How to Start a Consulting Business

Suppose after putting in the hours and years needed to become an expert in your field, you have decided to start your own consulting business. While navigating the transition of starting a consulting business can be tricky, there are several steps you can take to ease that transition from being an employee for a company to an independent consultant.

If you’re ready to leap, we’ve detailed everything you should consider, what you need to know to get started, and how to have a successful consulting business.

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Things to consider before becoming a consultant

When you start your business of consulting, there are a few things to consider before you can begin to sell your product or service.

• Certifications and Licencing: Depending on your industry or profession you might need to invest your time in completing special certifications or obtaining specific licensing to operate as a consultant. For example, accountants and auditors will need specialized education before they can begin to consult.

• Are you qualified?: Make sure you have the qualifications, like experience, before you go solo as an independent consultant. Without significant expertise in your chosen field, it could be difficult to find clients.

• Are you organized?: Unlike being an employee and given direction for deadlines on projects, you will need to time manage yourself and your workload.

• Do you like to network?: To be a successful independent consultant, you’ll need to enjoy networking. It’s best to begin building out your network of contacts early and have some potential clients lined up before you leap to become an independent consultant.

1. Choose your niche and define services

It will be easier to start a consulting business if you differentiate yourself and specialize in a specific type of consulting. Businesses want assurance that if they pay a consultant for a specific job, they’ll get their money’s worth for the service provided.

Realistically you can be a consultant for anything from accounting to coaching other consultants to editorial services and supply chain management. If you have a specialization as a consultant, then businesses that employ your services will find you more appealing than a generalist. Depending on your niche, you may also need to complete specialized training, certifications, or programs.

2. Choose a consulting business model

A good consultant will have a business model in place that reflects the lifestyle they want. You can begin choosing your model by defining your services and deliverables when you outline your consulting business.

Choosing a model specific for your services allows you to articulate to clients what service you provide and how it’s valuable to them, how you charge fees and your price model, and lets you set realistic expectations for your clients. This lets your clients make informed decisions and makes sure you won’t be taken advantage of.

There are four consulting business models you can choose from:

• The Solo Consultant Model: As a solo consultant, you work entirely alone on the project and work directly with the clients. This is a great model if you want a profitable and flexible business. However, if your goal is to eventually sell your consulting company or stop working for a period of time, this will be hard to generate revenue from.

• Consulting Firm Model: This model means that as the business owner you are responsible for running the company instead of working directly on client projects. You may manage a team of consultants who implement and manage individual projects for clients. This type of model is great for someone who wants to build a business and not be responsible for day-to-day work. However, you will need to like managing people and be alright with lower profit margins than if you were an independent solo consultant.

• The Productized Consulting Model: This model is where you as a business owner turn your expertise in a niche field into a ‘productized service’. This is done through repeatable steps that deliver predictable outcomes for clients.It’s a very scalable business model, especially if you want to sell your consulting business in the future. You’d enjoy this kind of model if you like managing or training people to deliver your service. However, it does require years of experience and delivery before it delivers a predictable result.

• Hybrid Consulting Model: Since this is a mixture of the previous three models, you can pick and choose what you enjoy about each of them and combine them to make your unique hybrid model perfect for you.

Once you know how you’ll deliver your consulting services and the type of business you want to run, you can begin to identify your target market.

3. Identify your ideal market

You need to ask yourself, who are your potential clients and why should they hire you? Are you planning on only offering services to large corporations, or do you prefer to offer a niche specialty that smaller businesses will profit from most? Does a nonprofit organization need your professional services?

To operate a successful consulting business owner you’ll first need to identify your target market.

4. Write a business plan

Starting a new business can be tedious and confusing when you’ve never done it before. If you rush into launching a business before considering essential aspects of the company, it can lead to issues later on.

Taking the time to write a comprehensive business plan will help you avoid future issues and implement your ideas. Your plan should include such things as long-term goals, hourly rates and consulting fees, your area of expertise, if you will have a human resources department in your business, contact information, and your target audience.

Including such information will help you identify gaps in your current plan, and provide more clarity into what steps you need to take to ensure your consulting business is successful.

5. Register your business

Registering your business in Canada includes not only registering your business name with the government and subscribing to a GST/HST number. But it can also include incorporating your business. Taking these steps means you receive a business number unique to you.

Your business may require licenses and permits from the federal, provincial, and municipal levels of government. This could be in addition to proof of completed certifications. For example, if you’re offering accounting services as an independent consultant, you’ll need to have your CPA designation before registering your consulting business.

6. Invest in the right insurance

While consulting work encompasses different professional services that independent business owners may provide customers, consulting professionals face many of the same risks regardless of the industry. Independent consultants should all have the following insurance policies:

• General Liability Insurance: This protects your business from losses related to third-party bodily injury, personal injuries, and property damage, regardless of if it occurs at your home or customers. It will also cover any financial costs due to medical expenses or lawsuits.

• Business Interruption Insurance: Any situation that stops you from performing your consultant work and prevents you from earning income like a power outage, are covered by this policy.

• Business Property Insurance: This coverage provides coverage against risks associated with the physical location of your consulting firm.

• Cyber Liability Insurance: Policies like this assist you in recovering from online attacks and cover the cost of investigating the attack. It also protects you against the financial cost of repairing or restoring your website, systems, and data, any loss of income, and legal fees and damages if a client sues for lost data.

• Errors and Omissions Insurance: If you make a mistake during service to your client, this will protect you against any lawsuits or negligence claims brought forth by a third party.

• Equipment Breakdown Insurance: If your equipment suddenly breaks down, this covers the cost of replacing it and helps protect any personal assets you need to perform your work.

• Professional Liability Insurance: General mistakes, negligence, neglect, or misinformation issues will be covered under this policy. Meaning your business won’t be financially responsible for any legal costs stemming from liability lawsuits.

Related: Do consultant need insurance

7. Create a marketing plan and get your first clients

A marketing plan is vital to acquiring clients. As a consultant, you’ll need to sell your services to other business owners and corporations. Some people may not even be aware that they need your services.

Your marketing plan can be comprised of several facets. You can have a brochure that you hand out or leave at businesses, you can cold call companies and pitch your services telling them why they need you, and you can take out traditional or digital marketing advertisements to bring in new clients.

A website in today’s world is a new business’s greatest asset. By creating an online presence through a website or digital marketing efforts, you reach a wider audience than through networking alone, and visitors will understand what services you offer. A website also helps lend credibility and legitimacy to your business.

Regardless of how you want to sell your services, you’ll need a solid marketing plan in place, one that details what kind of consulting you offer and why it’s beneficial.

The Takeaway

Starting an independent consulting business is an exciting endeavour. However, there are numerous considerations and steps to take before you can launch your new business. Some of these steps may be unique to your niche of consulting and others will be required by everyone starting a new business.

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APOLLO and Gallagher have partnered to provide insurance designed for businesses and business professionals. Get a free quote online in under five minutes and receive your policy instantly.

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