If you have specialized expertise that other businesses, professionals, or individuals would find useful, starting a consulting business might be a great idea. The nice thing about a consulting business is that you can do it from anywhere. Many independent consultants work from home with no real need for a separate office location since they often meet their clients on-site.
If you want to start your own consulting business from home and start offering expert advice to clients, we have tips and advice to help you succeed. Keep reading to learn more.
Qualifications Needed to Become a Consultant
While you don't technically need any particular educational or employment background to do consulting work, you may find it difficult to obtain new clients if you can't indicate that you have a specific area of expertise and know what you're talking about. Many people who become successful consultants do so after gaining expertise in a particular field, either through education, experience, or both, and most consultants have at least a bachelor's degree. When businesses hire consultants, they want to know they'll get what they're paying for.
For example, if you've worked in marketing for years, you might decide to go out on your own and become a marketing consultant - someone businesses can hire to advise them on their marketing strategies.
In general, consultants span a wide variety of niches. There are nonprofit business consultants who help such organizations identify and remedy pain points, IT consultants who advise businesses on digital transformation, human resources (HR) consultants, and more. Perhaps you used to work for a large consulting firm but now you're ready to branch out on your own.
Preparing for Your Consulting Business
Before you start your new business, it's important to plan out your strategies and goals. This will position you to hit the ground running once you open your doors and provide peace of mind that you took the time to prepare for contingencies. Consider the following details while planning:
- Clearly define your consulting services: Decide what it is you will consult about and take the time to write a description fit for prospective clients. Consulting, after all, can mean many different things.
- Identify your target market: Who are your prospective clients or your target audience? What types of businesses do you think will want to use your services? Make a list of what types of clients you intend to work for. You might consider looking at local businesses to get an idea of what the landscape looks like.
- Develop a pricing sheet: Look up the going rate for consultants in your area with similar expertise to get an idea of what you should charge. A quick search on Thumbtack for your area is a good place to start. For example, business consultants charge hourly rates between $45 and $150. It's a good idea to create a clear pricing sheet where you list your rates for different types of services. You should also include details about working on a retainer, if that applies.
- Determine your work capacity: You will need to devote a certain amount of time in your weekly schedule to activities related to running and maintaining your business. The rest of the time is spent helping your clients. How many hours this amounts to depends on whether you plan on consulting full time or part time. Determine how many hours a week you can work with clients and consider using a calendar tool for keeping track of appointments when the time comes to begin scheduling.
- Calculate your business expenses: This includes both startup costs and ongoing expenses. Working from home tends to keep the overhead low, but you will need some sort of home office space, a computer, and other tools. There are also expenses associated with business filings you will need to plan for.
- Create a contract template: When working with clients, you may want to create contracts that protect both your rights and the client's rights when it comes to inside business information and work to be completed.
- Draft a business plan: Creating a business plan helps you clarify your goals and how you will go about running your business. Business plans help you focus on important business details and can also help when it comes to securing small business loans.
Starting Your Consulting Business
Once the planning process is well underway, you can start laying the legal and marketing groundwork for your business. After that, you will need to make sure your billing, accounting, and invoicing methods are in order so that you can track your finances once you begin taking on clients.
Legal Steps for Forming Your Consulting Business
The exact process for legally forming your business varies depending on state and local laws. Details on what's required for registering your business can typically be found on your Secretary of State's website. Often, there are some forms to fill out, which may be done online or sent via mail, and a small fee to pay.
When it comes to business structures, as a consultant, you might choose to be a sole proprietor, or you may register your business as a limited liability company (LLC), which provides you with some legal protection since it separates your business assets from your personal assets.
If you will be operating under any company name other than your own, you will also need to register your business name. If you file as an LLC, this is typically handled on the same form. Otherwise, you may need to file a "doing business as" (DBA) or trade name to let your state know what name you are operating under. It's important that you choose a unique business name. You can usually search existing business names on the Secretary of State's website if you need to check.
Look up any permit or insurance requirements in your area. Often, as a sole proprietor or LLC owner, there isn't much needed on this front, but some municipalities may require separate business licenses for all business owners.
It's also important to be aware of local and federal tax laws for small businesses. You might be required to register for a state tax ID number and may also want to obtain an employer identification number (EIN) from the Internal Revenue Service (IRS). In most places, sole proprietorships and LLCs are "pass-through" entities when it comes to taxes, meaning that you account for business taxes on your personal tax return. Keep in mind, however, that some cities and states may have additional tax requirements for businesses.
Tips for Marketing Your Consulting Business
Once the paperwork is in order, you need to start letting potential clients know about your services by developing a marketing plan. Marketing can take many forms. Here are some ideas to help you get started:
- Build a website: It's a good idea to have a landing page on the internet where people can find you if they search for consultants. Often, simple websites are easy to put together on your own, but you may also wish to hire a web designer to make sure the job is done right and your page content follows search engine optimization (SEO) guidelines.
- Get in the social media game: As a consultant, you can leverage social media to reach more potential clients. LinkedIn is probably the platform that will work best since it focuses on professional networking. Many companies that are looking for consultants or other freelancers frequent the platform.
- Branding and business cards: Once you have your business name solidified, it's a good idea to create a branded logo. Seek out a graphic designer whose work you like to create one for you, and then use it on all of your documents. Business cards are a good idea as well because you can hand them out at networking events and leave them with clients so they have your contact information.
- Promote word of mouth: As you take on clients, if they are happy with your work, encourage them to share your name (or your business card) with others they know who might want to use your services. Many consultants use referrals to grow their client base in this way.
- Cold calling (or emailing): Consider contacting potential clients and businesses by calling or sending an email describing your services.
Invoices, Accounting, and the Day-to-Day: What to Expect
The final step before snagging your first client is to prepare for the day-to-day operations of your business. You need a way to handle billing, invoicing, and quotes, as well as a way to keep track of your consultancy's overall cash flow.
Skynova offers customizable templates for invoicing, sending quotes, requesting deposits, and more. We make it easy to send these forms electronically as well, and they can be customized with your business logo on them. As for accounting, Skynova has you covered with all-in-one accounting software designed for small businesses.
Get Your Consulting Business Started With Skynova
Starting your own consulting practice can be both daunting and exciting. You get to be your own boss, set your own hours, and decide which clients to take on. At the same time, you are responsible for running all aspects of your business, including the drudgery of paperwork. Fortunately, Skynova offers multiple software products that can help when it comes to tracking expenses and creating forms and invoices, allowing you to devote more time to keeping clients happy and growing a successful consulting business from the ground up.