In the consulting business, the product is you. Strengthen your personal brand and make sure you attend a pain point that people are willing to pay for.
Consulting is one of the lines that require less investment to start. However, it is not exempt from all the challenges that most face: the business plan, the legal constitution, the search for markets, the first sales, and the partners.
In addition, this type of business possess its own challenges, since the product offered in this case is none other than yourself. When you’re selling consulting services, people are buying from you, and you have to wonder why they’re going to choose you out of so many people who do the same.
Here in this article will share with you knowledge, learning experiences and some useful tips, and, most importantly: a short guide with the steps to follow to start your consulting business.
Also, don’t overlook the importance of staff. You must rely on experienced professionals who advise you at all times. These professionals will improve the quality of your business and, by extension, your quality of life.
Some preliminary questions.
Before getting into the legal and tax requirements and your financial plan, let’s answer some questions that will be key in your consulting business:
- What is the value that you can bring to your potential customers?
Once you have a specific answer, you can start to design your roadmap. Keep in mind that you will not offer a product but a service to help your clients face certain challenges.
- Have you studied the ideal customer profile and the markets in which they operate?
A little research on these markets is necessary either by doing it yourself or by using professional advice. It does not have to be too exhaustive, but it does have to be a little exploration that helps you know the context in which you will move more or less deeply.
- Do you have a strategic plan for your business, with a specific sales strategy?
Even if you do not spend too much time on this initially (you will improve it day by day), you must have a simple strategic plan of action. This plan will also put on the table the money you need to set up your consultancy.
A step-by-step guide to starting a consulting business.
To successfully undertake this line of business without any experience, take into account these key points.
- Should you work on the idea or the concept?
If the opening of a consulting firm does not require a lot of work on the idea and the nature of the advice to be provided. However, it may be interesting to take the time to take stock of several aspects that will have an important role in the success of your project:
- What is the nature of your skills (technical and personal)?
We are talking about skills recognized and expressed by third parties (entourage, partners, network, etc.). Those that your network recognizes and will agree to relay.
- How do you define the advice you will provide?
Expressing your offer clearly will help your interlocutors to retain and disseminate it.
- Make sure you know what motivates you.
By building a project that meets your expectations, you will be the most fulfilled and the most efficient.
1. Focus on the needs of your customers.
When choosing the specific area in which you will offer consulting, it is easy to fall into the ploy of picking the one you like the most. Yes, this criterion is important, but so is the fact that there is a real market need.
Business sales will be directly proportional to your effectiveness in communicating. Your message must express, without a doubt, what is the need – or pain point – that you solve. The clearer the idea, the less time it will take to get you back on track to income.
2. Decide on the legal structure of your consulting company.
We will leave out the S and C Corporations for now. Being a small business, if we expect to invoice less than $80,000 a year, we will opt for a limited liability company or LLC.
What “limited liability” means is that if your business fails or gets into legal trouble, then your personal assets (bank account, home, or car, for example) are protected.
It is not binding for you to be a US citizen to open the business. Foreign nationals without a green card or visa cannot work in the US, but they can be corporate executives or directors.
3. Make your business plan.
Once you have raised the need you serve, ask yourself where you want to take your business? How can you get there, earn income, and build a long-term relationship with clients? Think about how you will get results in the short term because the clock starts ticking from the moment you decide to start.
Your business plan reflects certain points which must contain at least:
- Description of your company
- Market study
- Competitor analysis
- Sales and marketing strategies
- Financing
Carrying out a business plan brings many advantages:
- It contributes to the formalization of the project and highlights certain aspects specific to the opening of a consulting firm.
- It makes it possible to measure the profitability of the various economic hypotheses.
- It enlightens the business creator on the consequences of the choices he will have to make (legal status, social status, and taxation, share capital, etc.).
While the qualitative part of the business plan can be brief, it should nevertheless include:
- Explanation of the project (nature of the offer, sector of activity, type and segment of customers, etc.)
- A presentation of the business creator (career path, diplomas, skills, etc.)
- The business model.
The quantitative part (financial forecast) will also be quite simple and will include:
- A provisional income statement.
- A provisional balance.
- A cash flow plan.
4. What budget to open a consulting firm?
The business plan usually includes the costs relating to the creation of your consulting firm. They vary depending on the business model you are considering, but generally, they are:
- Entry fees to premises if you wish to rent a professional office (deposit, furniture, fitting-out costs, etc.)
