Starting a Consulting Business? Avoid These Three Tragic Mistakes

If you've ever met someone who told you they were a business consultant, and you scratched your head wondering, What in the heck does that mean?, you're not alone. The term "consultant" is so vague it often borders on euphemistic. "Consultant" is like the word "sanitation engineer"—one can't quite figure out what that means. Are they essentially unemployed or trotting the globe advising Fortune 100 CEOs on their next strategic moves? Who knows?

Because the term "consultant" is vague and oftentimes misunderstood, starting a consulting business can be quite tricky. Oftentimes, I find that new "consultants" have difficulty articulating their business proposition, and that's a recipe for disaster. At the end of the day, our job as entrepreneurs is not just helping customers understand what we're providing but, more importantly, helping them see why they should buy it.

The simple truth is that customers don't say, "I'm not quite sure what that is, but I have to have it!" If they don't easily understand your services and feel a strong urge to purchase them, you'll have a steep, uphill sales climb at best.

So, should you abandon that consulting business idea? Not so quick. Instead, consider these three tragic mistakes (and suggestions on how to avoid them) as you plan your consulting endeavor.

Mistake #1: Not Developing Your Subtitle

I've noticed that virtually every nonfiction book title has the same format these days: a short, catchy title followed by a longer, more descriptive subtitle. (For example, Tony Robbins' Notes From a Friend: a Quick and Simple Guide to Taking Control of Your Life." Consulting businesses can often benefit from the same concept. Telling someone that you're a "marketing consultant" may sound good, but it provides little information and only leaves them scratching their heads.

What's more effective is starting with your catchy title, then following up with a descriptive sentence or two that provides a vivid description of tangible services that might serve a real need. In this case, a better business description might be, "Marketing specialist focusing on helping small businesses promote their products and services so they can focus on running their business. We specialize in developing social media campaigns, e-newsletters, webinar series, and similar products and client services."

Yes, the second version is longer and you shouldn't blurt it out anytime anyone asks your name; but you should be prepared to share it when you're asked to describe your business. The simple truth is, the title "consultant" is virtually meaningless and you should rarely use it without any additional explanation. Develop your subtitle and use it.

Mistake #2: Providing Services Only Without Any Tangible Products

The upside of service businesses often is that they require little capital expenditure and barriers to entry are low. After all, if you're essentially selling your advice, it's fairly easy to develop a website, hang your shingle, and find yourself . . . in business! Trying to start an airline, however? Not so simple. The downside for service businesses is that they're often quite labor intensive. Consulting businesses relying exclusively on services can find themselves frustrated because they're:

Exhausted by having to work physically (or bring in other labor to work) to bring in revenue.

Limited by their bandwidth and the amount/scope of services they can provide.

Having difficulty defining and distinguishing their offerings.

Having difficulty selling their services because people don't easily understand them.

A great option for many consulting businesses is to develop tangible products that can not only complement and expand their service offerings but also help them better serve their clients and generate passive revenue along the way. Typical product offerings could include:

Webinars

E-books or other publications

Training seminars or other instructional materials

Templates, guides, etc.

Instead of focusing exclusively on "consulting," think early on about what complementary products you might be able to offer to help round out your offerings.

Mistake #3: Allowing Scope Creep

As a hungry, new entrepreneur, it can be tempting to fall victim to scope creep. If you can smell the opportunity to win some new business, it's tempting to push your scope of services to pursue the business. It can feel completely unnatural to decline business early on, but it's even more dangerous to say "yes" to everyone and everything and miss the opportunity to clearly define your business and your brand.

Believe it or not, a key element of scoping your services is deciding what is out of your scope. This "out-of scope" list truly sets the boundaries of your consulting services and helps you better define your business. Instead of allowing scope creep, write an "in-scope/out-of-scope" list that clearly identifies what you do and what you don't do—and stick to it.

Developing a "consulting business" can sound tantalizingly simple, but it's anything but. Performing the consulting work may be the easy part. Appropriately defining and scoping your business may prove trickier than you think. Don't make the classic mistake of underestimating the importance of establishing this strong foundation.

Having developed and managed a small business over the past decade, Dana Brownlee is an advocate for helping other small businesses succeed. She is president of Atlanta-based training company Professionalism Matters and is an acclaimed keynote speaker, corporate trainer, and team development consultant. You can reach her at [email protected] and on LinkedIn and Twitter.

Opinions expressed by the author are not necessarily those of WITI.