Start a Consulting Company

If you are an expert in your field, your services could be in demand. Many companies have a need for a professional consultant, for a variety of reasons. A consultant can be called in to offer expertise and skills to handle a short project or make changes in the way an organization communicates or does business. Consulting services can be attractive because they are often a more flexible and money-saving approach than hiring a full time employee. Consulting services are one of the fastest-growing areas in small business, so learning how to set up a consulting firm could really pay off.

Steps

Considering Your Qualifications

1. Evaluate your expertise. Your expertise, or what you know about a certain field, is the fundamental reason why clients will hire you. Choose a consulting area where you have a lot of knowledge and experience. A good consultant has the expertise to anticipate what questions and problems a client will have. You should not have to be told what needs fixing.
   • If you’re passionate about a field but you have no background in it, start training now!
   • If you’re specializing in a field, learn everything you can about it. It’s better to learn now than to wait for a client to present a problem you can’t tackle.
   • Some of the top areas for consulting include the following: accounting, advertising, marketing, communications, grant-writing, public relations, and writing and editing.
2. Consider your skills. As a consultant, you will need to be able to explain why your services are the best. Many people may have the same knowledge as you, and this is where skills come in. For example, you might be great with numbers and a "people person." This skill would give you an advantage over a consultant who is great with numbers but not a good communicator. Determining what skills you have will help you present yourself to clients and set you apart from the competition.
   • Are you really good at being objective, or you better at analyzing things from a qualitative perspective? Are you a creative problem-solver, or a mastermind at crunching the data?
   • Think broadly about your skills and you might realize you have some talents that surprise you!
3. Examine your personality. Think about what your priorities and needs are. Some people will be better suited to being their own boss than others because of their personality traits and life goals. To succeed at consulting, you should have the following personality characteristics:
   • A strong sense of organization
   • A love of networking
   • The ability to think creatively
   • The ability to motivate and supervise yourself
   • The ability to handle risk and unpredictability
4. Determine whether you need special certifications or licensing. In addition to your small business license, you may also need to file other paperwork to practice consulting in your area. For example, in most states, financial planners, real estate agents, and fundraising consultants need some sort of certification or licensure. The last thing you want to do is establish your firm, set up a network of clients, and then get shut down because you forgot to get the appropriate credentials.
   • The certification process will vary depending on your field. Certification often involves completing a course, passing an exam, and/or working in the field.
   • Certifications may be optional, but they typically carry a prestige that will give you a huge competitive advantage.
   • Depending on your field, it may be difficult to find clients when you’re just starting out if you don’t have a certification.

Setting Up Your Company

1. Do some market research. Look for coverage gaps are in your area of expertise. What are other companies already doing? Is there a niche in your area that you can fill? What clients and companies could benefit from your knowledge and skills? Can you target a particular audience to make yourself stand out? What are the going rates for services like yours?
   • Think about how you’ll stand out from the crowd. If your competitors all specialize in big, corporate marketing campaigns, you might cater to small businesses instead.
   • Many businesses, non-profit agencies, government departments, and individuals hire consultants, especially during “crunch-times” like just before large trade shows or during tax season.
2. Develop a business plan. It’s important to write a business plan to help you figure out how to turn your knowledge and skills into profit. If you have to find investors for start-up capital, you'll need to show them a solid business plan to convince them to invest. A basic business plan will include the following:
   • A mission statement: who are you and what does your company stand for? What are your goals?
   • Market research on demand for your skills: who needs your services? Who is likely to buy them?
   • Advertising and marketing plan: how will you attract clients? How do your competitors do so?
   • Financial projections: how much money will you need to set up your company? How much money will you need to keep your business running?
3. Decide on a location. Many consultants operate their companies from home offices. This can be a great choice, because you don’t have to find a separate location, pay rent, or think about a commute. Once your business expands, you may need to find a different location. When you’re just starting out, keeping your expenses to a minimum will help your bottom line.
   • Keep your home office and personal living space separate. Not only will you be more productive, but you’ll also have an easier time when tax season comes.
4. Determine your financial goals. You need to have an idea of how much money your company will need to stay operational, including travel expenses, any business overhead, and your own salary. Writing your business plan will help you nail this information down. Use this to determine your hourly rate or consulting fees. It can be hard to get information on your competitors’ rates, but you may be able to ask someone in your professional network for advice. Websites such as Careers in Business can also help you find out what other consultants in your area earn.
   • Don’t sell yourself short. New consultants tend to undercharge, so make sure your fees fall within the standard range.
   • You can charge by the hour or project. You can also work “on retainer,” where a business or client pays you a set monthly fee for your continual services.
   • Your field matters as well. IT consultants are usually hourly, while marketing consultants often charge per project, for example.
5. Register your business. Although it’s not always required, registering your consulting company with state and local offices can provide several benefits. For example, a registered business can get a tax identification number from the IRS. This number will allow you to qualify for business bank and credit accounts, among other things. Talk to a lawyer or accountant to find out how to register a consulting company, as the process varies by state.
   • It may benefit you to incorporate your business as well, but you’ll need to talk to an accountant or securities attorney first.
6. Decide how to handle administrative tasks. Determine whether you have time to do it yourself or if it would make more sense to hire an employee to do tasks like mailing sales brochures, answering the phone and setting up appointments.
   • Many consultants hire temporary administrative assistance on an as-needed basis. If you aren’t swamped 24/7, that may be a good choice for you.
   • Hiring an employee to officially work for your company usually requires that you have certain business and tax procedures in place. Check with your accountant before you hire an official employee.
7. Create your brand. Particularly if you’re just starting out, a strong brand identity will help communicate who you are and what you do to potential clients. Purchase professional business cards, create a website, and maintain social media accounts like Twitter, Facebook, and LinkedIn.
   • It’s important to keep your accounts up to date! Post regularly to show that you’re committed to staying in touch with the developments in your field.
   • Consider starting a professional blog. This can be a great way for you to show off your extensive knowledge and experience. It will also help potential customers get to know you.

