How To Start a Consulting Business in 8 Steps

Evaluate your skill set and know-how. Are you a whiz with computers? You can start an IT consulting business. Or have you worked in human resources? You may want to become an HR consultant. There are many different types of consulting to choose from in the consulting industry, such as:

• Digital marketing consultant

• Education consultant

• Environmental consultant

• Financial consultant

• Healthcare consultant

• Legal consultant

• Management consultant

• Marketing consultant

• Operations consultant

• Project management consultant

• Public relations consultant

• Real estate consultant

• Sales consultant

• Search Engine Optimization (SEO) consultant

• Strategy consultant

As a consultant, you should determine what expert advice and value you bring to your client base. Tune into industry trends and know what pain points to eliminate for your target audience.

Now, you will want to define the scope of your business. Do you want to operate it full-time or set your own flexible hours?"

The first step for many business owners is to put together a business plan. Even a small business benefits from a business plan. Common elements of a business plan include:

• Executive Summary. Describe your business, your background, who your customers are, and your revenue expectations.

• Business Description. Outline the type of consulting business you are creating and who you will serve.

• Market Analysis. Conduct market research to see if there is a demand for your services. Identify your target market. Research your competitors and show how you differ from them.

• Marketing Plan. Develop a marketing plan for reaching your potential clients. Your first client may be a former employer, but you want to make sure you are in a position to welcome new business.

• Financial Projections. Determine your startup and ongoing costs to project when your business will turn a profit.

When drafting your business plan, you may also want to determine the following:

• Certifications. Do you need any licenses or certifications prior to offering consulting services?

• Pricing. Will you charge an hourly rate or create a flat fee arrangement? If you handle large scale projects, will you request a retainer?

A business plan can be formal and highly detailed or informal. However, if you are looking for a business loan or bank financing, you should have a well-formulated plan.

Your company name is your brand so consider it carefully. There are many considerations in choosing a business name, primarily that it is unique and no one else can claim it. Before you settle on a name, conduct an online search with your Secretary of State’s business records, Google the name to see if another business uses it, and search in the US Patent and Trademark Office (USPTO) for prior name registrations. If the name is in use or a registered trademark, do not use it.

As a consultant, you may want your name to be your personal name, such as “Cheryl Smith Consulting,” or you may want a name to reflect the consulting you do, such as “College Success Consulting.”

Many startup consulting companies begin as sole proprietorships, where a single individual owns and operates the business in their own name. However, consultants often create a limited liability company (LLC) for personal asset protection. A sole proprietor’s personal assets are at risk from lawsuits and debts. In contrast, a business owner with an LLC only risks assets within the company. No matter what type of consulting you do, it is wise to look into protecting your personal assets from your business liabilities.

Both corporations and LLCs offer personal liability protection. However, LLCs are popular among entrepreneurs due to the ease of formation and low maintenance cost and requirements

An Employer Identification Number (EIN) for your business is similar to a Social Security Number. You can find out if you need an EIN and easily apply online with the IRS for your EIN. You use this number to identify your business when paying federal, state, and local taxes.

The next step is to open a business bank account for your consulting business. A bank will want to see proof of your business entity (such as a Certificate of Incorporation for a corporation or Certificate of Formation for an LLC) and your EIN.

You run all your transactions (paying business expenses and depositing checks) through your business bank account and not your personal one.

Determine what business licenses and permits you may need for your consulting practice. Your state and township may require a business license. If you operate from home, you may need permission from your homeowner's association (HOA).

Depending on your business, you may also want to consider a business insurance policy. While a business structure such as an LLC or corporation protects your personal assets, a business insurance policy protects your business assets.

Many independent consultants start by serving one customer, but they must develop strategies to attract new clients. When setting up your business from scratch, you want to reach your target market in the most cost-effective way. The best way to get clients is from word-of-mouth referrals. However, there are many other ways to get business, such as:

• Create a dynamic website so people can find you and learn about what you do. There are many online templates for creating your website.

• Leverage your social media channels by posting about your business. For example, you can post about your business on LinkedIn, Facebook, and Instagram. Consider writing a blog or starting a podcast about your area of expertise to attract attention.

• Give business cards to former work colleagues, friends, and family.