[PeterisP]

There's a big difference between a contractor and a consultant, and I'm not speaking about the difference between full time contracting and some variable hours contracting. In consulting you want to ensure an arms-length separation and work on a deliverables-only basis with the understanding that the deliverables can be worked on by your team, not exclusively you; i.e. that your hours, schedule, work environment, tools, software, work organization, who does what, how many and which people are involved, subcontracting, etc are all decided and managed by you with only reasonable limitations caused by requirements of confidentialty/NDA's and the billing setup. Of course, some tasks are a bad fit for that, and it's reasonable to want an employee or a full time contractor for that, but if you don't want that then you most likely shouldn't convince them, but you should accept that this task is not what you want - perhaps the same company will have other tasks later where they will want consulting services.

Yes, if you want to be in consulting business, that means that you have to work as if you were a consulting firm, even if you are a single person. It carries some overhead, so charge accordingly. Some form of incorporation tends to help and give an aura of being a larger team even if you're not, but for people who know you it only changes billing/legal/tax factors, not the job itself.

Yes, small businesses and startups are iffy about hiring consultants, and probably rightly so - the nature of such services simply isn't a good fit for them. Again, you shouldn't convince anyone, you should either accept that small businesses and startups won't be your target audience (and thus avoid networking with them but focus on larger companies who are actually likely to be customers) or discard the concept of consulting and accept to work as full time contractor or employee or co-founder or service provider or any other relationship style that works well for their situation.