Ask a Consultant: How to Get Into Consulting

Have you ever thought about taking all of your years of experience and pivoting into consulting? Or, are you just getting started in your career and looking for a way to rapidly learn, experience many different project types, companies, and industries?

Recently, a friend and her colleagues who were newly impacted by layoffs approached me curious about the management consulting profession. This brought a smile as a former colleague used to describe me as a “consultant’s consultant.” So, yes friends, I will consult with you on consulting.

The list of questions they had are ones that I hear quite often. So, I thought I’d share them in a Q&A.

Q: How do I position my background to transition from the corporate world to consulting?

A: Consulting is all about solving problems for clients or customers. Most of our roles—even if in house—have a problem to solve and a customer to serve. Like the Vanilla Ice song—“you gotta problem, yo I’ll solve it”—there’s a consultant out there for every facet of business. So, in your resume, LinkedIn, and website messaging you can start positioning the project opportunity, how you helped with services and deliverables, and the final outcome or result.

Q: What are the different models for consulting?

A: The model in which consultants offer their services may be hourly-, project-, retainer-, subscription-, value-, outcome-, or fractional-based. You can also have a hybrid of all of these in your consulting model—depending on the customer or project.

Hourly is the most common and straight forward. As you become more knowledgable, experienced, and fast in an hour, that hour becomes more valuable and hence the rate goes up. Even if you choose to use a different model, it’s usually rooted in your estimate of the amount of hours it takes to accomplish something.

Q: How do you set your rate?

A: You’ll want to set a rate that is competitive with the market, aligned to your experience level, is expected for your target customer, and covers your costs. You’ll want to consider that your rate is competing against a company’s ability to hire in house, other consultants, and firms. If you run lower operating margins, you can bring a greater experience at a lower cost than big firms and agencies that mark up 10-50% to cover their overhead and burden costs.

Q: What are different ways to price consulting?

A: There are a few common ways to price services—hourly, fixed capacity, or fixed fee. There’s a psychology to how something is priced and the readiness to buy. I typically factor in risk, trust, time, effort, feasibility, confidence, value, and customer needs when looking at which option makes the most sense.

Q: Where do you give on price in negotiations?

A: Any time a customer gets something for free or for a discount, there needs to be a value exchange. The worst investment you can make is one that your client or customer doesn’t know about. The fastest way to devalue your products or services is to discount without a clear value exchange. Examples of value exchanges might be the commitment of longterm work for a lower rate, access to build buyer relationships for a free workshop, or earlier sign ups for a discount.

Q: How do you source new business?

A: There are many ways to source new business including representation from a sourcing, recruiting, or consulting firm, creating a marketing funnel with social media and email lists, networking within your community, referrals from current customers, collaboration with other, complementary professionals, offering free consultants or workshops, or offering to speak at events or on podcasts.

Q: How do you plan and balance business development and delivery?

A: In an overly simplified way, the lifecycle of consulting is marketing, lead generation, opportunity pursuit and proposal, project and contract negotiation, project delivery, and recommendations for ongoing services or extensions.

Ideally, an automated a funnel that lands project opportunities in your inbox on a regular basis so that you can craft proposals while juggling delivery. The best place to sell is where you’ve already delivered great work, built trust, and understand the business to be able to recommend ongoing services. So, it’s important to always recommend a next phase of work.

Q: Should I have a playbook, set of templates, or tools created ahead of an engagement or create it as I go?

A: During business development, clients seek clarity on your approach, credibility, and problem-solving framework. While templates can aid visualization, creating tailored materials is part of the value delivery. As engagements kick off, having activity outlines and adaptable frameworks is crucial, even if they're crafted on-the-go to suit client needs, showcasing nimbleness in consulting.

Consulting is about building your muscle to respond quickly with a grab bag of frameworks to organize thinking and get to solutions. This is why consultants love walking around with white boards, flip charts, and sticky notes so that we can quickly do a “gamestorming” exercise on the fly when the moment calls for it.

Q: How do you factor in taxes, insurance, and other expenses?

A: The short answer is that the customer only needs to know your rate or costs for services to solve their problem—and the price needs to match the value they gain in return. Behind the scenes, you’ll want to estimate your operating expenses—with the help of an accountant, insurance broker, and lawyer—to determine how much you need to make in a year to be profitable.

Q: Should I have a co-founder for my business?

A: That’s really a personal question. I chose not to bring in a co-founder or co-owner because I did not want to spend the legal fees to create a partner agreement, take on the added shared responsibility of another’s livelihood, share finances or banking with a friend, share the rights or profits of my hard work, or risk conflict in the relationship. While I do not have a co-owner in my business, I do envision having many collaborators for which I’d pay for their services to be on projects with me, to contribute to a product, or to consult with me on my business in general.

Q: How do you differentiate yourself from other consultants or companies?

A: Consulting stands out through expertise, education, tailored services, industry standards, partnerships, relationships, reputation, innovation, and pricing. Do you specialize in solving specific problems? Are you well-educated in your expertise? Do you offer tailored services? Do you meet industry or DEI standards? Do you have strategic partnerships? Do you have strong community relationships? Do you have a positive reputation? Is your approach current? Is your pricing competitive? These factors contribute to your unique story and differentiate your consultancy in the market.