Consulting is the business of providing advice to clients to help them solve a particular problem or range of problems in a business area of the consultant’s expertise.
Some consultants work as internal consultants for a firm, usually a very large one. Such as McKinsey & Company, PwC Advisory/Strategy& or Deloitte Consulting LLP and many others. However, most consultants are self-employed, often from their own homes, or run their own small consulting firm.
A majority of consultants have developed their expertise from a previous job. For example, a former IT specialist might become an IT consultant in his area of expertise or a former stockbroker might become a financial consultant. Similarly, an accountant might become a tax consultant or a former employee in a non-profit organization might open a business as a fund-raising consultant.
However, expertise alone is not enough to make someone a consultant, at least not a full-time consultant. Indeed, consulting, as a business, requires marketing skills and the ability to reach out and establish professional contacts. Like any other business, the consultant needs also to take care of the management of their business.
Indeed, according to the American Consultants League, the failure rate for first-time consulting businesses is extremely high: 91 per cent in the first year.
In this post, we’ll provide you with the consulting business’s main pros and cons to help you ensure that the consulting business is a good fit for you.
Advantages of an online consulting business:
1. Easy access
One of the greatest things for new graduates considering a consulting career is that a specific degree is often not required.
Obviously, there are exceptions. For instance, if you have a degree, experience and show a potential client that you’re genuinely invested in starting a consulting career, you might be the perfect candidate for a consulting role.
2. Freedom to choose the client and the job you like
As a consultant, you can choose with whom you want to work, the project you like to work on and how much time you are willing to invest in a client. As a consultant, if you meet an unpleasant client, you can abandon the contract and move on to the next client. You aren’t tied down to just one source of income. The clients who give you the highest income, the jobs you love, and the people you enjoy working with can make up the bulk of your client base. When times are tough, you could end up with a less pleasant job or with demanding clients.
3. Flexibility in working hours
One of the benefits of being a consultant is that you can create your own schedule, take time off to take care of family responsibilities or travel when it suits you. Many consultant opportunities are done at your own pace. For example, if you are a developer, you can have your days free to follow your passion and hobbies like biking or playing tennis and work at night. As a consultant, you may work seven days a week for a month and save enough to take a month off and travel. One of the main consulting perks is developing the balance you need between your work and personal life.
4. Permanent learning
Consultants must study their fields of expertise continuously to keep abreast of developments. The great thing about staying on your toes is that clients appreciate it because you’ll be able to develop relevant and successful ideas. Though it might sound overwhelming to always be on top of news and trends, it will eventually become a habit – and the results are worth it!
5. Attractive growth opportunities
With the right work ethic and dedication, consultants can experience professional growth early on in their careers. According to CNN, the average 10-year salary growth for consultants is 41.2%!
6. Wide variety of clients
Consultants get to work with amazing clients of all sizes and from all types of industries! There’s no one specific type of client that hires a consultant, making developing solutions and ideas exciting because every situation is different. Every client has different expectations, needs, audience, products and services so that consultants can oversee projects of all kinds!
7. Interesting work
Instead of doing the same job day after day, you can diversify your work as you like. The diversity of your work can keep you energized and motivated, while working with the same people all the time may drain your creativity. While you may have to rely on less than rewarding work to boost your income or please your biggest client, you can mix fun jobs and more enjoyable environments to break up the monotony.
8. Training offered by the client
Often, when starting out as a consultant, the company you’re hired with will give you terrific training or on-boarding to get things started off to a good start. The purpose of onboarding/training is to prepare you for success, so during this training, you can expect to receive the resources, knowledge, and tools to do so.
Disadvantages of an online consulting business:
1. No Job Security
Consultants can face an uncertain future at the end of one project if another project isn’t immediately available. Depending on the type of work you do, finding a new job can take weeks or even months. Developing a wide network of possible contacts can help you quickly find work at the end of a project.
Budget cuts or other factors can result in your contract not being renewed, even if the company had indicated earlier that it wanted to continue the relationship. In fact, if company finances require someone to be fired from a project, contractors will usually be the first to go.
2. Long working hours
Long work hours can be the norm, particularly if you are trying to impress a new client. If working 9 to 5 is important to you, a consulting business might not be the best career choice. When a deadline approaches, you will be expected to complete the work on time, no matter how many hours you have work to meet the deadline. I know of consultants who state that, due to frequent and extended meetings with the client, they only do actual work outside regular business hours.
3. No corporate benefits
Most employers offer a package of benefits to employees that may include health insurance, disability insurance, paid vacation and retirement plans. As an independent contractor, the companies that use your services will not offer you any of these benefits, and you will have to purchase them yourself, which can be costly. If you’re sick or want to take a vacation, no one will pay you for your absence from work. You will also not be able to apply for unemployment benefits or workers’ compensation if needed.
4. You have to pay your taxes yourself
Paychecks from an employer come with taxes automatically deducted, but that’s a duty you will have to take care of yourself as a contract. The company you work for will most likely pay you based on an invoice you submit. You need to calculate the amount of income taxes to set aside. Remember also to cover your portion of social security and medical care taxes and the portion an employer normally pays. Set up a good bookkeeping system to keep track of tax issues or hire an accountant to care for this aspect.
Depending on the work you do, you may be held responsible for damages caused during the work. It would help if you considered the possibility of being sued for anything from libel to copyright infringement. Even if lawsuits are dismissed, they’re expensive to fight. So you may want to purchase general or professional liability insurance. Moreover, you will need to adhere carefully to your contract’s terms to avoid breaching the contract, which could result in non-payment or a lawsuit.
The freedom to choose jobs, a flexible work schedule and being your own boss are appealing aspects of the consulting business. But consider the disadvantages of not having an employer before choosing that path. With no one to handle, or remind you of, important financial details, you will have to shoulder the burden an employer would normally have. You may find the freedom of contract work refreshing, but remember that there is no job security in being an independent contractor.