How to Start a Customer Service Consulting Business

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Our guide on starting a customer service consulting business covers all the essential information to help you decide if this business is a good match for you. Learn about the day-to-day activities of a customer service consulting business owner, the typical target market, growth potential, startup costs, legal considerations, and more!

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Start a customer service consulting business by following these 9 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your customer service consulting business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

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 are the initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Luckily we have done a lot of this research for you. Skip on ahead to the Business Overview for more detailed answers to all your questions.

Choosing the right name is very important. 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.

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STEP 2: Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your customer service consulting business is sued. Consider using a registered agent service to help protect your privacy and stay compliant.

STEP 3: Register for taxes

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

STEP 4: Open a business bank account

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.

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.

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

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

STEP 8: Define your brand.

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

STEP 9: Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Business Overview

Customer service can make or break a business. When a customer calls in with a question, problem, or concern, the way they're treated often determined whether they will remain a customer or buy from a competitor. Service also determines how well a customer's problem is addressed and, ultimately, whether the business does a good job solving it.

This is why a customer service consulting business is so valuable. It helps businesses and firms improve their customer service by doing customer surveys, offering customer service training lessons, examining the workflow of customer service processes, or trying to develop an improved culture of service.

They primarily serve industries and business that are very service-oriented, like restaurants, coffee shops, and beauty salons. Consulting for these types of business is different from product-driven companies, which typically try to improve customer service to better handle complaints.

A consulting business must understand the nature of customer service and service-oriented businesses and their need for quality service. They must study the target consumer for the company and product and how best to service their needs.

Who is this business right for?

This business is perfect for individuals with good people skills and a drive to facilitate good communication between two or more people.

What happens during a typical day at a customer service consulting business?

A day in the life of a consulting company consists of meeting with clients, following up with prospects and managing client attitude and behaviors.

Most consulting firms spend a lot of time researching their clients' customers and target market. This takes up the bulk of the time spend on a client's project. For example, a consulting company working with a coffee shop might spend a significant amount of time researching the local demographic, comparing it to how much the coffee shop charges for its coffee and teas, what type of clientele it is trying to serve, the coffee shop's location, and so on.

If a coffee shop owner is serving a high-end client, who demands microlots and custom brews, including hand poured coffee, then service should be focused on providing a unique experience for each customer. This is not the type of coffee shop that sells coffee as a commodity.

A consultant might stress the need for knowledgeable baristas with years of experience, education, and training.

If, on the other hand, a coffee shop is mass marketing its coffee to a middle or low-income market, then the customer service strategy might be more focused on providing fast and polite service.

Consulting companies must also document all recommendations to their clients, maintain excellent records and, of course, provide excellent service to its own clients. Consulting companies also typically provide monthly or quarterly reports to clients.

What is the target market?

Target market are successful businesses that have hit a sticking point in revenues and profit and need help improving customer relationships so they can break through to the next level.

How does a customer service consulting business make money?

Customer service consulting companies make money by charging clients fees for consultation services.

What is the growth potential for a customer service consulting business?

Companies are typically run as small agencies. However, larger companies do exist. Some of them cross over from customer service to providing a blend of customer service and management consulting, like McKinsey & Co., Accenture and Marsh & McLennan.

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

Excellent management, and customer service, is a must. If you do not know how to talk to people, you obviously cannot sell that service to others. Aside from that, you must have good organizational skills and the ability to communicate your message effectively to another company's management.

Working for another consulting agency helps you "get your feet wet," and also gives you the relevant experience.

A business degree may help, but customer service strategies are often driven by experience as opposed to academic theory or study.

What are the costs involved in opening a customer service consulting business?

Costs involved in starting an agency are minimal. You can start with less than $1,000. You will need a CRM system for managing your clients, a computer, and a phone.

Where can I find a business mentor?

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

What are some insider tips for jump starting a customer service consulting business?

Work in industries you understand. It helps to have experience in industries other than consulting. For example, if you've been a successful restaurateur in several different markets for 20 years, you probably have a good idea about how to improve customer service in that industry.

You understand the unique challenges of the restaurant business as well as the clientele that frequent various types of restaurants. A 5-star French restaurant, for example, will have a very different client base than an Italian sandwich shop.

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Growing Your Business

How to promote & market a customer service consulting business

Promote your services locally through the newspaper, online on your social media accounts, and through pay-per-click advertising. Reach out to local businesses and ask them if you could conduct a free customer service study for them. If they agree, analyze their business and offer to improve sales through better customer service.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

Retaining customers is easy. As long as you can improve profits for them, most businesses will be happy to keep hiring you.

How and when to build a team

Build a team only as and when needed. This is a business that's difficult to scale because it depends on your unique insights into a particular industry or business. Hire support staff (when you can afford it) to take over mundane tasks, like bookkeeping and HR.

Legal Considerations

Federal Business Licensing Requirements

Certain state permits and licenses may be needed to operate a customer service consulting business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

State & Local Business Licensing Requirements

For information about local licenses and permits:

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

For information about local licenses and permits:

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

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

Two of the simplest steps that will protect your business, and yourself, are to:

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.
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To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Certificate of Occupancy

Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a location:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a customer service consulting business.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or build a location:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for your business’ location to ensure your customer service consulting business will be in compliance and able to obtain a CO.

Services Contract

Customer service consulting businesses should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership.

Earning Potential

How much can you charge customers?

Most customer service consultants can charge clients between $100/hr and $300/hr for services. The exact charge depends on your experience in the industry and your name recognition. The more successful you are, the more you can charge.

What are the ongoing expenses for a customer service consulting business?

Ongoing expenses for a customer service consulting business are minimal. Basically, you have to cover rent and utilities and costs for whatever customer relationship management software you use.

How much profit can a customer service consulting business make?

Profitability is high. Most consulting companies can make a 20% profit margin if they hire assistants to help them with their consulting business. If you're working alone, your margin is higher, but your total income may be less. Average consultant income ranges between $60,000 per year and $150,000 per year.

How can you make your business more profitable?

Make your business more profitable by partnering with non-competing firms to offer ancillary services. For example, a company may need more than just customer service help. They may need a coordinated marketing and customer service overhaul. If you can provide that to them, then you stand to make more money by consolidating both services into one.

You can also try increasing your fees over time as you gain experience.

Finally, consider creating tiered service levels, where you hire assistants to perform routine consulting jobs based on a service template you design. These lower-cost services could add substantially to your base income.

Next Steps

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