed the invoices and passed them on to the accounts payable function in the client companies.

You’re going into a business-to-business world, meaning that you turn invoices to your client and the client company takes weeks or months to pay.

Don’t hassle your clients for prompt payment. Do find out who is in charge of payables, and keep yourself informed on payment schedule.

5. Under promise and over deliver

Repeat business is the key to success. It takes four times the resources to find a new client than to keep existing clients. Even when it’s 3 a.m. and you’re hating the job, stick to it to deliver your best work in the morning.

6. Start small to demonstrate your skill

For new clients, try to find a quick small job to demonstrate your skill without requiring the client to commit to a long term expensive job.

It’s the equivalent of having a cup of coffee together before you take the weekend in Hawaii. It’s also easier to sell an engagement when it starts with just a first step, meaning less of a commitment. And it gives you time to sell yourself.

7. Get your schedule and deliverables well defined, written down, agreed upon, and signed

Expect scope creep—clients asking for more after they’ve agreed on deliverables and price—and deal with it delicately, suggesting the extra work needs extra fees. This is one of the toughest problems you’ll have, and there are no easy solutions.

8. Write a boilerplate proposal

Do a boilerplate proposal that includes pre-written text on your background and qualifications. Give the client the peace of mind of seeing the formality of a proposal with a lot of background.

You aren’t going to sue your client so they do you no good. Make it easy on yourself and your client by offering a simple commitment letter. And if the client needs you to sign a contract, if you have to negotiate key points related to intellectual property and work product, then do—but try to avoid it.

10. Don’t drag on with unhappy, unprofitable, or unproductive clients

If there is constant pressure and complaining, don’t fire the client, but do propose three or four times what you would normally charge if that client asks for a follow-on job. If your client is disastrously late to pay, you have an unhappy client. Don’t fight with them, you can’t win. Explore what the real problem is. Write off the debt. Go on to the next engagement.

Plan for success

I hope these tips help. I enjoyed my 13 years of depending on consulting for making my living. I liked almost all of my clients, as well as the changing face of the job, the new challenges, and variety of work. I hope it works for you.

To prepare for your consulting business, the best thing you can do is write a business plan. Check out our business consulting business plan example and free template to get started.

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Content Author: Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.