How to Start a Consulting Business

Do you have extensive experience in a specific field and a natural affinity for helping others? If so, consulting may be the right business venture for you.

An important first step is to define the problem(s) you can solve for your clients. How can you help improve their business? And, what makes you stand out from your competitors? This is known as your value proposition.

As an expert in your field, you should already have a deep understanding of the complexities and obstacles your industry is faced with, and how to overcome them.

The next step is to determine your niche by assessing your strengths and skills. Ask yourself who would benefit most from your services, and how you can add value with your knowledge and expertise.

Once you’ve figured out your consulting niche, consider taking a few courses to augment your skill base. While you may be an expert in one field, you might lack other essential skills needed to run a consulting business successfully, such as public speaking, sales, finance, and marketing skills.

What happens if clients do not actually want the services you are offering? Before starting your consulting business, you will need to research your market and validate that there is a need for the services you are offering. The best way to validate the need for your services is to call and talk to potential clients.

Your market research and SWOT analysis ensure that you understand the demographics of your customers, and your competitors' strengths and weaknesses. Therefore, your marketing strategy should describe how you plan to attract and retain clients.

Once you have validated the need for your services, you can target your specific market by identifying all potential clients that have the specific problem your services would solve.

Consider the industry, the size of the business, the location of the business, and the seniority and job title of your ideal client. A detailed client profile will make it easier for you to write targeted advertisements and messaging that appeal to your ideal client.

Choosing and registering your business name is the first port of call when starting your business. Ideally, your business name should identify the type of services you offer while being memorable and easy to pronounce.

Before settling on a name, check that it's available as a domain name, as well as with your Secretary of State's (SOS) office, and that it is not already in use by another business. You can do so by searching the trademark. If your name is available, go ahead and register it along with your domain name.

There are several business structures to choose from, each with their own pros and cons.

A consulting business is most commonly set up as a Limited Liability Company (LLC) or a Limited Liability Partnership (LLP), which enables the business owner(s) to separate their personal assets from their business's assets and liabilities.

Once you have clearly outlined your services, market, and ideal client, write a business plan. Your business plan should include an executive summary, a business description, a market analysis, an outline of your services, as well as a marketing and sales pitch.

If you plan on hiring employees, such as an administrative assistant or secretary, you will need to obtain an Employer Identification Number (EIN) from the IRS.

As a business owner, you’ll want to keep your business banking separate from your personal banking. This will allow you to keep your financial affairs in order and give your business a sense of professionalism, which is important when you have clients.

As a business consultant, it is important to protect your business from unforeseen circumstances such as lawsuits, property damage, on-site injuries, etc. The insurance options that would suit a consulting business include:

• Professional liability insurance.
• General liability insurance.
• A business owner's policy.

Your business will most likely need to be licensed with the state and at the local level. Check with your local county clerk's office about common licensing requirements in your area. In addition, certain industries may require specialized certification and licenses to practice.

Depending on your location, you may be required to register for sales tax, withholding tax, and/or unemployment compensation insurance with your state.

Drawing up a legal consulting contract is essential for protecting yourself and your business, and should be signed by both you and your client(s) before starting work. A consulting contract should detail the following:

• The parties involved.
• The services to be provided.
• A list of responsibilities.
• A project timeline.
• Compensation and payment details.
• Limitations of liability.
• Your signature.
• Your client's signature.

Before applying for a business loan, you will want to determine how much money it will take to start your business. It typically costs between $10,000 and $50,000 to start a consulting business in the U.S.

However, depending on the size of your business, you may find it more affordable to start small and work from home. This will help you save on labor costs, insurance, and rent.

For a consulting business, you'll likely need the following:

• Laptop.
• Cell phone.
• Utilities (if you plan on renting office space).
• Website.
• Printed marketing materials.
• Business insurance.
• Employee(s) salary.
• Licenses and/or permits.

Business credit cards with a 0% APR allow you to make essential purchases without having to pay interest for the first 6–12 months. This will enable you to manage your expenses, improve cash flow, and grow your business. That said, you'll want to make sure that you pay off the balance by the time the introductory period ends to avoid paying heightened interest rates later.

