What's a good hourly rate to charge for Smll Business Consulting?

I'm thinking of trying out online and local small business consulting. I don't come from a consulting background, but after reading the threads on here and doing a little research I think I can pull it off. Would $60 be about right?

I was inspired after reading the recent posts on this forum and reading the McKinsey way. I figured as long as I can sell my services, perform root cause analysis, and keep my clients happy I'll succeed. Keeping the clients happy might be the tough part when the issue they face are management related or when they realize that some changes take time and effort., but I'm sure I can figure it out or pay for the mentor sessions on WSO to get feedback on this.

I make $60-65k a year so if this works out even part-time I'll be making more than at my regular job.

What do you guys think?

I plan on getting an MBA to attempt consulting but why wait?

13 Comments
 

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I've read several comments speaking on the cons/barriers, so allow me to play the devil's advocate and speak on the pros/advantages. 

Small Businesses focus on Operations

  • One reason any firm hires consultants is because their current employees (or themselves) are in the weeds of their operations. Some of this may be non-management businesses like owning a small restaurant, convenience shop, or offering their own services (like massage/physio). Their core expertise may lie outside of business altogether and may need a hand in record keeping, business strategy, website design or a number of things dependent on the size and scale.
  • You're focusing heavily on Root Cause Analysis, but that's just one faucet of consulting services, you can look into opportunities or expansions on behalf of the client. A simple idea would be to create an online presence for a local pizza store that don't have one (free LI with promotions, maybe a Twitter, etc.) or convert the back-end accounting for a convenience store that's mostly paper-based to a software for longevity.  

Never Underestimate Referrals/Word of Mouth

  • If you want to try this out, target your local mom & pop shops and pitch them services pro-bono with the condition that they must leave a review/testimonial and refer you to some other folks they know. Once you get the ball rolling, they can champion your utility and it costs nothing to them to give you a shot.
  • The other approach is to target your network and see if any of your friends/colleagues are brainstorming (or have?) a start-up that needs a whole mess of administrative services - maybe a high level financial model to show potential VC firms, maybe accounting services or they have problems with their product design.

If some of these skills are outside of your experiences, take free courses and start small. Just my two cents on the pros to this.

 

Think from the perspective of your customers. I wouldn't pay a penny to someone to "consult" for my small business who has zero experience in consulting, and just got inspired to do consulting after reading some promotional material about the "McKinsey way". If it is my own business, I sure as hell can figure out the root cause 20x better than you could. 

 

Me neither but not everyone will feel the same way, but as long as I can deliver something it doesn't matter. Also, a lot of consultants for small businesses don't start of with consulting experience rather industry experience who consult with smaller companies.

 

Your entire argument rests upon the assumption that small business owners, who are already more stingy than large corporations, are going to pay you $60/hr to find the solution to problems that they themselves are way better equipped to solve. I mean dude, let's be real, if you were offering a tangible skillset like, idk, IT consulting, sure. But if you're gonna sell services about "root cause analysis" or other buzzwords that consultants use, I doubt you're gonna get enough business. 

Your business plan, in a nutshell, is, "I'm gonna tell people with years of experience in their respective industries on how to solve problems within said industry, all without having any experience. I wouldn't even pay for my own services, but I'm sure I'll find those dumb enough to pay."

 

Depends on your resume and area of expertise. If it is light, start with $80/hr and negotiate up or down based on your read of client's willingness to pay. The challenge is to secure these gigs. My plumber charges $150/hr. :(

 

What's BI? I'm thinking of starting small with basic things that can be measured. ie.optimizing utilization of cash and financing for their operating cycle.

I need to sell something without revealing my ""inexperience" and avoiding lawsuits etc.

 

Assume you will get sued at some point. General, and maybe even professional, liability insurance policy with some basic limits won't be expensive. You don't want your gains wiped out by one disgruntled client.

 

Try to align the incentives as much as possible. Charge a “fixed” fee for the service over 3 payments and deliver top notch value. 

 

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