Want to launch a brand-new consulting business? You're in luck! While the consulting sector used to be dominated by large corporations, nowadays, anyone with enough expertise and determination can launch a profitable consulting firm from scratch. Even one that operates entirely online. This is not to say that it is a simple business to run, it just means that with the right tools and strategies, it will not be as overwhelming as one may think.
To help you figure out the right way to get started, we have created a comprehensive 'starting a consulting business checklist'. Following these 8 essential steps, you will have a rock-solid base and be ready to build a strong business plan. Let's get to it!
Note: Bonsai's small business all-in-one product suite is everything you need to manage your consulting business efficiently and painlessly. From client onboarding to invoicing, payments, and taxes, we've got you covered. Claim your 14-day free trial here.
Let's be honest; you'll never feel fully ready to start a new business. You will always think there are more things to improve, change or prepare before you can reach out to your first client. But the key here is, once you build a solid foundation, everything else will work its way out as you go. You simply have to focus on what matters and leave the rest alone for now. But what is exactly what you have to focus on?
Well, here's a list of 8 important aspects you have to figure out before you take the big leap.
A successful business owner must be able to define a specific offer that is relevant to a specific audience. Start by identifying your area of expertise considering your current abilities, past performance, professional background, and personal interests. The following questions should help you figure this out:
Once you have answered these questions, take note of any similarities or patterns that can point you in the right direction. It also helps to determine if you're more prone to working with women, business owners, professionals, or families. Then go one step further and define a more specific niche, for instance, business owners in a specific industry or new/expecting parents.
Focusing your practice on a specific consulting niche where you are an expert and can truly make a difference has many advantages. You'll be eliminating competition that doesn't share your niche's focus, giving you more possibility to generate income and decrease marketing costs. Plus, referrals from clients will increase as they will have a clear picture of who your ideal client is.
When it comes to consulting businesses, it's typical to see one of three basic business models; hourly, per project (predetermined scope of work), and retainer (flat fee per month). Depending on the project, it's possible to use all three of them (hybrid consulting model), but you must consider the pros and cons of each option.
For example, charging a project rate vs an hourly rate can help you avoid surprises and you won't have to be tracking your time, however, it could decrease your earning potential and some clients may be more hesitant to agree to pay for your consulting services in advance. Once you know what business model works best for you, create a set of services you will offer and determine prices.
It's essential to be clear about your fees before you start any work. In order to determine your pricing structure, you can start by estimating an hourly rate based on your former salary (most independent consultants have worked for agencies before). You can also do some research to look at competitor prices and compare them to your hourly rate. A good rule of thumb is not to surpass a 25-30% markup.
Additionally, you'll want to consider the amount of time you will spend on a project including client analysis, interviews, research, as well as creating proposals, contracts and reports. Aside from charging for your time and expertise, you may also incur additional costs for materials, transportation, and any other unforeseen expenses that may arise.
As you begin working with your first clients, keep track of your small business expenses, the time you spend in meetings, and the administrative tasks you complete so you can adjust your rates in case you are not generating enough profit.
Being clear about who you are and the value you bring is an important first step in order to convey the right message in the appropriate settings. Whether this is on the Internet, in person or in business groups, you need to implement focused and organized marketing efforts to find new consulting clients, otherwise you will easily exhaust your resources and empty your bank account.
For starters, you can network with friends, past colleagues and family to obtain recommendations for your new consulting business. Start participating in industry events or authoring blog articles, to demonstrate your knowledge and abilities in your target market. If you're a marketing consultant this is your chance to shine!
If you have the resources, you can use paid advertising, email marketing, influencer marketing, video marketing, and any other marketing channel to achieve more traction. It's important to keep testing and optimizing your marketing strategies constantly in order to get better outcomes.
You must be recognized as an expert in your subject in order to start your own consulting business. A great way to establish credibility and attract clients is by going digital. By creating a straightforward website and setting up business social media accounts, you can start to provide useful material to potential clients and get them interested in your services.
Look at your main competitor's websites, as well as those in other industries, to get ideas and use them as references. The easiest way for you to get started is to use a website builder. These companies will usually provide the whole package, including a template (design), web hosting, domain name, and email address. Some of the most popular website builders include Wix, Shopify, and Squarespace.
Additionally, you'll want to be active on at least 2-3 social media channels. For consulting businesses LinkedIn is a must because it allows you to connect with people with the sole purpose of doing business, which can be frowned upon on other social media networks. You can use other platforms such as Facebook, Instagram or Twitter to share educational content and promote your services in a less direct manner. Read our guide if you need help naming your consultant business.
In order to stay legally compliant and prevent future legal problems you'll want to register your consulting business as a legal entity. To decide which business structure aligns best with your consulting firm, you must understand your business requirements and consider the amount of business owners. For example, if you're a solo consultant you can start as a sole proprietorship, but keep in mind you will be liable for any company losses.
Alternatively, instead of a sole proprietorship you may opt for an LLC (Limited Liability Company), which you can do on your own or with partners. This business structure will keep your personal assets protected by considering your consulting company as a separate entity. Another option is to form a corporation, which would be your best bet if you are starting your consulting business with outside funding. This is because shares in a corporation are a lot easier to transfer compared to ownership interests in an LLC.
While formal business registration is not necessarily required for business transactions, it does come with many advantages. It can sometimes be a requirement when applying for a loan, business credit cards, and even government contracts.
