Setting Up Own Consultancy Business – Hints and Tips from Bruce, Sea Glass – Feb 2013
- Doing your own thing is fab. I would recommend it to almost anyone. My sense is that having a niche capability is best. Once you’ve chosen the niche, test it to see how many people would buy the services (versus saying ‘yes, that’s interesting’). I have seen ‘more’ strategy consultancies year-on-year and I think that most opportunities come through intermediaries (PR agencies or management consultancies). Decide if you want to do implementation as a service (it needs staff and freelancers – not really part of most consultancy biz models).
- Doing a combination of interim work and then strategy/consultancy is a good idea. The former will help fund the latter in its early stages and provides additional credibility outside the MoD. You could also throw a couple of non-exec posts in there too. The IoD (UK) does a very good introductory course for Non-Executive roles. Get one and others will follow… however, getting the first can take time and many firms need persuading that veterans have the skills required for Board level employment directly out of the military.
- You’ll need to think of an appropriate day rate – £1K a day should be OK for most businesses. But you may find that you must be flexible depending on where you are (regional), versus (national) and international and in which sector you’re offering your services. A day rate is £840 – £1,200. And you’ll have to think of some tools, products and have a Point Of View (specific skill) that is yours to peddle.
- There are significant opportunities in training. Training is priced on a per delegate rate. Popular training courses (pitching, presentation skills, and media training) can be charged at £2,000 plus a day once you have a track record. The customer here is generally an HR person who controls the business budget for staff training.
- People who have been consultants (as in ‘worked for an agency’) do better than those that have worked in house. Just because they are used to selling ‘time’ and have customer service in their veins.
- Your biz would be almost entirely fee based. You can charge travel costs at reasonable cost and you should try and recover as many costs as possible from the client (or else it erodes your fee).
- Be very careful with business costs. Every cost needs to be scrutinised – particularly recurring costs. Perhaps work from home to start with. Travel economy. Freeze pension. Review private health. Only commit to new costs that you can cancel if times get tough. For example, a serviced office will cost about £400 a month but home basing is cheaper (providing you can keep clear of distractions).
- In terms of money, be prepared to earn less than you do now! My sense is that take home is 20 per cent less (currently). If you’re running a Ltd business then income is variable and usually based on dividends. There are things you can ‘run-through’ or offset against the business (I estimate that it equates to c£8K of post-tax income that I would otherwise have had to spend – travel, dinner’s out, phone/internet, home office, print cartridges, IT etc).
- Most people think that the maximum annual earning potential of a solo independent consultant is £200K in fees. Just because of day rate tolerance and the number of hours in a week. I have plenty of friends that do half of that and are happy. Be realistic about your earnings in your planning – My original business plan was based on selling a maximum of 13 days a month at full day rate (£1k). In practice, it will be a struggle to do more than 13 fully billable days a month (month on month).
- (In the UK) look at the flat rate scheme for VAT. It means you can save money on VAT. As a limited company, it is slightly more expensive in accounting but worthwhile. But Blue Chip clients like it (namely their advisor being Limited). Don’t forget liability insurance!
- All the ‘start your own business’ books say you need 6 months’ worth of survival money in the bank. However, if you can dramatically cut your personal costs (sell cars, cut memberships, partner going out to work, etc).
- Be sceptical about organised networking events. They can be depressing and a waste of time. There are lots of people walking around looking desperate. Instead, I am a continuous and determined networker on my own terms – a cuppa coffee, a quick after work beer. You should probably spend 2-3 days per month networking (8-10 meetings) – target your activity carefully.
- Never be afraid to ask to see a prospective customer – people you know or have worked with before will very rarely say ‘no’ to a catch-up and coffee. Be prepared to talk about them a lot and be prepared to pay. Don’t look nervous when the bill arrives or else you can appear very parochial and cheap – try to control the venue if you need to control your costs.
- One slight downside to doing consultancy now – the market is flooded with out of work senior military and civilians contemplating ‘independent working and interim work’. It’s an over supplied market and consequently driving down price.
- Many people aren’t really committed to a solo existence and would probably prefer a full-time job (and it shows). And most don’t have a niche or even a POV. Therefore, make sure you have a niche market or unique skill and selling point.
- The second to last point – to be successful from day 1, you will need a founding client that will commit to sufficient fees to pay your very basic costs and pay you the minimum. Try to secure one or two retainers that pay c£7K a month on a 12-month contract which will help you sleep at night.
- Try this book – The Independent Consultants Survival Guide. It’s a good read. https://www.amazon.co.uk/exec/obidos/ASIN/1843981165/
BD/Sea Glass PR Ltd/12th Feb 2013