How to Start a Consulting Business in 2024
Step 1: Choose Your Consulting Business Model
Step 2: Get Clear On Your Ideal Client
Startup costs for new consulting businesses range from $10,000 to $50,000. LLCs combine many of the advantages of other entities. If you run a small operation and want to protect your assets, this is the best legal structure. Consulting services for startups: Strategy, Marketing. Monitor expenses related to revenue. Have enough money to cover costs until cash flow increases. Consider a business plan, risks, and insurance. Industry research shows 35% more consultants now than in 2013. Ensure you have qualifications to consult. Do you have licenses or certifications? Running your firm under a different name than your legal business name? You can register your trade name with the state by filing a “doing business as” (DBA) certificate.
How to Set Up a Consulting Firm
Choose your niche. Define your services. Write a business plan. Hire an experienced business attorney. Decide your legal business structure. Set up accounting and bookkeeping. Assess your finances. Develop your brand identity. Fill in the business blanks. Crunch the numbers. Build an online presence. Create a sales plan. Spread the word. Find partners or investors. Find the right help.
Consulting Firm Models
Consulting Firm Model
In the consulting firm model, you run the firm instead of just working on client projects. For example, Amanda runs an HR consulting firm, where she helps technology companies with culture, hiring, and talent retention. She manages a team of consultants implementing projects for clients. The consulting firm model is great if you don’t want to focus on “day-to-day” work, want to build a business that runs without you, and would like to sell it one day.
Productized Consulting Model
The Productized Consulting Model involves selling repeatable consulting “products,” instead of your time. For example, your product could be a 12-week consulting engagement, a masterclass, an assessment, a tool, or even done-for-you services. This model has higher profit margins since you aren’t trading hours for dollars. However, it requires significant upfront work to create profitable products. This model works well if you want to scale your business, create consistent income streams, leverage your expertise, and boost profit margins.
Should a Consulting Firm be an LLC?
To start a consulting firm, choose your niche, define your services, develop your brand identity, create a sales plan, and spread the word. Consultants provide expertise in various fields to help businesses and organizations. Popular consulting services include strategy, marketing, technology, HR, and more.
You can structure your consulting firm in a few ways:
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As a solo practitioner, where you do the work yourself for clients on a project basis. This model has flexibility but less scalability.
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A consulting firm with a team of consultants, each with specialized expertise, working on larger client projects together. This model allows for growth through taking on more complex clients.
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A "productized" consulting firm that sells repeatable services and products instead of your time. This increases profit margins through leveraged services but requires significant upfront work.
The best structure depends on your skills, preferences around management, ideal work style, and business goals.
KEY POINTS:
- Provide expertise clients need but lack internally
- Structure your firm to suit your skills and preferences
- Limit liability risk through legal formation like an LLC
- Create consistent revenue through packaged services
- LLC formation protects personal assets if sued