Why All Entrepreneurs Should Start as Consultants

I’ve co-authored this article with my friend Sam Ovens of Ovens Enterprises after a conversation we had about how we both got our entrepreneurial start in consulting. We soon realized this was a conversation we should share with other aspiring entrepreneurs who are trying to find an entrance into entrepreneurship.

Some of my most valuable lessons in entrepreneurship came from when I first started out by providing consulting. After seeing similar patterns in friends who are also entrepreneurs, I’ve become convinced that starting your entrepreneurial career as a consultant or in the service business is one of the best ways to build a foundation for your success for a number of reasons. Here I’ll share the lessons I learned as a consultant that served me even after I went on to start other types of companies as well as the key strategic advantages it provided to my future startups.

1. First and foremost, consulting is one of the cheapest and fastest businesses to start. When you’re selling your own service or expertise, it costs practically nothing to find your first client and deliver your service except for your time. All you need to begin is a laptop and a phone and you are in business. The internet is a big place and with 7 billion people in the world, there is no reason why you can’t find at least a handful of key clients to get your company going. Your margins will be high and your risk is also relatively low due to the low startup cost. Whether your expertise is marketing, social media, business strategy or any other myriad of specialties, there are people who are looking to pay for your expertise and service.

2. It teaches you to focus on cashflow. Consulting is perhaps the best business for teaching new entrepreneurs to focus on cashflow. You likely aren’t going to be venture backed as a consultant so you are forced from day one to make money and protect your margins. As your cashflow increases and your business grows, you will be able to reinvest in your business while seeing exactly which programs are generating an ROI and which are not.

3. Consulting is the best way to learn sales and marketing from the ground up. When you’re running a consulting business, most of the time the product and brand you are selling is you. This forces you to learn how to sell yourself, and quickly, otherwise the cash won’t flow. Many of the marketing and sales strategies required to grow a new consulting firm are pretty straight forward, good ‘ole fashion selling techniques and so you will learn from the ground up. This experience is invaluable later on when you are building a much more complex team with more resources to allocate. Learning how to sell yourself above all else from day one is critical to success as an entrepreneur and this is the best on the job training that there is.

4. If you can scale consulting, you can scale almost anything. Many consulting and service-based businesses are among the hardest types of companies to scale because they are labor intensive. There is no mass production or viral sales in consulting. To scale your company, you are going to need to build a highly organized and effective business model with strong leadership. This will teach you how to scale anywhere.

Many of today’s most successful entrepreneurs such as Neil Patel, Jason Fried and Larry Elison started as consultants. It may not be the sexiest business model out there, but it will make you into a highly-skilled entrepreneur and it is a tried and proven path to success.