- Communication costs at start-up (creation of a website, business cards, setting up of a logo and a graphic charter, etc.)
- Software, subscriptions to IT tools, and equipment necessary for the exercise of the consulting activity.
- The legal costs of creating standard contracts and general conditions of sale.
- Subscription fees to professional civil insurance (RC Pro insurance).
- Cash at start-up to meet initial expenses before achieving enough revenue to cover its operating cycle.
- Business registration fees (variable depending on legal status).
5. Find out about paying taxes.
You have to act in accordance with federal state, and local tax laws. LLCs are cheaper for tax purposes.
The profits of an LLC only carry over to your income taxes. You will save costs since your accountant will not have to do a separate form for your small business taxes.
6. Simulate taxation and social system.
The consultant’s social regime and taxation depend on legal status. So, it is necessary to carry out simulations before registering a business.
An independent consultant in sole proprietorship or self-employed under the income tax regime is taxed in the category of Non-Commercial Profits.
An executive of a consulting company under the corporate tax regime is taxed in the executive remuneration category, and his company is subject to corporation tax.
7. Where to install your consulting firm?
When starting an advisory activity, the firm’s domiciliation address is often secondary since the advisor generally travels to his client. The creator can open his consulting firm in the place, which seems to him to best correspond to his expectations. He can thus:
- Place the firm’s head office at its home. It saves him from paying professional rent, and can even, under certain conditions, charge himself rent.
- Domiciling his office with a domiciliation company. It can be a democratic option because it offers various advantages such as the provision of administrative services, processing of mails, taking calls, physical reception, a prestigious address, provision of room and equipment for meetings or training.
- Register in a nursery or incubator. This choice allows him to benefit from premises, services identical to domiciliation, but also support for the launch of his project and the possibility of discussing with other creators.
- Rent offices in which he can carry out his activity. This solution is more expensive. However, it offers complete freedom. It is often privileged when the nature of the activity requires the company to receive its customers for specific reasons (confidentiality, prestige, technique, etc.).
8. Strengthen your personal brand.
In addition to a solid portfolio and a resume that supports your experience, it is also necessary to show the approval of others towards your work in these times. It is essential that you consider at least these strategies:
- Publications. Write articles on platforms such as LinkedIn to strengthen your professional profile.
- Presence on the web. Open a website where you display your portfolio and post testimonials from former bosses, co-workers, and others with whom you have worked.
- Positioning. If you’re just launching your career and have insufficient experience, the good idea is to do your first jobs for free or for a nominal fee. In this way, you will get the first testimonials in your favor.
9. Seek help.
Get the advice of other consultants or entrepreneurs in your sector. If you don’t know someone, find a mentor, or take courses that will allow you to clarify doubts or keep up to date.
10. Never stop marketing.
A mutual problem amid small business proprietors is neglecting marketing while working on a project. The main thing is that after completing the project, there is often no next customer. And downtime can last for days or weeks.
A good habit is to execute marketing strategies on a daily basis. Also, at the end of projects, it is useful to ask for references and recommendations.
11. Stay focused.
Many consultants fall into the trap of addressing issues that are not really in their areas of expertise. Sometimes the problem is that they are working with clients who are not in their market. The more specific the niche you are targeting, the better your service will be.
12. Look for productivity.
The fact that a consultancy does not produce something physical does not mean that it is technology-free. Adopt the applications you need to automate your tasks, manage your clients’ projects, and manage your own time.
And don’t be afraid to hire a fresh pair of eyes, or ask for a favor, when you feel like your productivity has reached its limit. Getting stuck with a customer sometimes prevents us from seeing a problem objectively.
Last tips and then go for a walk!
Network and ask for advice.
Connect with other experts, both in networking activities and online networks, just like you. Count the value you contribute whenever you can.
You don’t have to know everything. Lean on the best professionals. Please do not see the payment of their services as a cost but as an investment that will help the sustainable growth of your business.
Remember that the ideal client does not exist.
Create a personal work system that allows you to access potential clients whom you can help. But be prepared to adapt to the unique needs of each client and to deal with unexpected changes.
Consider other possible businesses.
If you have doubts and consider dedicating yourself to another activity, look for other types of businesses that you can start with little money but with the knowledge you already have.
Get your finances in order.
As you know, without a proper order in your finances, it is very difficult to face your company’s daily activities, as well as face its administrative obligations and invest in its growth.
We hope this post has helped you clarify the process of creating your consulting business with no experience and clearly draw the context to frame all these steps.
