How to Start a Consulting Business

Everything you need to know about starting a consulting business

Research & Refine your Business Idea

Consulting businesses can be highly profitable if you find the right niche. According to US statistics, the industry is projected to reach a volume of 471 billion dollars by 2022. In order to secure your share, you have to come up with a strong business concept right now.

There are plenty of specialization opportunities within the business consulting world. Will you be offering IT consulting assistance? Do you have extensive knowledge in corporate sustainable development? Or maybe you’d like to focus on marketing analysis, ecommerce implementation consultancy, time management and planning, bookkeeping or human resource consultancy?

The specialization opportunities are limitless, as long as you identify a profitable niche. A profitable niche is defined by sufficient demand and a relatively small number of competitors. If these conditions are met, you’ve identified an opportunity conductive of long-term growth.

Once you discover your specialty area, you’ll be left with registering and certifying your business.

The step is similar to registering any other kind of enterprise. If you don’t know how to handle the administrative process, you should definitely get assistance from a corporate lawyer. An attorney will know the steps and the documentation requirements for you to begin practicing legally.

Creating your Business Website

Your consultancy business needs a well-established, niche online presence.

Building your online reputation starts with website development.

Having a corporate website will give you a chance to build and deliver quality content to the right B2B crowd. The format and design of the website is entirely dependent on the concept you want to pursue and the goals you’re trying to accomplish.

A business consultancy website can feature multimedia and how-to videos that will help you establish your expertise in the respective field.

You can also make it possible for potential clients to schedule an initial appointment online. Via a live video chat, you can easily get in touch with such potential clients and give them a chance to engage with you, regardless of their location.

A website will give you a chance to accept payments and provide support via a digital channel.

You may worry that offering all of these options online is going to be expensive. This doesn’t have to be the case.

Setting up a website isn’t as hard as it may sound, in-fact, many hosting providers have tailored their service around small businesses who may not be tech savvy. We suggest going with BlueHost to host your website, they’re service is simple and easy to use/setup and they’re currently offering 60% off hosting, including free domain registration.

Additionally, creating a blog on your website is also a great way to attract organic traffic and expand your business. Checkout our full guide on the best and easiest way to setup a WordPress blog here.

Get Ideas for your consulting business name!

Marketing Your Business

Generating leads for your consulting business is heavily dependent on the effectiveness of your marketing strategy.

A good advertising plan should utilize more than one channel. Ideally, you should be dependent on both online and offline promotional methods.

As a consultant, you have to work hard on establishing your professional reputation. You are targeting B2B customers. Appealing to such prospects is different from carrying out a B2C marketing campaign. You have to show your business clients how you can enable their growth and provide them with adequate support.

To accomplish this goal, you should create a corporate blog and you should also be active on relevant social media. These channels will provide your clients with useful information and they’ll help for brand establishment. When in need of the respective service, potential customers will quickly recall the content you created and get in touch with you.

Apart from launching a content-based strategy, you can do consulting business marketing in a number of additional ways:

  • Pay per click (PPC) advertising on relevant websites that have a relatively big, targeted audience
  • Strategic partnerships with other service providers for the purpose of increasing your market share
  • Email marketing
  • Hosting local events, organizing workshops and seminars to establish your expert reputation
  • Create referral programs for your existing clients
  • Run webinars (on top of or instead of the workshops and actual events that could be costly to plan and carry out)
  • Try podcasting as an addition to your video marketing efforts
  • Craft brochures, pamphlets and booklets
  • Create an ebook and distribute it among clients and prospects
  • Partner up with local media (an interview in a business or a managerial magazine can be excellent for local reach)

Setting Goals and KPI’s

Once you set goals for your consulting business, you will have to keep track of progress. To do so, you will need to choose the right KPIs.

