Choosing Between Business Ownership and Consulting: Charting the Best Path for Professional Advancement

Entrepreneurship and consulting are two distinct paths towards professional success, each with its own advantages and challenges. While both involve offering value to clients or customers, they differ significantly in terms of scalability, flexibility, and the direct involvement required in the work being done.

Starting a Business vs. Working as a Consultant: A Comparison

Starting a business often requires a combination of luck, capital, or extensive business experience. In contrast, consulting is about leveraging your skills and expertise to solve specific problems for clients, whether for a consulting firm or as an independent contractor. Consulting can be seen as a prelude to starting your own business, where you might later turn your consulting skills into a product or service that can be scaled.

Imagine starting a business as akin to building a brand new car from scratch. If your car functions perfectly, you can get behind the wheel and drive it. Conversely, consulting is more like sitting next to a professional driver in a car that works reliably. You provide the guidance and direction, ensuring the driver reaches their destination on time and without incident. Once they arrive, you hop out, take a new task, and continue navigating others.

Consulting as a Stepping Stone to Entrepreneurship

I recommend beginning your professional journey as a consultant. Earning as much as possible in this role can provide valuable experience and financial stability, preparing you for the next step.

Working for a consulting firm typically means joining a management consulting company. These companies assess and advise on strategies, operations, and organizational changes for various clients. On the other hand, independent consulting involves working as a freelancer, thereby creating a more personalized and flexible experience. This path can be challenging due to the need for self-management, from finding clients to handling finances and legal requirements.

Qualities and Responsibilities of an Independent Consultant

Michael Cohen has compiled a list of key personal and professional traits needed for a successful independent consultant. These include:

A recognized personal brand A clear value proposition that aligns with the client's needs Extensive expertise and experience, often accumulated as a stellar employee Willingness to travel to meet clients, potentially extensively

Being an independent consultant also means handling all logistical aspects of your business, such as client relationships, report writing, billing, and receivables. This role often comes with regulatory requirements and tax obligations, necessitating a strong understanding of business operations.

Advantages of Being an Independent Consultant

Acting as an independent consultant can serve as an excellent platform for broadening your technical and domain-specific expertise. This process can be incredibly exciting, as it keeps you at the forefront of industry developments and best practices. Regardless of age, you can continue learning and growing in your field. As a consultant ages, they often gain wisdom and knowledge that younger professionals might take years to acquire through experience alone.

For many, the path from consultant to independent consultant to business owner is a natural progression. By first honing your skills and building a reputable name as a consultant, you can gradually evolve into an entrepreneur, scaling your expertise into a sustainable product or service. This journey not only offers financial rewards but also personal and professional satisfaction in building something from the ground up.