How to Start a Consulting Business?

1. Justify Your Strengths, Skill Set & Niche

A consultant’s expertise is always limited to a specific domain. No one can be an expert consultant in every field. Therefore, an individual must identify the consulting niche according to his strengths and interests to become the best consultant.

You might need a license or certification in your consulting field. Suppose a person has deep experience and knowledge of recruitment, then he or she can initiate HR consultancy services. Such services aim to offer the right HR-related solutions to the company so that the recruitment process goes smoothly.

Pro Tip: Try to get a certificate to add value to your consultancy profession.

2. Business Plan

A business plan is necessary for the consulting business, as it acts as a roadmap. You must be clear regarding your objectives when outlining the business plan. It must include the listed elements:

• Consulting company information
• Business objectives
• Consulting services that you are offering
• Marketing strategy
• Expenditure details
• Financial projections

Pro Tip: Review your plan every 3 to 6 months and keep updating it as your business grows.

3. Research Your Target Market

Before stepping into the consultancy business, delve into target market analysis. Take all the demographic key points such as location, industry, and age. You will successfully get a clear understanding of who needs your consultancy services and what the current market trend is.

Pro Tip: Use market research tools to save your time and efforts while getting accurate outcomes.

4. Competitor Research

When you think about how to start a consulting business, you must include competitor research in the solution. You can easily predict your competitors’ information by reviewing their websites, social media profiles, and potential customer reviews.

It will help you to figure out what makes your competitors different. What are their social media marketing strategies? What are their strengths and weaknesses? And what do customers like about their service?

Generally, a large consulting firm has many public records that are open to access. You can incorporate this step into your competitor research strategy as well.

Pro Tip: Don’t be busy copying your competitors. In addition to following them, you must also determine what things they are missing and what unique things you can offer as compared to them.

5. Business Name Registration

Business registration is needed for your consulting profession. This will make your business legal and authorized on the market. Here are some key points to focus on:

• Choose the business name that defines your consulting business.
• Verify the name’s availability to ensure it hasn’t been registered with the local government.
  Complete all the paperwork.

Pro Tip: Registering your business as a trademark is a good practice.

6. Select the Business Structure

You must be careful when choosing a business structure because it will directly affect your taxes, daily operations, and risk. Here are the following common business structures:

• Sole Proprietorship: In this kind of business, one person is solely responsible for managing the business. He is also in charge of looking out for debts and obligations. There is no state-filling requirement in this kind of business structure.
• General Partnership: It is one of the easiest business structures. There is unlimited personal liability for the business’s debts for the owner.
• Corporation: A corporation is also known as a company that is governed by its owners. It is created under state law.
• Limited Liability Company (LLC): An LLC provides limited liability protection along with pass-through taxation benefits.

Pro Tip: Your chosen business structure will affect your tax implications and process growth. Consult with a lawyer or any financial advisor to gain a better understanding.

7. Get the Business Bank Account

Managing your personal and professional finances together is a huge mistake. A separate business bank account is the key to smooth financial management. This makes taxation and bookkeeping easier without confusion. You should manage your business finances separately even if you have a startup or small business.

Pro Tip: Try to choose the bank that offers some perks to benefit your business.

8. Get License and Permits

Licenses and permits are necessary when you think about what you need to start a consulting business. The conditions for licenses and permits are different in every state. It may or may not be compulsory according to the state. You must acquire the required license and permits according to local law to run your business smoothly.

Pro Tip: You can consult any expert to get clarity over the required permits.

9. Generate Contracts and Other Essential Documents

Prepare your business contract and other essential documents that support your business. The contract should include the work scope, terms & conditions, and costs. Confidentiality, intellectual property, project termination, and liability are other points to cover.

Pro Tip: Choose a legal professional to review contracts.

10. Invest in Invoicing Tools

To keep your business finances on the right track, you must use invoicing software for consultants that eases your working process. You can use invoicing tools like Moon Invoice, for the ultimate invoicing solution for your business.

This tool streamlines the invoice process. It offers customized ready-made templates for quickly generating digital invoices. Consulting professionals can craft a professional invoice using a consulting invoice template. Additionally, it helps to create estimates and sales receipts, with expense management solutions in a modern digital approach. Professionals can create credit notes, debit notes, and purchase orders.

Key Highlights of Moon Invoice:

• 66+ custom templates to make invoices, receipts, and estimate
• Project tracking option
• Expense management
• Auto calculation
• 20+ payment integration method
• Templates available in Excel, Word, Sheets, Docs, and PDF
• Offline data synchronization
• User-friendly interface
• Get 15+ business reports

Pro Tip: Choose the tool that offers all the features for your business needs.

11. Outline the Pricing Strategy

You must set up a fair pricing strategy for your own consulting business that gives you some profit while not overcharging the client.

