• Realism
• Marketing
• Networking
• Staying power
• Nuts and bolts

As for a thorough knowledge of your field, a passion for what you do, and the ability to deliver quality work—that’s a given.

Realism

There’s economic and psychological realism. The economic part begins with realizing that you’ll never bill for 52 40-hour weeks in a year. You’ll rarely be able to bill more than 35 weeks a year, cautioned Steve Epner, founder of the Brown Smith Wallace Consulting Group in St. Louis, MO. And that money represents your gross—you then have to subtract expenses, insurance, taxes, etc., before arriving at your net income.

As for psychological realism, you may literally not know where your next mortgage payment is coming from, so if you flinch at risks you may never become comfortable as a consultant, Epner said. And if you thrive on give-and-take, being on your own will be lonely, he added.

Meanwhile, you must define a market niche and realistically determine what unique services you can offer that niche—and also make sure the niche actually needs your services.

“You have to learn how to capitalize on your experience—your success stories,” said Bill Mooney, a consultant coach in Torrance, CA, whose web site at www.consultantcoach.com contains resources of interest to budding consultants. “Once you have identified your experience, you try to clone your success stories.”

Marketing

Having identified a niche, a consultant should strive to become the go-to person in that niche. Make speeches, get listed in directories, produce research papers, and participate in trade organizations, Mooney suggested. Epner said that writing articles for trade journals—dozens a year—is an excellent approach.

Mooney added that a consultant should seek to create “mental intersections” with potential buyers. “Once you have met the person and created a personal intersection, you can go from contact to contract. And once you are well known enough, most of your work should come from referrals.”

Until your referral network is fully established, a good way to get consulting assignments is by searching for jobs or posting your resume on an online job board. On Dice.com for example, you can limit your search to consulting jobs and can indicate in your resume that you’re only interested in working on a contract basis.

Networking

Often work will be commissioned by other consultants who could not themselves perform a specific task. Learning to likewise take advantage of other consultants will put you in a better position to please the client.

“A big pitfall for newcomers is to think they can do and be everything,” warned Linda Wessels, principal of the Financial Industry Advisors Group in Vista, CA. But through networking it is possible to deliver services that you could never deliver by yourself.

Meanwhile, Epner said that prospects often ask novice consultants, “What happens if you are hit by a bus?” To answer that, the solo consultant needs to be able to point to colleagues who are constantly updated on the consultant’s projects. Those colleagues often turn into business partners.

Staying Power

“Plan your entry into consulting far in advance,” urged Epner. “I put away 12 months of housing and food expenses, so I knew we could live and eat.”

Actually, five or six years of uncertainty may face the beginner, since it takes at least three years to assemble worthwhile references, cautioned Jim Stodd, principal at J. T. Stodd and Associates in Irvine, CA. A secondary line of business or income, a working spouse, or money in the bank can all be life-savers, Stodd indicated.

Stodd added that novices sometimes waste money on the trappings of success, such as a fancy fully-staffed office. “You can go broke real fast,” he warned, adding that working out of your home saves money and offers many tax advantages.

Nuts and Bolts

Building his own infrastructure was the thing he found most daunting about starting out, recalled Dana Gardner, head of Interarbor Solutions LLC in Gilford, NH. That included setting up his e-mail and web site, getting incorporation papers, accounting software, a commercial bank account, and health insurance.

“But the good news is that putting together a small business has never been cheaper, since you can now get a lot of services—such as travel arrangements—from the internet,” Gardner noted.

Don’t forget to track your time and bill for it, no matter how much fun you’re having, Epner added. But if you bill monthly and the client takes 60 days to pay, you’ll be 90 days without income, so you should consider billing in advance for the first month, making adjustments in the second invoice, he noted.

A consultant should get a separate credit card just for business expenses, since it will ease bookkeeping and look good if there’s a tax audit, he added.

Speaking of taxes, your expenses become deductions, and if you have a home office part of your housing expenses are deductible. But Epner advised against doing anything purely for tax purposes, and to get professional advice.

Gardner also advised using a lawyer to incorporate, since it needs to be done right, and offers liability and tax advantages.

Yes, there are challenges—but if everything falls into place, you can finally stop gritting your teeth.