If you have decided to venture out on your own as a consultant, chances are you have a lot of faith in your abilities already, which is great.
But, in order to build a successful consulting business, it is imperative that you identify and target a niche market for your services. Throwing the net wide and hoping for the best may yield some results, but those results would be vastly improved by identifying your key market, and targeting that specific market.
How do you achieve that you may be wondering? Well, there are several core issues that you should assess before you choose your niche:
Above all else, your clients look to you to have an above average, even excellent, grasp of the issues on which you consult. Make sure that you are 100% sure that you can provide the necessary expertise, experience and skills in your chosen field.
Do your market research. Check how many other consultants are operating in your area in the same field.
While you may believe that simply by being the best, you can achieve results, the law of averages in this case works against you. The more competition you have, the smaller your piece of the proverbial pie is likely to be.
Change Rate and Product Life Cycle
Potential clients are unlikely to choose to hire a consultant to assist with areas where change is constant or frequent, or products have a reduced shelf life. This is simple economics – if they require consulting services too frequently, it makes more sense to hire in house staff, since consultants rates are generally higher.
It is cheaper to pay a full time employee for frequent tasks or high turnaround areas than it is to hire a consultant.
Predictability and Complexity
Likewise, routine, mundane and simpler tasks are unlikely to be outsourced to consultants, as it is easier and cheaper, to use existing staff, or hire new employees, to manage these tasks.
Choose a field that the average employee lacks the skill level to accomplish, or you will find work very hard to come by!
Reputation, Word of Mouth and Referrals
Even if you are new to consulting, chances are you are targeting an area where you have been active professionally for some time. Your professional reputation can be key in establishing a new consulting business.
Make sure yours is up to the task! And make use of your existing professional network to identify prospects and gain introductions.
Barriers to Entry
As with any business, you should consider choosing a field where the barriers to entry are higher than average. Remember, even if you have no competition when you start out, if your business is easy to replicate, you will have competition soon enough!
If the business requires a high level of development, and has many barriers to entry for potential competitors, you can avoid this, or at least put it off for a while!
Defining a niche is one thing, but limiting your target market too much can hamstring your consulting business’s chances of success.
Try not to be too specific within the niche you have chosen, for example, provide HR services to the medical field. Do not limit that further by targeting surgeons only. Target the entire medical industry, and broaden your potential client base.
Growth and Diversification Potential
When starting any business, you generally start with a single focus area. But choosing a field where there is potential for diversification can mean more growth potential for your business.
For example, if you start a wedding planning consultancy. This can form the core of your business, but, at a later stage, you can add a hiring or catering division, thereby expanding your business’s potential.
Think about potential diversification options when defining your niche.
Business is business, and whether it is a passion or drudgery, the bottom line is you have bills to pay.
Make sure your chosen field or niche has the potential to supply a sustainable, realistic income.
There is no use being busy all the time if you cannot make ends meet, now is there?
By combining all of these points, and assessing your consulting business’s potential to maximize each point, you should have a pretty accurate picture of your potential for success. Spend some time tweaking the plan, and you should be off to a flying start!