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consultant vs contractor

Consultant Vs Contractor: What’s the Difference?

By Michael Zipursky
5 Comments

What’s the difference between a consultant vs contractor?

A consultant can function as a contractor which means they are brought in to do specific work for that client. But, in most cases, they are only working with one client at a time.

However, a consultant can also be an entrepreneurial consultant.

An entrepreneurial consultant doesn’t just focus on doing work for the client, they run a consulting business.

In this post, you’ll learn the difference between a contractor vs consultant.

Let’s dive in.

The “Contractor” Consultant

Do you get clients from other agencies?

Do you work with only one client for a long stretch of time?

Are you responsible for delivering the consulting work, but not getting the consulting clients?

Do you ever feel frustrated that you’re only getting a small percentage of a project when you’re doing the majority of the work?

If so, you might be doing consulting work — but you’re not an entrepreneurial consultant.

That may sound harsh, but we see it time and time again.

These consultants experience what we call a “marketing rollercoaster.” It’s up and down, up and down. It’s feast or famine. You have to go from one project to another. There’s no consistency, no predictability, and no real business.

The moment agencies stop sending you opportunities, the moment that your “business” is gone. Every time this happens, you have to restart your marketing and work on your business.

If you don’t have clients, you don’t have a business. If you rely on other companies to give you projects, you haven’t turned your business into an asset.

You’re not truly you’re own boss — one of the main reasons people become consultants.

reasons to become a consultant statistic

That’s why it’s important to see the distinction between being a consultant vs contractor — a consultant who does contract work vs an entrepreneurial consultant.

There are also consultants doing consulting work who work for larger consulting firms. They might be consultants, but they aren’t consulting business owners. They do consulting work, but they don’t have a consulting business. That means they’re like contractors doing consulting work, but they are still working for a company.

If you want to truly have a long-term business that thrives, you need to work on the business, and not only do the consulting work.

The “Entrepreneurial” Consultant

If you want to build a sustainable and profitable consulting business, then you must change your mindset. You’re not a contractor who does consulting work. You’re a consulting business owner: an entrepreneurial consultant.

Many consultants think all they need to do is be good at the consulting work. They think that generating new business is all about providing value to their current clients. That’s not the case.

You can go from referral to referral and (mistakenly) consider yourself a consulting business owner. We work with many clients who have done that. They’ve even achieved a fair level of success.

Eventually, they want to grow to the next level. They want to attract more clients. They want more predictability. They want a greater lead flow.

Referrals don’t provide predictability or greater lead flow. If your referral well runs dry, you’re no longer in control.

The only thing you can control is your own business. The only thing you can affect is how much effort and energy you put into your business.

Here’s the bottom line: if you want to run a consulting business, you can’t just do consulting work for your clients. You also have to run the business.

For example, you have to market your consulting business: generate conversations with ideal clients.

You’ll also have to sell: turn these conversations into paid consulting projects.

biggest challenge for new consultants

Marketing and sales are the biggest challenges for consultants.

You have to learn how to market your consulting business and how to sell if you want to grow your consulting business.

That means doing things like…

  • Creating messaging that attracts the attention of your ideal clients
  • Writing outreach messages to get your ideal clients on a call
  • Building authority content that demonstrates your expertise
magnetic messaging exercise
The “Magnetic Messaging” Exercise from our Clarity Coaching Framework

You don’t have to be a gifted extrovert to excel in marketing and sales. But you do need to have a clear ideal client profile, a powerful magnetic message, and the ability to ask meaningful questions, and write compelling proposals.

Contractor Vs Consultant Case Study: Husain Shekhani

When Husain Shekhani first started his consulting business, he had a full-time job and one big client on the side.

He still had to work as a full-time employee. With his one client, he was working as a contractor.

Like many contractors who do consulting, Husain had subject matter expertise, but he didn’t have a clear marketing or sales strategy.

In our Clarity Coaching Program, we helped Husain “evolve” from a contractor into an entrepreneurial consultant.

First, we helped him turn his employer into a client.

Then, we helped him…

  • target his messaging for more effective marketing
  • structure his pricing and fees so the work was profitable
  • create compelling proposals
  • attract prospective clients by providing value through YouTube videos and LinkedIn posts
  • navigate some of the legal complexities of being a consultant, such as non-compete agreements and intellectual property

…and, as a result, Husain gained the confidence to become fully self-employed and run a real consulting business instead of just doing consulting work.

You can read Husain’s case full case story here: Going from Employee to Independent Consultant.

“I joined Clarity Coaching to help me transition from being an employee to a full-time, self-employed consultant. Mike and Sam helped me through the process of changing my current employer into a consulting client. They instructed me on how to approach my employer, help with proposals, help with negotiation, and gave me the confidence to go forward and seal the deal.”

Imperfect Action: Do You Want To Be A Contractor Or Consultant?

If you want to run a consulting business, think of yourself as an entrepreneurial consultant.

You’re not just a consultant. You’re a consulting business owner.

This doesn’t mean you need employees and use the firm model. You can still be an independent consultant.

But recognize this: you’re running a business. And to run a business, you need to do certain things to grow that business, like…

There are many others, but these are all aspects that will help you run a viable consulting business.

Ask yourself: do you want to make the shift from contractor to consulting business owner?

Maybe you don’t. Quite frankly, you can be a contractor. You can get opportunities from agencies or work within a consulting firm as a consultant. That’s totally fine.

But entrepreneurial consultants are the people who want to build a real business. People who want to control their income-earning potential. People who want freedom. People who want to pick and choose which clients they work with. People who want to maximize their consulting fees.

If you want to reap those rewards, you’ll have to be an entrepreneurial consultant. And that all starts with adopting the mindset of a consulting business owner.

That’s what we teach inside of our Clarity Coaching Program.

5 thoughts on “Consultant Vs Contractor: What’s the Difference?

  1. Your article struck a chord with me. I own a business and I’ve had that client where the project dried up and I have scrambled to find the next client. I do need to focus on the marketing and sales side of things more to push the business forward! Thank you for posting the information.

    • Ansar, thank you for your comment and I’m glad to hear that you’re going to push your business and marketing forward!

  2. Poetra says:

    Hi Michael, thank you for posting this subject. I couldn’t agree more about shifting the mindset. Your term “marketing engine” on the previous postings is always in my subconscious mind. I am an independent mining consultant with two clients. one as a result of referral and the other one is because of your “marketing engine” lesson. Thanks a lot.

    • Poetra – thank you and it’s my pleasure. Very happy to hear that you’ve put the ideas I share here into practice and are benefiting from them. Keep taking action!

  3. Scott says:

    Hello
    Thank you for your notes
    I am currently thinking of changing career and going into Business Intelligence Consulting. I would like to use your help on how to build such consulting business
    Thank you

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