I f you’ve built a career in government, you’ve experienced intense upheaval and uncertainty this year. You’re probably trying to pick up the pieces and plan your next move.
You might want to capitalize on your institutional knowledge and start a consulting business. Many companies, nonprofits and government agencies need input from people who have policy expertise, and consulting offers perks—like working from anywhere and setting your own compensation—that aren’t always possible with corporate jobs.
Here’s how to transition from government employee to consultant.
Why Consulting?
Consulting can be a lucrative career for those who offer high value to clients and can command high rates. Beyond that, it provides a chance to grow your career at your own pace, which might mean leaping ahead of others’ expectations.
“Consulting appeals to professionals who prefer variety, if they're multidisciplinary individuals, and that's not just the variety and the type of projects that they're working on, but also their daily tasks,” says Amar Marouf, business development and marketing growth lead at Gowling WLG LLP.
For those who enjoy self-direction and embrace challenges, consulting is an excellent path to developing their strengths.
“It gets very predictable when you work in corporate environments. And when you're working in consulting, it's not predictable at all,” Marouf says.
Consulting also involves meeting and working with many different teams, so your network can expand much faster than in a corporate setting. That may be an advantage if you later decide to start a larger company or apply for a full-time position.
Choosing Your Niche and Defining Services
Your niche will likely depend on the work you’ve done previously, because that’s the topic on which you can immediately establish yourself as an authority. But be open to clients from a range of sectors and roles.
“If you have an expertise in understanding healthcare, that doesn't necessarily mean just industry for hospitals or administration,” says Jeff Le, managing principal at 100 Mile Strategies. “It could also mean working with nonprofit entities or even local governments that are in that space.”
Consider working with clients in some of these categories:
- Startups or “scaleups.” Newcomers to highly regulated industries often need guidance on the policy landscape. “They look for government funding or regulatory barriers that need help navigating. So you can position your services around policy risk management,” Marouf says.
- NGOs and advocacy groups. Nonprofits need consultants for stakeholder mapping, strategy and keeping tabs on changing legislative priorities. Work may fluctuate with funding cycles, though. “You have to align your services with grant-writing periods and government-funding releases. So that's a little bit more of a waiting game,” Marouf says.
- Think tanks. Research organizations turn to consultants for help with defining research questions, as well as data collection, analysis and interpretation.
- Local governments. Consultants help government agencies with needs assessments, strategy, research, and technology upgrades.
- Professional service firms. Legal and financial firms often publish white-label content created by consultants. “You're providing policy expertise and you're delivering it under the firm's umbrella,” Marouf says.
Decide on your core services, too. Consider offering regulatory audits, advisory retainers or event or roundtable production. On the research side, you might convene focus groups or administer surveys. And deliverables might include reports, grants or regulatory roadmaps.
"Consulting offers perks—like working from anywhere and setting your own compensation—that aren’t always possible with corporate jobs."
Setting Up Your Business Structure
You’ll need to decide whether to operate as a sole proprietor or to set up an LLC.
You’re automatically a sole proprietor if you don’t set up an alternate business structure, so it’s easy to get started by going this route. A major downside is that a sole proprietorship doesn’t separate your personal finances from your business, so if someone sues you, your assets are on the line.
Setting up an LLC takes a little extra work. You’ll have to file a unique business name with your state, adopt an operating agreement and apply for an EIN with the IRS. You’ll also pay a fee. And you’ll need to maintain separate bank accounts and credit cards to ensure that the LLC is distinct from your personal identity.
The effort is usually well worth it, though, because according to the Small Business Administration, in many cases an LLC offers protections from personal liability if your business goes bankrupt or gets sued.
An LLC also signals your credibility to potential clients.
“It sets you up as like you're in this for real,” says Kimberly DeCarrera, fractional general counsel and fractional CFO at Springboard Legal. “You're not just a fly-by-night operation. You treat it like a business. Other people—and your clients—are going to also treat it like a business. And I've seen that taking that step to get the LLC just helps in presenting you as a professional and somebody that knows what they're doing.”
While an LLC offers some legal advantages, it doesn’t eliminate risk from lawsuits. It’s important to buy errors and omissions insurance to protect yourself, whether you’re forming an LLC or remaining a sole proprietor.
According to DeCarrera, sole proprietorships and LLCs are usually taxed similarly. A potential difference, though, is that if you have an LLC, you can elect to be taxed as an S corp. In some situations, that can result in tax savings, but it also comes with significant compliance requirements.
