I have been doing SEO/Online Marketing since 1997 and I have been, and still am a freelancer. I think the best think you can do before you even think about setting up a consultancy is think what you can offer you're prospective clients. It's pointless offering email marketing if you simply can't or don't know how to do it.
A good thing to do is when you get you're first client per se, take along some testimonials from previous work along with all the keywords you have that site ranked for etc. Even if its a personal site, it gives the prospect something to see.
As for software, I don't really buy it to be honest just because I'm old school and you have all the information you need at your fingertips from the server log files.
I think the only piece of software I have is SEO Elite and that's purely for tracking my US clients. Even then I always do a manual search on there keywords just to be sure.
The thing that I am seeing more and more these days are a lot of snake oil media companies out there, I did write an article on what to watch out for if you're a business/person looking or an SEO'er (not sure if I can put link in here) but it might be handy reading that so you know not what to do.
Always educate your clients because a lot of them know nothing about how SE's work. Taking the time to educate your prospect can go in you're favour.
Tell you're client exactly what you are doing on their website. You don't need to go into great detail because the probably won't understand but a good summary will do the trick.
At the beginning make not of where they are in the search engines under what keywords and every month shoot them a nice sexy PDF of where they are and what you have done to the site. If you can incorporate some graphs and stuff like that. The business men/women love that kind of stuff and it also spices the report up.
Never ever tell them how much traffic they expect to receive or where there likely to rank. Why?, thats just asking for trouble because if you get a client that is calling you everyday wanting to know where they are in the SE's (which you will, I think every one has a client like that) and how much traffic they are getting, if you don't deliver what you said, it could go against you're reputation.
Never promise never guarantee rankings or traffic.
Hope that helps a little.
KP
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