So you’re about to start your own consulting business. Congratulations! It’s not an easy path but it can be rewarding like no other. In this post, I’ll provide you with all the resources you need on how to start a consulting business, including a step-by-step guide.
As an entrepreneur, I have founded and co-founded four companies, the last one being a consulting firm where I currently work as a professional in my field. That’s why I’m especially excited to share this information aimed to clarify your doubts and help you grow. I will share with you knowledge, learning experiences, some useful tips and, most importantly, a step-by-step guide on how to start a consulting business.
Before starting, here you have two key tips: we can agree that setting up a consulting business will have a cost. Therefore you have to outline a plan taking the initial cost into account.
Also, don’t overlook the importance of your staff. You must rely on experienced professionals who can provide you with the best advice. These professionals will improve the quality of your business and therefore, your quality of life.
Some Preliminary Questions Before Starting Your Consulting Business
Before dealing with legal and fiscal requirements, or even your financial plan, let me ask you some questions that will be key for your consulting business:
1. What is the value you can bring to your potential customers?
Once you have a specific answer, you can start designing your roadmap. Keep in mind that you are not going to offer a product but a service to help your clients overcome certain challenges.
2. Have you studied your target customer profile and your market?
You need to carry out brief market research before launching your business. You can do this yourself or rely on professional help. It doesn’t have to be too exhaustive; quick research will help you better understand your business context.
3. Do you have a strategic plan and a sales strategy for your business?
You don’t need to allocate too much time to this task at the beginning, but you still need to have a simple strategic plan of action. This plan will also specify the money you need to set up your consulting business and a strategy to drive more sales.
Next, let’s check out a brief guide on how to start a consulting business.
How to Start a Consulting Business – Step-by-Step Guide
1. Decide the legal structure of your consulting business
We will leave aside the Corporations S and C. Being a small business (expecting to have less than $80,000 annually in sales), I recommend you to opt for a Limited Liability Company or LLC
“Limited liability” means that if your business fails or gets in legal trouble, then your personal assets (bank account, home or car, for example) are protected.
Remember you DON’T need to be a US citizen to start a business. Foreign citizens without a green card or visa are not allowed to work legally in the US, but they can be executives or corporate directors.
Learn here how to set up an LLC.
2. Decide on location
The process and the answers to how to start a consulting business can vary a bit depending on the state you are. For example, there are states, such as Nevada, with favorable conditions for foreign owners.
If you are not going to be physically present in the consulting business, you will need the services of a registered agent to collect documents and send them to another state or another country.
You will also need licenses, registrations, permits, etc. that may vary depending on your location.
3. Learn about your taxes
You have to comply with federal, state and local tax laws. Have in mind that LLCs are cheaper for tax purposes.
The earnings of your LLC are transferred to your personal income taxes. Therefore, you will save on costs and paperwork since your accountant will not have to prepare a separate form for your small business taxes. Here is everything you need to know to file taxes as an LLC.
4. Get an Employer Identifier Number (EIN)
It is easy to obtain, and this number will allow you to open a bank account, pay your taxes and hire workers. Read this post to find out how to get your EIN, and remember: if you are an undocumented immigrant, you must obtain an ITIN instead.
5. Educate yourself
No degree guarantees the success of a business. If you don’t have a proper degree, don’t stress: learn as quickly as possible and have a financially sustainable strategy in hand. Work hard every day and provide your customers with the best customer experience while you keep learning.
6. Some financial advice
Don’t use your business account for personal purposes or your personal bank account for your business. In other words, keep your personal and business finances separate to avoid commingling.
I insist: you need a business plan in place to be on top of your financial needs and make sure you always have enough capital to pay all your business expenses, including payroll (unless you are a solopreneur, in which case you will only have to deal with your own expenses as a professional.)
Also, don’t forget that starting your consulting business from home can save you costs considerably.
Last but not least when it comes to finances, always rely on the expertise of financial professionals. A great part of the sustainability of your business depends on their honesty and experience.
Last Tips Before Launching Your Consulting Business
1. Network and ask for advice
Connect with other professionals like you, both in networking events and online platforms. Talk about the value you can provide whenever you can.
You don’t have to know everything. Rely on the best professionals. Don’t see their paid services as an expense but as an investment that will help the sustainable growth of your business.
2. Remember: the ideal client does not exist
Create a personal work system to access those potential clients you can help. But get ready to adapt quickly to your clients’ specific needs and unexpected changes.
3. Consider other possible businesses
If you have serious doubts, consider a different activity. You can always look for other types of businesses you can start with a small budget but with the knowledge you already have.
4. Put your finances in order
As you know, without properly organized finances, it is very difficult to face the daily activities of your company and to invest in its growth.
I hope this post has helped you clarify the process of creating your small consulting firm and draw the optimal context for your success.
How Can Camino Financial Help You?
In Camino we are loyal to our motto: “No Business Left Behind“. Unlike most lenders that require at least two years in business, we will require that your business has been operating for only 9 months. This way new entrepreneurs have the opportunity to invest in their business when they have limited access to financing through traditional loans.
We have fewer loan requirements than a bank, and our business loan process is safe, transparent and fast: you can receive the funds you need for your consulting business in just 4-10 days.
Keep reading: Resources to start a small business.