Consulting work is on the rise. More than ever, revenue leaders are taking on consulting work in addition to their day-to-day job — or transitioning to consulting work entirely. As work grows more remote, many professionals are embracing consultancy as a way to gain flexibility and independence, focus on a niche skillset, have more control of their schedule and income, and offer highly specialized industry services.
But consultancy is also not for everyone. There are contracts, SOWs, and comp to negotiate. As a solo consultant, you’re also an accountant, a project manager, a strategist, a novice legal consultant, and more. Work can be either feast or famine.
We’ve compiled a few resources shared among the Pavilion (formerly Revenue Collective) community to help you get started with a consulting gig, including a checklist and some tips for success from our #consulting_advisory Slack channel.
Getting Started with Consulting: A Checklist
Set up a business entity
There are benefits to creating some structure around your consultancy, but it’s important to know that you only have to pay taxes in the US if you make over $600 annually.
Determine invoicing method & set up a finance software, if necessary
A multitude of affordable and easy-to-use accounting and invoicing tools exist to help freelancers and consultants. Before you pick a solution, consider what might be the best universal solution for different types of clients. Also, remember that some invoicing software takes a surcharge from every invoice. If you don’t have to juggle too many consulting gigs, it might serve you best to create a polished invoice template, skip the tech middle man, and email it directly to your client or their AP department.
Set up your website, a professional email address, and phone number. Go Daddy and Squarespace offer professional, beautiful, and easy-to-use templates to help lend your consultancy some credibility. It will also help you attract what’s most important — new clients.
Craft a winning proposal
Once you understand what a potential client is looking for, it’s time to put together a proposal. A client may ask for these proposals or RFPs from many potential partners, so it’s important to put your best foot forward. Focus on the unique value your talents and experience bring to the project. Sell yourself — and make sure it’s clear to the client that you understand their business, too.
Establish a clear scope of work
As the channel often notes, there are many ways to format a consulting agreement. But first, it’s important to decide the kind of consultancy work you want to do. Fred Mather NYC notes that go-to-market assessment and fractional roles typically extend beyond a point solution to a larger strategic vision, creating opportunities for ongoing consulting work across other responsibilities. A solid discovery document can act as a good starting point for negotiations and scope definition.
Setting your rates is one of the most challenging parts of setting up a new consultancy. Set your rates too low, and you’re short changing yourself (or making you seem less expert or credible). Aim too high, and you’ll deter otherwise profitable clients. There are many factors to consider when setting rates, but be sure to research comparable rates in your industry and geographic location. Also, determine whether you’re billing hourly or by the project — typically, it’s more time- and cost-efficient to establish upfront project rates vs. keeping track of every hour spent. Remember: the client is paying for your expertise. Bill accordingly.
Prepare a standard agreement
A standard consulting agreement will do a few things: clearly establish expectations, add credibility to your consultancy, and prevent scope creep. The content of your contract will depend on your specialty, the project’s ask, and the goals of the engagement, but there are some universal things to include, like background, services, compensation, confidentiality, and intellectual property rights.
Think about networking and client acquisition
The basics — a website, an email address, and invoicing and project management tool — go a long way to help new clients find and vet you. However, for many consultants, the most successful and lucrative source of new clients comes through word-of-mouth referrals and professional networking. Consider offering happy clients referral bonuses, ask for testimonials and case studies after a successful project, and carve out time for networking events in your industry niche.
Decide how you will manage projects
Working at a larger organization comes with more built-in support, from interns to assistants to project managers and junior team members. When you go out on your own, the management of the project will be up to you unless you hire someone. Explore tools like Asana, Trello, JIRA, and Monday.com to help stay organized and keep your projects running smoothly.
Find a communication plan that works for you and your clients
Decide the best way to communicate with your clients. Slack is a good tool for quick collaboration and communication, but it’s important to set expectations and boundaries around response times, too. Clearly document a communication plan including a regular cadence of check-ins and conversations so your client is clear on your availability and how often they can expect to hear from you. If a messaging tool like Slack is your main form of communication, it may be wise to follow up via email to document important conversations and stay aligned on major milestones.
If you don’t reserve a percentage of your income for taxes or pre-pay those taxes, you’re in for a world of hurt come tax filing day. In the US, you can set up automatic quarterly payments with the IRS, or, if you choose to wait until tax filing season to pay, a good rule of thumb is to set aside 30% of each incoming payment.
If you’re thinking about taking on a consulting role, here are a few Pavilion resources to help inform your decision — and your next steps forward.