The Top 10 Myths of Starting a Consulting Business

I’ve seen a lot of myths about consulting, all of them as hoary and false as the idea that if you build a better mousetrap, people will beat a path to your door. Following are the infopreneur myths I’ve found to be most prevalent… and wrong.

#1. Consulting is what people do when they’re between jobs
In my experience, you can’t both start a business and look for a job; either you are focused on finding what your clients need most and how you can meet those needs, or you’re focused on finding who will hire you for your skills.

#2. The services I provided as an employee will be valued by consulting clients
Broadly speaking, employees are paid to maintain processes, while consultants are paid for outcomes. While you may do the same type of work as a consultant as you did as an employee, the focus – and what your client is paying you for – is very different.

#3. I know what my clients need
You don’t yet know what they need, value and will pay you well for, until you have conducted at least a half-dozen reality-check interviews. (tiny.cc/reality-check) I am always surprised by what I learn when I conduct reality-check interviews with my existing clients.

#4. I’ll be able to bill 40 hours a week
At least half your time will ALWAYS be non-billable. You’ll be doing marketing, administrative work such as paying bills and sending out invoices, more marketing, professional development such as attending the AIIP conference (aiip.org/conference), and more marketing. I’ve been in business for over a quarter century, and I still spend at least a third of my time marketing.

#5. I won’t have to work as hard / I can do this part-time
It takes 400 hours of solid, unbillable work before you can expect your first client. If you’re only working part-time, it will take that much longer to get your first paying client. See more at tiny.cc/400-hours.

#6. Once I’ve written my business plan, I’ll be set
Business plan? What business plan? Yes, while it’s important to know where you’re going, it is also critical to have short-term metrics that keep you focused. What are your measurable 12-week outcomes? What do you need to do to get that first (or next) paying client?

#7. I should make cold calls to generate business
Wrong, wrong, wrong. For starters, keep in mind that no one appreciates or trusts cold callers. More importantly, you will be more successful if you fish for clients with a net rather than a line. Rather than chasing after individual prospects, focus on broad efforts that attract the kind of clients you most want to work with.

#8. I should focus on finding retainer clients
Nope. Retainer clients aren’t good clients, for a number of reasons. They pay for process, not outcome, so they tend to be price-sensitive and focused on your time as opposed to your value. And they pigeonhole you; they see you as one cog in a larger operation, which tends to keep your billable rate low. And they lull you into complacency, as you get accustomed to that steady payment, until the day that they quit using you and you are suddenly faced with no income.

#9. I should price myself low to start out
You’ll wind up with price-sensitive clients who only value you for your low price. You’ll get low-value projects from them, and they will only refer you to other low-budget clients.

#10. I can do this on my own
You may be a solopreneur, but you’re not alone! AIIP offers resources that help you succeed – accountability buddies, mentors, a lively discussion list, virtual events where we talk about our biggest challenges, and opportunities to build your skills.

 

One comment on “The Top 10 Myths of Starting a Consulting Business

  1. I sold my 10 year old consulting company in 1987 (during which I was an AIIP member), and my partner and I successfully sold a library management service in 2007 after 10 years. You were a guide in each of those tenures MEBs.

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