Running Your Company

1. Engage in networking activities. Join local business associations and professional groups to market your services. Attend trade and industry shows in your field. Speak at public events. Teach aspects of your field via local adult education classes. Hold seminars or training sessions to showcase your professional consultant skills.
   • Networking is also a great way to pick up new clients.
   • You don’t need to be trying to sell your services 100% of the time when you’re networking, but throw in a pitch here and there!
2. Practice effective time management and organization. Adjust your schedule to have enough time for sales and networking activities as well as actual consulting. Keep your schedule and work areas well organized to make it easier to take care of tasks and manage your time.
   • It’s easy to get off task when you’re working for yourself. Be disciplined, and don’t waste your own time. Keep yourself accountable!
3. Do cold calls. Unlike traditional sales services, where you usually have a distinct product that people want (doughnuts, cars, dentistry), your skills are the product in consulting. Your clients may not even be aware that they need your services, but cold calling can let them know how much you could help them.
   • Develop a script for your calls. Deviate from it when necessary, and start with something respectful, like, "I know you're busy and I respect your time, so I'll be brief."
   • Include a hook. Something like, "My firm just saved Lucky's Doughnuts $4,000 by revamping their shipping plan. I'm reaching out to see if we could benefit your company too."
   • Invite them to talk. If you can get your prospect to talk about their business by asking them a question or two, they're more likely to stay on the line.
   • Don’t be pushy. If you can close, great! If not, thank them for their time move on.
4. Promote your company. Some consultants view traditional advertising, such as buying print ads in newspapers or having TV ads, as a bad idea for a consulting company. These advertising types may seem to cheapen your brand. Instead, create original, helpful content in your field of expertise that’s easily found online. Write online and print articles and publish them on your blog, in the local paper, and in various trade magazines. Keep your social media profiles up to date with great information about your field. When customers see your expertise displayed this way, they’ll feel good about hiring you.
   • Consider advertising in trade journals and industry-specific publications to focus on a more targeted audience.
   • Print informative brochures that highlight your services and hand them out to potential clients.
   • You could publish a monthly newsletter to stay in touch with your regular clients.
   • Word-of-mouth is still the best advertisement. Do a great job, treat your clients right, and they will be happy to refer their friends to you.
5. Ask for referrals. You may feel awkward about doing this at first, but keep in mind that if you’ve done your job, your customers should be comfortable recommending your services to people they know. If you’re worried that your clients wouldn’t be comfortable referring you, then you might want to consider why. Is it because you’re not used to taking a direct approach, or is it because you’re genuinely worried that your services aren’t good enough? If you’re not asking for referrals just because you think it’s somehow odd, you’re missing out on a huge opportunity.

Quick Summary

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