How to Start a Successful Consulting Business

The first rule of consulting is that clients must believe that you can do what you say you can do. Obviously, if they don’t, you won’t get any business. Therefore, you have to make yourself credible. As a high-school student, it was potentially possible that I could fix a TV or radio (and on at least several occasions, I did). Thus, if you’re just starting out on your own to make a few extra bucks, be reasonable. People expect young entrepreneurs to be good at things like creating web-sites or fixing computers. But, if you say you can streamline their accounts receivable system or can design spread-spectrum receivers, they’ll be skeptical. It’s also important to specialize. No one can do everything.  I’ve never seen an engineer ‘handyman’. It’s probably best to choose something you like. In that way, you’ll be more likely to enjoy your work and also keep up with the latest developments (learning is forever). However, there is a down side to working your hobby. People generally use their pastime to relax. If that’s your work too, you may not find it very soothing to come home and do more work. It can be very hard to separate business from pleasure if they are both the same thing. Unfortunately, there is no easy way to predict if this will happen to you. Results Oriented The first rule of consulting (yes, there are two first rules) is that you must be able to do what you say you can do. There is nothing worse than hiring someone and finding out weeks or months later that the person is floundering. Unfortunately, this is not uncommon. There are many people who say they can do something when they can’t. Don’t be one of them. Don’t let the lure of a contract make you promise something you can’t achieve. And don’t fool yourself into thinking you can do anything. When a client asks for something you haven’t done before, tell him that. This is hugely important. It immediately gives you credibility. And being believed is crucial (see rule one). Then tell him that you will need a few days to examine the project. During those days, research and develop the key parts of the contract. If possible, build a breadboard and test it. That way you know you can complete the assignment. Sometimes, you will need to learn a new skill or specialty or tool. Maybe it’s a new computer language or how to build an FPGA (Field Programmable Gate Array). This is not something that you can obtain and master in a day or so. In this case, tell the client you will need a couple of weeks or so to get up to speed (and make it clear that you are not charging for this learning time). If you can show your customer that this approach is superior to other methods, he will rarely balk at giving you the extra time to do it right. And then spend that time diligently studying and learning. If you realize that you are in over your head, you must tell your client immediately. Don’t make excuses. Don’t wait until he asks why there are no results. Don’t pretend you’re making progress, when you’re not. And, above all, don’t lie to yourself. It’s one thing to encounter a sticky technical problem like an invisible software bug, or too much noise in an amplifier. It’s quite something else if you can’t determine how to design your product, or if you don’t understand the test results. If you’re having problems with fundamentals, you aren’t swimming. Simply have a face-to-face meeting with your client (no e-mails or telephone calls) and tell him that you are unable to complete the assignment, return any money and apologize. Yes, it’s embarrassing and humiliating. But that’s what happens when you over-reach. Quite honestly, most clients are understanding when this occurs. And while they aren’t happy about the lost time, most realize that people make mistakes. Few will shout and throw things. Money Matters There is always the question of how much to charge. This is quite variable depending on the specialty, area of the country and the experience you have. Generally $25 to $50 per hour is a reasonable for starting out. Some people charge by the hour. I charge by the job. It’s been my experience that everyone benefits with ‘Firm-Fixed Contract’. In this way, there are no surprises. And you learn very quickly just how long a particular task will take. I have the client pay actual costs for major purchases (like PC boards). (Some people add 10% or so for ‘handling’). Separating out the big expenses makes my quote seem lower and more attractive. It’s vital that you have a contract for the first time you work with a client. This spells out exactly what you will do and what the client will do. Obviously you will perform some labor. But in order to succeed, you will need: information from the client, perhaps special parts, test procedures, access to proprietary instrumentation, etc. The contract defines success — exactly what the product is and its specifications. There is nothing worse than presenting a ‘finished’ product only to find that it doesn’t do what the client wants (or said he wanted). After a few jobs, and after you understand each other well, a contract may not always be necessary. But neither party should ever balk at having one. Contracting is a lot of fun and you get to work on a lot of different projects. Unlike a regular nine-to-five job, you have a lot of flexibility and every day is different.

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