We often talk about how starting and building your own startup can be one of the most challenging but fulfilling journeys an individual can embark on. But shaping your dream from scratch, where you are in charge and in control of everything that happens with your company (as well as the people in it), is a mostly high-risk and rarely high-reward situation.
Most startups don’t end up being profitable for a long time because they prioritise growth over profitability, which can be unfeasible for people who don’t have a lot of savings or have a family to look after. The volatility of a startup can prove to be unsustainable for lots of people.
Entrepreneurship has more than one face, but many people equate it with just building venture-scale startups. Consulting is an equally challenging but slightly less volatile approach to entrepreneurship.
Read through this article to read about these two types of entrepreneurship and make an informed choice about which one is right for you!
All About Building Startups
Pretty sure we know this one. Startups are young, innovative companies founded to develop a unique product or service. Seeking rapid growth and scalability over profitability is characteristic to the startup culture. They aim to disrupt existing markets or create entirely new ones. Startups usually require significant funding, as they focus on product development, marketing, and scaling operations.
Building a startup requires building a team that can help tackle and scale the operations of the company. The reward of building a startup is big in the longer run. Unlike independent consulting, assets built by startups belong to the entire team.
Building Startups: Pros
- Innovation and Disruption: Startups have the potential to bring groundbreaking ideas to life, revolutionizing industries and solving real-world problems.
- High Growth Potential: With a scalable business model, startups can experience exponential growth, attracting investors and achieving substantial market share.
- Access to Funding: Many startups attract venture capital and angel investments, offering ample financial resources for development and expansion.
- Team Collaboration: Working in a startup environment fosters a dynamic and collaborative atmosphere, encouraging creative problem-solving and collective growth.
Building Startups: Cons
- High Risk and Volatility: Due to the uncertainty inherent in new ventures, startups face a high risk of failure, especially if they struggle to gain market traction or face fierce competition.
- Resource Demands: The initial stages of a startup often demand considerable time, effort, and financial resources. This can put significant pressure on the founding team.
- Regulatory Challenges: Many startups operate in industries with strict regulations, leading to compliance complexities and potential legal hurdles.
- Long Time to Profitability: It may take several years for startups to become profitable, requiring patience and persistence from the founders and investors.
How to Start Building your Startup
- Idea Validation: Start by identifying a problem or need in the market and validating your business idea through market research and customer feedback.
- Team Building: Assemble a skilled and passionate team with complementary skills to drive the company’s growth.
- Business Plan: Create a detailed business plan outlining your product, target audience, marketing strategy, revenue model, and financial projections.
- Funding: Explore various funding options, such as venture capital, angel investors, crowdfunding, or bootstrapping, to secure the necessary capital.
- Execution: Implement your business plan and continuously iterate based on user feedback and market dynamics.
All About Consulting
Consulting, in its most condensed essence, is providing expert advice from your proficiency in a certain field to professionals and individuals seeking it. Everyone knows about the “Big 3” consulting firms (McKinsey & Company, Boston Consulting Group, and Bain & Company). These tend to be one of the most sought after jobs for graduate professionals looking to start management consulting. But you don’t always have to attach yourself to a reputed name to become a consultant.
Independent consulting is a great way for entrepreneurs to build something purely out of their expertise and credibility- both of which are relatively easier and faster to build than a product/startup. Consulting guarantees you solve a real issue that a business/organisation is facing. You can use your consulting experience to eventually build a product later since you would have first hand research about consumer problems and behaviour.
Consulting: Pros
- Flexibility and Autonomy: Independent consultants have the freedom to choose their clients, projects, and working hours, allowing for a better work-life balance.
- Low Overhead Costs: Unlike startups, consultants can operate without significant infrastructure costs, such as office spaces or inventory.
- Niche Expertise: Consultants can focus on their areas of expertise, building a strong reputation and attracting clients seeking specialized knowledge.
- Quick Profitability: Independent consulting can lead to quicker returns on investment, especially for seasoned professionals with an established network.
Consulting: Cons
- Irregular Income: Independent consultants may face fluctuations in income, especially during slow business periods or when between projects.
- Limited Growth Potential: Unlike startups, independent consulting businesses may not experience exponential growth, and income is typically limited by the consultant’s capacity.
- Client Acquisition: Securing a steady stream of clients can be challenging, requiring continuous marketing efforts and networking.
- Single-Point Dependency: As a solo consultant, success heavily relies on the individual’s skills and reputation, making it difficult to scale beyond personal capabilities.
How to Get Started as a Consultant
Consulting’s only pre-requisite is that an individual is an expert in their chosen field. Here is one way to go about it:
- Identify Expertise: Determine your area of expertise and define the services you can offer to clients effectively.
- Marketing: Building your brand and authority as an expert is crucial to you gaining clients and opportunities. One of the ways to go about this is to start posting on professional platforms like LinkedIn. Another is to start with your own newsletter. Talk about the insights and problems you’ve identified in your field, and slowly you will gain recognition as an important voice in your field.
- Networking: Leveraging your network can be a great accelerating factor for your growth. Connect with with past clients, industry peers, and professional networks to gain leads and work towards building a solid client base.
Also read: Michael Lin’s blog on Consulting and How to Get Started with it
Conclusion
Entrepreneurship is the act of gaining control and responsibility for your business, no matter the approach one choose for it. Startups and independent consulting offer distinct paths for entrepreneurs to pursue their ambitions. Startups provide a platform for innovation, scalability, and disruptive potential, but they come with higher risks and resource demands. Independent consulting offers flexibility, autonomy, and the ability to leverage niche expertise, but growth potential may be limited compared to startups.
Ultimately, the choice between the two depends on an entrepreneur’s risk appetite, vision, and skill set. The bottom line is, if you have an idea or a service which can impact lives, work towards building it and making it accessible.
