Should I Start a Planning Consulting Firm?

Many planners wonder about the possibility of creating their own consulting firm.

A reader posted a query asking about the feasibility of starting a small independent planning practice: "What are the steps necessary to be in the "right" position to do it? How do you start off getting clients, especially if you're coming from the public sector where you don't have as much opportunity to build client relationships?"

I've worked in the start-up environment of two consulting firms and currently have a small transportation practice. In each case, the business model was based on clearly defined expertise and well-established connections with a market niche.

A previous blog post, How to Start a Planning Firm, provides good advice on procedural steps for starting a consulting firm, so I won't repeat that material here. You'll need to decide many practical matters such as the legal structure of the firm, insurance coverages, and whether to hire employees.

Assess Your Competitive Advantage Thoroughly

For me, however, the essential question concerns the market for your expertise. Why would a client hire your new firm over an established competitor? The answer, of course, is that you offer needed expertise on the right terms. Let's review questions that will help you assess your competitive advantage.

• Technical expertise in a planning subfield. Are you among a handful of experts in that topic, whether it be transportation modeling, housing finance, or meeting facilitation?
• Skill in client relations. Are you effective in understanding the complicated planning "mess" that the client faces and can you bring clarity to the problem definition? Are you skilled in managing interactions with team members, departments, and decision-makers?
• Do you possess needed local knowledge and community contacts in your target market area and a solid reputation that is known to decision-makers?
• Are you registered as a firm that receives preferences in contract procurement for public sector work? There are many categories, including minority business enterprises (MBE), women business enterprises (WBE), and disadvantaged business enterprises (DBE). There may also be preferences for businesses owned by veterans, disabled veterans, and those with disabilities, and for local businesses of various sizes.
• Do you enjoy a cost advantage because of lower billing rates or overhead?
• Do you have a responsiveness advantage because of simple, direct relations with clients?

There is no hard and fast rule about how many of the questions should be answered in the affirmative before proceeding.

Your assessment should include knowledge of potential competitors and strategic partners that can be acquired in a quick environmental scan. In this way, you can realistically assess your ability to compete for work.

Gain Consulting Experience Before Starting Firm

While it is possible to jump from the public sector to your firm, prior consulting experience is helpful. You'll know more about proposal decision-making and writing, cost estimating, teaming with other consultants, employee management, client relations, and administrative matters.

Ideally, you can find a consultant mentor who is willing to show you the ropes. Learn enough so that you can market yourself as a seasoned professional, with a solid portfolio of projects and well-developed networks. Starting with a contract from a large, stable client can help you weather the ups and downs of the first few years of the firm.

There are at least two main markets for your services:

1. Working directly for clients
2. Being a sub-consultant on larger consulting teams

Work Directly for Clients

Typical clients include cities and other public agencies, developers, and nonprofits.

Because your small firm may have a lower overhead rate, you may offer cost economies. Also, you may be able to bid on smaller projects that large firms may avoid, or receive smaller contracts offered under "sole source" authorizations. Of course, this requires that you know the organization well.

Sometimes, small firms complete initial projects that set up larger, subsequent projects carried out by a larger firm. In other cases, the work is similar to what a staff person would do. For example, you might be hired by a city to write grant applications for park funds. With a small firm, you are nimble, provide quick responses, and can assure the client that you will do the work directly.

Work as a SUB-CONSULTANT to a Larger Firm for Larger Contracts

This role is based on a specific niche of expertise that the prime firm seeks to make its proposal more attractive. You negotiate a significant enough role to make it worth lending your name to the proposal, and also decide on whether you are "exclusive" with one proposer or participate with multiple firms. In addition, your firm may be in a preferred hiring class, as discussed above. In this case, pay attention to the tasks you are assigned. If they are mundane, the prime cares more about your firm's type than your expertise. In all cases, assess how much time to spend helping with a proposal that you don't control.

There is a lot to worry about as a planning consultant — competing for work, clients with unclear goals, clients who don't pay their bills, recommendations that aren't implemented, personnel management, and overhead costs.

The consulting life can be stressful for "worriers." The payoff, though, is big.

You own your time and efforts, experience continual learning through new assignments and clients, gain exposure to new communities and situations, and ideally, you are the person with the answer.

Sometimes public agency planners lament that a solution is adopted only if it comes from a consultant. It is satisfying to have the market value your services, gratifying to win projects, and fulfilling to work on projects that have a completion date. And of course, if you start and grow a successful firm perhaps you can sell it for financial gain as part of worldwide consolidation occurring in planning, architecture, and engineering firms.

Top image: Thinkstock photo.

About the Author

Richard Willson, FAICP, is a professor in the Department of Urban and Regional Planning at Cal Poly Pomona. He has also served as department chair, interim dean, and independent planning consultant. Willson's research addresses planning practice and parking policy.