The implementation of Standard Operating Procedures (SOPs) refers to outlining the precise protocols you will follow in each stage of the consulting experience. For example, how will you reach out to potential clients? How will you present your consulting offers? What happens when the client agrees to work with you? You don't want to be caught off-guard and spend another week drafting a contract before you can get down to business.
For this reason, it's important to stay one step ahead and prepare your templates for onboarding emails, intake questionnaires, feedback forms, proposals, contracts, etc., before you start working with your first client. You'll also want to have your schedule already set up so your clients can easily see your availability and schedule appointments themselves.
Another great idea is to prepare a welcome package or email that explains your clients what to expect once they have agreed to work with you. Having all these procedures figured out will save you tons of time and allow you to provide a smooth experience to your clients.
As your clientele expands, you will certainly find yourself circling through tons of paperwork to find the information you need for your next meeting or tax filing time. You will soon realize you need a strategy for organizing every aspect of your consulting business and completing tasks far more quickly. But if you wait until then to look for a solution, it might be too late.
This is why, as part of your preparations, you must look for a complete consultant project management software that allows you to create and store paperwork such as proposals, contracts or invoices, schedule and follow-up on appointments, and even receive payments. A well-rounded platform can also help you track your expenses and income so you can budget for profit and easily do your taxes.
There are many options out there, and your choice ultimately comes down to your needs and budget. However, there is one platform that is revolutionizing the market by providing entrepreneurs and small business owners multiple administrative tools that can make running your consulting practice a lot easier than you thought; Bonsai. Read on if you want to find out more about what this amazing platform has to offer.
Administrative responsibilities are some of the most tedious and time consuming tasks you will have to take care of when running your own firm. But it is also a vital part to building a profitable consulting business. With so many things to take care of, it's just smart to get some help, but it doesn't have to be difficult. Bonsai actually makes it very easy for you to stay on top of your paperwork, billing, deadlines, taxes, and business finances.
Here's how we can help:
To help you manage your time efficiently, Bonsai offers you a consultant time-tracking tool that makes it surprisingly simple to keep track of how much time you're spending with clients each day. This way you can make the necessary adjustments and enhance your budgeting for future projects. You will also get insights on your time-tracking habits, so if you notice that you're working longer than you'd like, for example, you can utilize the Insights tool to find strategies to help you cut down on your workday.
Note: if you need a time tracking tool to automatically record the hours it takes for you to complete tasks, try Bonsai. Bonsai's tool records time automatically in the background while you complete tasks you won't hurt your productivity. Claim your 14-day free trial here.
Bonsai's task management tool makes it easier to track your client's progress helping you to keep a detailed plan of what has to be done and acting as a to-do list. Through an online appointment scheduling function, the platform will automatically add your meetings to a calendar and send automatic confirmations as well as reminders so you don't miss any appointments. Additionally, you may set up the software to automatically perform specific tasks on your behalf, such as sending clients welcome emails, processing bills, or generating reports.
To help you save valuable time and standardize your paperwork, Bonsai offers a variety of fully-customizable templates. You'll be able to quickly draft professional consultant proposal templates, contracts, questionnaires and invoices. You can also store all of these documents and organize them per client so you can instantly access the information you need and keep everything in one place (plus you can clear out some office space!). Our proposal and contract templates for consulting have been legally vetted by top legal experts and verified by thousands of professionals in your industry, so you can be sure your business will stay protected.
Note: Get access to our full suite of contract, invoice and proposal templates by signing up with Bonsai today. Easily customize, personalize and design our templates to suit your business and automate the entire process. Claim your 14-day free trial here.
Payment processing should be simple and straightforward for both you and your clients. For this reason, Bonsai's invoice templates allow you to integrate multiple payment methods such as PayPal, Stripe, and the Bonsai Payments platform which enables quicker payouts, and reduced fees. You can also set up automatic payments, allow partial installments and automatically charge a late fee when the payment is overdue. Additionally, the platform offers global coverage throughout the US, UK, Canada, Australia, and more, allowing you to invoice and receive payments in 180 different currencies.
With Bonsai, you'll be doing your bookkeeping and taxes like a true professional. Our platform allows you to connect your bank and credit/debit card accounts, which will automatically input tax receipts, income and expenses. Then, the system will identify potential tax write-offs based on your accounting reports, which can considerably save you money if you're not completely aware of all the tax deductions available for independent consultants. Bonsai Tax also examines your spending to determine how much quarterly and annual tax you will have to pay.
Note: If you are looking for an expense tracker to scan your bank/credit card receipts to discover potential tax write-offs, try Bonsai Tax. Our users save on average $5,600 in tax deductions from their taxes with our software. Claim your 14-day free trial here.
Last but not least, Bonsai offers a fuss-free business checking account, especially designed for independent workers and small business owners. Bonsai Cash has no start-up or maintenance fees, no minimum balance requirements and can be linked to your invoices so you can have immediate access to your money in addition to getting paid faster. Plus, its 'Envelopes' feature enables you to set aside a percentage of your earnings for taxes, vacations, payroll, equipment or anything else you'd like to be prepared for in the future.
Bonsai will be a great ally to help you start a consulting business on the right foot. Sign up for a 14-day free trial and see for yourself! We help you save time so you can simply focus on your passion, not your paperwork.