“Typically, you'll see that most CPAs and tax lawyers don't recommend the S corp until you hit certain thresholds of income,” DeCarrera says.
Building a Brand and Bolstering Your Online Presence
Prospective clients will check your LinkedIn, so you should be active there. Regularly post thoughts and commentary, and participate in discussions on other people’s posts, too. And make sure your profile is optimized for the main keywords that are relevant to your niche.
Le recommends hiring a professional designer to create your website.
“I found, at least for me, having that sort of digital presence showed to folks just how deep I was in terms of wanting to make the business much more long-term. And I think it gave a sense of legitimacy that way,” Le says.
LinkedIn is a good platform for sharing thought leadership, but your reach should extend further. Submit op-eds on timely topics to publications in your niche, and offer to speak at conferences and on webinars.
Prepare for networking events by printing business cards. In addition to your name, contact information and a quick description of your services, include a QR code so recipients can easily find your LinkedIn and website.
Finding Clients
Networking at conferences and events is a great way to find clients—but don’t tell yourself you have to land a new client by the end of the evening. Go in with the mindset of forming new professional relationships.
“There's still a premium on in-person connection and community in this era,” Le says. “I know it's scary, especially if you don't know anyone in these places, but I sort of look at these events as if you meet one person, one interesting conversation, it's worth it. And I think that makes it maybe less high-pressure.”
Get to know other consultants, who might be able to offer referrals or contract work from time to time.
“I have people that I work with who are similar to me, who are consultants, and if I need extra help, I'll hire as a 1099. And they do the same with me,” says Tim Cooley, president and CEO of DynamX Consulting.
And when you’re first starting out, you want to get in touch with previous contacts–whether they’re classmates from college, former managers or one-time coworkers. Ask if their organizations are hiring consultants or if they can recommend you to others in their industry. It’s easier to get your foot in the door when people know you and advocate for you.
“Ideally some of the initial clients would be folks that maybe you've worked with in the past or you're a fairly known quantity in the space, so that it's less of that sort of awkward dance,” Le says.
Pricing Services
You have a few options for structuring fees. Some consultants stick to one approach, while others offer different pricing structures for different engagements:
- Hourly fees. You’re paid for the time you spend on a project, but you’re not rewarded for working more efficiently or increasing the value of your deliverables. And it can be tricky to set an hourly rate high enough to account for all the non-billable work that goes into consulting.
- Project-based pricing. This structure offers more transparency and predictability for both you and your clients, and it emphasizes the value of your insights rather than time spent per task. It’s ideal when deliverables are well-defined—like reports and surveys—but may be too rigid for open-ended engagements.
- Retainer fees. Ongoing services like strategic advisory, policy monitoring or compliance updates are often best billed as retainers, so you’re compensated for being on-hand to respond to developing news as needed.
Whichever route you take, compare your fees with other consultants to align your rates with industry averages. Beware of setting fees too low. Lowball proposals can signal to clients that you’re inexperienced or unsure of yourself. Plus, you want to have enough leeway for unexpected challenges that come up while you’re working.
“You can be off by easily 20%, 25%, and end up working that many more hours. I've rarely had less hours on a project [than predicted],” Cooley says.
Above all, keep in mind what the client gains from your expertise when setting rates.
“Base fees on value delivered. Are you going to avoid regulatory risk? Can you help get funding? Is the funding going to get secured? Will you help them win the contracts?” Marouf says.
Successfully Transitioning From Employee to Consultant
The newfound flexibility you enjoy as a consultant can be freeing but potentially overwhelming, too. With no set schedule or salary, it’s up to you to define goals and give your days structure.
It’s reasonable to aim to replace your previous salary, but be aware that it might take some time to build your brand and work up to that level. Consultants frequently have to contend with “feast or famine” cycles in which busy seasons are interspersed with slower times.
Marouf recommends devoting up to 60% of your time to billable client work, 20% to 30% to business development, 10% to 20% on administrative tasks and up to 10% on thought leadership and marketing. And while there’s no avoiding the ups and downs of self employment, diversifying between short-term and long-term contracts can help you achieve a relatively stable workflow.
Compared to larger corporations, you have a unique ability to pivot and seize opportunities. Take advantage of it.
“You can really set yourself up for success with agility because that'll set you apart from anybody else,” Marouf says.