Additionally, pricing will also depend upon the type of consulting service you offer. For instance, a consultancy firm will charge a higher cost for large and complex consultancy than simple consultancy services.

Keep your pricing strategy aligned with your expertise and niche. You can either charge an hourly rate or per the project or retainer payment structure.

Pro Tip: Keep reviewing your prices. Increase your price with time because you will gain experience and knowledge while practicing as a consultant.

12. Marketing & Promoting Your Business

You have finalized the niche, prepared a business plan, chosen a business structure, got licenses, and prepared a pricing structure. So what next? It’s marketing and promotion of your business to acquire leads.

You have offline and online marketing options. While distributing business cards sounds outdated, strategy, reference, and word of mouth still contribute a lot of benefits in promoting your business. So, showcase your business within your friend circle and family.

In online marketing, you can build a business website and enhance its visibility through SEO. Incorporate social media’s power into your strategy and reach a wide range of target audiences. You can also opt for paid advertising marketing.

Attending events or joining online communities is another approach to enhance your business marketing. With it, you will get a chance to make new contacts and chances of gaining leads.

Other than marketing, you can also build a potential relationship with influencers. Establishing good professional networking is fruitful for the consulting industry.

Pro Tip: Add consistency to your marketing and track the status of its results.

13. Stay Organized and Scale

Your consulting business is a long and ongoing journey. It means you should be proactive while managing your tasks, from serving the client to the final payment.

Be aware of the latest market trends as they positively impact your profession. This will prevent you from giving outdated solutions that add no value to the client’s business. Keep your business scalable in a dynamic market.

Your consultancy business will be successful when you offer high-quality consulting services and manage your business well.

Pro Tip: Review your workflow. This will be helpful to identify points where you want to improve. Try to automate your workflow where it is possible.

Types of Consultants

1. IT Consultant

IT consultants assist businesses in deciding on their technology needs. However, to become a good IT consultant, you need to have in-depth technical knowledge to give the right technical solution. Provide services in consultation that resolve technical issues of a company.

2. Financial Consultants

Financial consultants guide professionals regarding their money management. To become a successful consultant in finance, one needs to be knowledgeable in bank accounts, loans, stocks, and interest rates.

3. HR Consultants

HR consultants help companies create and manage their human resources policies. Additionally, they also offer solutions to HR-related issues that cover leave policy, recruitment process, salary, firing, team structure, and training.

4. Business Consultants

Business consultants are helpful for a business when there is a need to make a critical decision. They guide business professionals on topics like operations, finance, and promotion.

5. Marketing Consultants

Marketing consultants help businesses to avail of good marketing to acquire the target audience. It is necessary to have an in-depth knowledge of marketing principles to become a successful marketing consultant.

6. Legal Consultants

Legal consultants help businesses with their legal process. Their major responsibility is to guide the right solution to the legal process. Using deep law knowledge, these consultants help the business to mitigate risks and overcome complex legal challenges.

7. Data Analytics Consultants

Data analytics consultants help businesses optimize the process by analyzing their raw data. They transform raw data into strategic information. Additionally, they also help businesses by identifying their areas of improvement and suggesting the right solution.

8. Management Consultants

Management consultants guide companies to refine their operations and overall management process. Their major aim is to provide the right solution so that businesses achieve their goals while increasing efficiency.

How Much Does It Cost to Start a Consulting Business?

The actual cost to start a consulting business varies depending on the niche of the consulting service you select.

Fortunately, starting a consulting business does not require a huge investment. Professionals only need to invest in office space, licensing fees, networking events, and promotion expenses.

Fixed and variable are two types of costs involved in the consulting business. So consider them when it’s about how much does it cost to start a consulting business.

Fixed Cost

Fixed costs are non-variable costs that consulting professionals need to bear when initiating a new business.

• Business entity fees – $100
• Consulting firm business license – $100 + (Needs when you work from the office)
• Insurance policies – $100 or above
• Promotional materials – $250 or above
• Equipment, Supplies, and Office Furniture – $1,000 or above

Variable Cost

Variable costs may vary depending on consulting business needs. It includes the following types of costs:

Recruitment:

• Hiring software/systems – $1,000 or above

Marketing:

• Marketing consultant – $35 to $600 or above per hour
• Advertising – $250 or above

Other variable expenses:

• Software – $1,000 or above
• Conferences – $250

Final Note

Figure out your expertise, knowledge, interests, and experience before stepping into the consulting business. It is an ideal option for those who want to be their own boss with little investment. Additionally, work dedicatedly to be on the successful side.

Now, we are closing our guide on how to start a consulting business. However, don’t miss any of the above steps when starting a consulting business.

Frequently Asked Questions