How to Start a Crowdfunding Consulting Business

Start a crowdfunding consulting business by following these 10 steps:

1. Plan your Crowdfunding Consulting Business
2. Form your Crowdfunding Consulting Business into a Legal Entity
3. Register your Crowdfunding Consulting Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Crowdfunding Consulting Business
6. Get the Necessary Permits & Licenses for your Crowdfunding Consulting Business
7. Get Crowdfunding Consulting Business Insurance
8. Define your Crowdfunding Consulting Business Brand
9. Create your Crowdfunding Consulting Business Website
10. Set up your Business Phone System

We have put together this simple guide to starting your crowdfunding consulting business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

What are the costs involved in opening a crowdfunding consulting business?

Startup costs for this type of business venture are minimal. Your clients will be spread out across the globe with most meetings conducted online. Therefore, those looking to minimize costs may choose to operate out of a home office. You will need a computer, high-speed internet, a telephone, and marketing materials. While startup costs may not exceed $10,000, what you bring to the table is invaluable - a proven track record and real-world experience.

What are the ongoing expenses for a crowdfunding consulting business?

Much like your startup expenses, overhead costs to run a crowdfunding agency can be kept at a minimum by managing your business out of a home office. Once the business experiences significant growth, however, it may be necessary to lease an office space and hire additional staff. At that point, ongoing expenses will expand to include payroll, increased insurance, an increased marketing budget, and overhead expenses.

Who is the target market?

A crowdfunding consulting business’s target market is any new project or business venture that is seeking funding to help launch their product/service and gain exposure. Some consultants decide to limit their services to certain industries while others prefer to consult wherever their expertise is needed.

How does a crowdfunding consulting business make money?

Some crowdfunding consulting agencies receive commission-based compensation while others are paid a flat or hourly rate. Once a contract is signed, your customer should pay a deposit, with the balance paid when the contract ends.

How much can you charge customers?

Since each crowdfunding campaign is different, there is no one-size-fits-all approach to setting your pricing. Many agencies require a due diligence fee of $1,000, an upfront payment of $3,500, and 20% to 35% commission on monies raised.

How much profit can a crowdfunding consulting business make?

If you lead a successful crowdfunding campaign towards their goal of $1 million dollars, with a commission fee of 20%, net profit for that campaign equals $200,000.

How can you make your business more profitable?

Due to the nature of this business, it’s important to not overextend yourself or commit to too many projects at once. However, many crowdfunding consulting businesses offer additional services, such as public relations, advertising, and marketing.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your crowdfunding consulting business is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

Have you realized significant success in your crowdfunding efforts? Are you passionate about helping new and aspiring entrepreneurs reach their business goals and dreams? If so, a crowdfunding consulting business may be the perfect fit for you.

What happens during a typical day at a crowdfunding consulting business?

Your workday as a crowdfunding consultant will entail the research and implementation of crowdfunding strategies based on the unique needs of your clients. You will monitor the progress of each campaign, adjusting your strategy based on which methods are reaching your target audience and which methods are failing. Clients will expect to be regularly updated on your progress with clear data outlined in your reports.

When not working on client accounts, you and your team will need to utilize your knowledge and skills to identify potential new clients. Extensive research should be a part of your daily tasks, ensuring you are prepared for prospective new client meetings. Your organization’s successes should be outlined in a business portfolio that demonstrates your ability to crowdfund across a myriad of industries.

What are some skills and experiences that will help you build a successful crowdfunding consulting business?

While crowdfunding is a proven method of raising money for a new business venture, only a quarter of all efforts result in success. Therefore, those entering this field should have a proven track record, with numerical data, to back up their successes. This experience comes with a large network of influencers and correspondents who can assist in gaining exposure, leading you to a larger clientele.

At the conclusion of a successful crowdfunding campaign, your clients should have a clearly defined brand with the materials needed to realize continued growth. Therefore, it is important that you are able to listen to each client, understand their branding needs, and develop a strong, memorable brand for your clients.

What is the growth potential for a crowdfunding consulting business?

While still in its infancy, the global crowdfunding market is expected to experience 16% growth between 2020 and 2025. Experienced entrepreneurs getting in on the ground floor have the potential to achieve significant growth, even in their first year.