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Starting your own Consultancy

 
#1 Starting your own Consultancy
28/02/2013 14:14

YoungMaverick

All,

I know many consultants go into contracting (freelance) and hence are self-employed. But I think even less go up into setting up their own consultancy, however I know a few do and have seemed to make a good career out of it.

As a junior consultant I want to know your thoughts of whether there is an actual market for a bunch of experienced consultant pals to partner up and start their own firm.

What would the target markets be? Can they realistically take work of the bigger companies or is it best to stay local, or with SMEs. Can SMEs afford it and do they even think they need consultants?

Would it only work well if you have a niche expertise?

Thoughts please :)

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#2 RE: Starting your own Consultancy
28/02/2013 14:23

rc to YoungMaverick (#1)

I've seen a couple of routes make money. one is as you suggest based around a niche; these can be in industry areas where traditionally the big consultancies haven't been able to get the level of fees they need, particularly from tier 2 clients, but niche spin offs with deep expertise but far lighter overheads can still do well - I've seen this work well targeting asset management and insurance broking. the other more generic model acts as a glorified broker/recruitment agent - undercutting big player fees by resourcing up job by job with 'associates' (ie contractors). harder to justify the value proposition to the client, and a fair amount of smoke and mirrors required.

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#3 RE: Starting your own Consultancy
28/02/2013 14:33

marsday to YoungMaverick (#1)

Entirely feasible but as mentioned by RC it needs to be around a niche. Deciding on starting a company and then working out what it will sell is rather putting the cart before the horse. Most successful consulting start ups come from a 'you need me more than I need you' position.

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#4 RE: Starting your own Consultancy
28/02/2013 14:49

YoungMaverick to rc (#2)

Im not a fan of the second model (recruitment agency) idea, I think its over done and just plain boring (and a bit tacky?)!

But ok so it seems you support the niche model. Do you believe this will only work with bigger organisation clients?

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#5 RE: Starting your own Consultancy
28/02/2013 14:49

YoungMaverick to marsday (#3)

I totally get that but do you think one could form a niche in just advising SMEs in a handful of industrys?

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#6 RE: Starting your own Consultancy
28/02/2013 14:59

Mr Cool to YoungMaverick (#5)

Young Macerick - are you already servicing SME's in your current firm?

There is a market in the SME sector but day rates are low, owners are mean, projects are shorter and teams smaller. If you want to live a cosy life servicing local SMEs then you can probably make a six figure wage, but you can't get rich by building up a 50-100 person consultancy in this way.

To your original question. Yes, all firms started this way, even Accebture, so it can be done.

The challenge in starting your own firm is selling the first pieces of work, then delivering them while you simultaneously sell the second an third piece. That's why so many 50 man consultancies are still massively reliant on a small number of clients (or even single projects!) for their income.

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#7 RE: Starting your own Consultancy
04/03/2013 15:36

The advisor to YoungMaverick (#1)

This is a great article:http://www.consultingcafe.com/articles/8-tips-for-independent-consultants-to-jump-start-business

Even though it isn't your first career move, there is still good advice to be found here.

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#8 RE: Starting your own Consultancy
04/03/2013 22:52

alexandermeerkat to YoungMaverick (#1)

If you are going to start your own business why the hell would you start a consulting business?

- very little recurring revenue (especially in strategy)

- high fixed costs (staff)

- highly competitive market with established players

On the plus side

- low startup costs

- known business model

As others have said it would only work if you had found a nice niche, ideally a growing one. Other way of doing it would be to combine with some other thing e.g. research services, IT services, market research etc.

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