The idea of starting your own consulting firm can be exciting! You may want to rush out and design a logo, print some business cards, and start handing them out to anyone and everyone. But hold on! There are several things you need to know and do before you can start your own consulting firm, if you want to make it as successful as possible.
Before you can start your own consulting firm, you need to research your potential market. You should know if there’s a high demand in your area for your services, or if the market is already saturated (the number of companies providing the service are meeting or exceeding the demand for it). You need to find out who your biggest competitors are, who their clients are, what they’re doing well, and what they’re not doing so well.
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Planning: Preparing Your Business Plan
Before you can start your own consulting firm, you need a business plan. It is essentially an outline or report, that says why you’re in business, who your customers are, what services you offer, how you intend to market your products and services, who your competitors are, what strengths and weaknesses your consulting firm has, your firm’s short-term and long-term goals and strategies for achieving them, and your financial records and projections to show when you expect to turn a profit.
Planning: Writing Your Marketing Plan
While some aspects of your marketing plan were likely discussed in your business plan, a separate and more advanced marketing plan is advised. In your marketing plan, you can lay out your ideas on how to market or promote your services and your consulting firm. Focus on branding issues, what kind of advertising would work best for your firm, how you intend to encourage word-of-mouth or referral marketing and what marketing efforts you plan to use to get repeat customers, just for a few examples.
The Legal Issues
Before you can start your own consulting firm, and “open for business,” you have a few legal housekeeping tasks to deal with.
- Business Structure – Decide what business structure you’ll use, and deal with necessary forms and fees.
- Licenses / Permits – Take care of licenses, zoning permits, and business permits, as required by your state.
- Taxes – Register with your state for income taxes and a sales tax license. Getting an EIN from the IRS is required by some banks.
Open a Bank Account
A lot of new entrepreneurs wait to open their bank accounts until after they’ve started working with clients. The problem with that is simply that it can get “lost” in everything else going on. You’ll find that you’re soon too busy to be comparing banks and choosing an account. One of the most important relationships you’ll have after you start your own consulting firm is that which you’ll have with your banker. Get on it early, and choose wisely!
Once you have an account, and a business plan in hand, you can start pitching your consulting firm to potential investors. Be ready to explain what makes you a good investment. No matter where you get your financing, make sure you’ve secured it before you open your doors for business. Budget for everything, no matter how small. If you don’t know what you need, you’ll never find someone willing to give it to you.
Prepare for Launch!
Have you ever heard of a gallery or restaurant opening? They don’t just say, “Hey, let’s open our doors today.” They launch! You should launch your consulting firm too. Choose a launch date and promote your company name, logo, and services, to as many people as possible. Build a buzz before you start accepting clients.