One of the most common ways to fund a business is through bootstrapping. Many financial experts recommend investing your own personal savings into your business to avoid having to repay anyone later. However, saving up enough money can take years, and is not entirely possible for many aspiring entrepreneurs.

The U.S. Small Business Administration (SBA) provides low-interest loans to businesses that may not qualify for traditional financing. There are six different SBA options to choose from, guaranteeing loans of up to $5 million.

For the best results, make sure that you have a well-prepared presentation and a detailed business plan that showcases your predictions. Landing the right investors is not an easy process and you might need to meet multiple investors before finding the right one for you.

You may have already met your potential partner. Look into your coworker history, both past and present, and find out if anyone is willing to branch off and start a consulting business. This way, you already know your partner's work ethic and consulting experience.

You should make a list of all your expenses, including a "miscellaneous" section for unforeseen expenses. Then, find out what your competitors charge so that you can offer a competitive package.

Charging hourly fees requires careful consideration: too high and clients won't be able to afford it, and too low means that clients won't take you seriously. You also need to be prepared to deliver service worth the price. Working on project rates runs the risk of late payments.

Projects can sometimes be long-term, meaning that a client will probably pay you monthly for the overall project fee. Working on a retainer basis guarantees you a monthly income, but some companies prohibit you from working with others while you are on retainer.

When starting a consulting business, you may not need or have the finances to hire employees. However, as your consulting business grows, you may require additional employees to take care of the administrative and financial aspects of your business.

If you are starting a larger consulting firm, you'll want to consider hiring these professionals:

• Administrator.
• Administrative assistant.
• Business consultant.
• Account executive.
• Service advisor.
• HR manager.
• HR officer.
• Operations manager.
• Managing director.
• CEO.

Over time, you may need to hire an administrative crew and additional consultants. For the best results, create a candidate persona for each position, highlighting the skills, experience, and qualifications you're looking for.

Once you have determined the scope of the position, write a comprehensive job posting. To ensure success, your job posting should include a detailed list of all responsibilities and requirements for each role.

You'll want to advertise your job posting on an appropriate job board to attract talented applicants. Many of these sites use parsing technology to screen potential candidates according to set criteria so that you won't have to sift through hundreds of applicants who do not meet your job requirements.

Potential clients may not be aware of a problem that you can solve, so you may be marketing your services to people who aren't even aware that they need your services. This can make marketing extremely difficult for consulting businesses. To combat this, there are many different types of marketing that you should become familiar with:

• Brochures: clearly and simply outline your services and the reasons you should be hired.

• Cold calling: in a few short sentences, outline your services and the reasons you should be hired.

• Online and other media advertising: spreads your message to a wide audience and gets your presence known by potential clients.

• Newsletters: engages potential clients and opens the possibility of a conversation.

• Public speaking: allows you to engage with new clients and expand your network.

• Referrals: if a client is happy with your services, they will be more inclined to refer you to associates and colleagues.

• Newspaper adverts: draw attention to your business by placing an ad in your local newspaper, a relevant trade journal, or a magazine in your field.

Once you have set up your office and determined your fee structure, you can start marketing your business to attract customers. This is an essential step in the beginning as you will likely need to build up your client base.

Word-of-mouth is considered one of the best ways to market your business organically. Start by contacting your friends and former colleagues to let them know you’re starting a consulting business, and ask them for referrals.

In the digital age, a company website is an essential marketing tool and an indication of professionalism. Most of your potential clients will be using Google to search for consulting businesses, and a good website may be key in attracting them to your business.

Social media is another essential marketing tool in today's modern world. You can list your business online via Google Maps, Yelp, and consulting portal pages. That way, your business will show up in search results.

Facebook and Twitter are great platforms that allow you to advertise your services for free. You also have the option to purchase sponsored posts or online campaigns in order to reach a wider audience and target a more specific group of people.

Contacting referral prospects is a great way to spread awareness of your brand and land more assignments. Once your business is up and running and you've completed several projects, ask your customers if they have any friends, colleagues, and fellow business associates in mind who would benefit from your services.

Create an email template that you can use more than once. It should have a strong subject line and mention your mutual acquaintance in the body. Keep it short and to the point.

If you choose to call your referral prospects, be sure to present yourself as an expert in your field before describing your services. You'll also want to rehearse what you want to say before making the phone call.