KPIs may vary from one consulting business to other due to the niche specialization area. Still, a few metrics are universally-applicable and these include:

  • Leads generated: this is a simple, universal metric that demonstrates the effectiveness of your outreach and marketing efforts.
  • Average fee per hour: how much does your consulting company charge per hour of service delivered? Depending on the cost of service delivery and your experience, it could make sense to raisqe the hourly fee after some time.
  • Repeat business rate: winning new clients is great but do you keep your established relationships in the long run? A high repeat business rate will be indicative of quality, consistency and overall customer satisfaction.
  • Annual revenue per billable consultant: this is the total revenue divided by the number of consultants working at the firm. This metric is very important because it gives you a good idea about the productivity of your consultants.
  • Profit margin: the percentage of revenue that remains after all direct costs for project provision are covered. It doesn’t matter whether you get paid per project or per billable hour. A general rule of thumb is to keep the profit margin above 40 percent for sustainable growth.

Don’t forget to try our consulting business name generator!

Plan your Finances

You need to have a good idea about the expenses related to launching your consulting business.

If you have an adequate financial plan, you’ll know what sources of funding to pursue.

Apart from the regular operational expenditure, you will also have to consider the things and processes you’ll need to invest in once.

Some of the costs to cover include buying or renting an office, office equipment and furniture, the cost of getting a business license, insurance, staffing expenditure, website development, marketing and bookkeeping.

The largest amount will be needed for paying employees. Usually, small consulting companies have at least two to three consultants. In the US, paying two employees for a period of three months will necessitate approximately 10,000 dollars.

Now that you have an idea about the cost of setting up a business, you will have to identify the right funding source.

Investing your savings in the business is one option. You can also get family members or business partners involved. Alternatively, seek angel investors and shareholders. To attract such experienced entrepreneurs, you’ll need to come up with a strong, distinctive business concept.

Adopt an Entrepreneurial Mindset

Adopt the entrepreneurial mindset if you want to ensure the success and growth of your business in the long run.

Entrepreneurs are strategic. They don’t pay attention to the small steps needed to get from point A to point B. Entrepreneurs keep the final goal in mind and they prioritize the long-term goals over the short-term survival of the company.

You can enhance your entrepreneurial skills through access to the right professional qualification materials.

The Secret to Landing Six-Figure Consulting Projects with Dauwn Parker is a wonderful podcast for those interested in setting up a consulting company. As far as books go, Flawless Consulting by Peter Block is an absolute must-read.

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Legal Requirements: 

The legal requirements for starting a consulting business are similar to the process for the establishment of any other corporate entity.

There could be specific licenses or permits required on the basis of your nationality or location. A federal tax ID number, an employer identification number and a general business license, for example, are required for legal operation in the US.

Furthermore, you will need to get liability insurance.

Depending on the legal form of business establishment you choose, you will also need to acquaint yourself with the taxation regulations you’ll have to adhere to.

All of this can get a bit complicated. Talk to a legal professional. It’s also possible to hire a lawyer to complete the licensing and registration process for you. Professional assistance can save you time and money, enabling you to initiate consulting activities as soon as possible.

Accounting & Bookkeeping:

If you don’t intend to hire a full-time accountant, you should definitely outsource the process.

Most accounting firms know how to handle the bookkeeping of consulting companies. The same applies to freelance accountants. A freelance accountant will offer reliable and cost-efficient services that are going to be a perfect choice for a startup attempting to establish itself on a limited budget.

A final thing you’ll need to choose is accounting software you’ll be using on a regular basis. Client billing and invoicing, as well as online payments are something you’ll have to deal with on a regular basis. You will need a flexible and user-friendly solution like Xero, for example.

Hiring Employees:

In the beginning, it could be possible to practice on your own and to outsource aspects of running the company that you simply can’t handle (marketing, website development, PR).

As the business grows, however, you will have to increase the number of consultants. While investing in salaries could be costly, it will increase your company’s revenue generation potential.

Look for experts who have enough experience and who have also specialized in the respective area. Consulting in the field of IT isn’t the same as offering HR services. Always seek references in order to confirm the experience and the reputation of the person you’re considering for addition to the team.

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