Start a local business consulting firm by following these 10 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 guide to starting your local business consulting firm. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a local business consulting firm?
The startup costs associated with business consulting are between $10,000 and $50,000. While a local business consultancy can be started from home, it’s far more effective when situated within an office. Startup costs include licensing, professional informational resources, and additional funds to enter a freelance support network. Additional startup income may be needed to focus on reducing overhead, minimizing risk, and meeting client needs.
What are the ongoing expenses for a local business consulting firm?
Ongoing expenses are relatively small, as few variable costs exist. Because of this, ongoing expenses are difficult to determine. A local business consultant needs to maintain special licensing, organizational tools, and networking tools. Depending on your consulting firm's size, advertisement costs will be important. Additionally, consider investing in career counseling yourself. A local business consultant must constantly learn, so as to impart knowledge upon other business decision makers.
Who is the target market?
As a local business consulting firm, your target market will be small and medium-sized businesses. Entrepreneurs and remote businesses, particularly, are lucrative to your business. Your target market will best be found in large-scale business consultancy networks.
How does a local business consulting firm make money?
Business consultants make money via the success of their clients. Close rates can be between 10 and 20 percent, giving a business consultant a decent amount of growth potential if their client’s business is successful. For this reason, many business consultancies develop strategies based upon hard revenue data, margins, and market caps. Many business consultancies make money on a per-success basis. So, a variety of pricing plans can be used. A successful business consultant understands the administrative and budget needs of many businesses. So, they’re likely to be more successful by creating ongoing pricing plans, which are customized to each client’s needs.
How much can you charge customers?
An entry-level local business consultant can charge business owners about $175 per hour. Average-level consultants, meanwhile, can charge approximately $294 per hour.
How much profit can a local business consulting firm make?
The median salary of a local business consultant is about $90,800. That said, a highly successful business consultancy can make millions. This profit is highly variable, as it’s determined by business health, ongoing network relationships, and a slew of other factors.
How can you make your business more profitable?
To remain effective, a business consultancy must be proactive about their industry’s challenges. It’s important to stay up to date on cash flow analysis, budgets, mergers, and acquisitions. Additionally, it’s a good idea to interview business owners to understand, enhance, and benefit their goals. Again, to help your clients you must be familiar with their challenges.
Cultivate personal networks, strive for face-to-face interactions when possible and stay within your client’s radars. By being a relevant business consultancy, you can be a profitable business consultancy. Maintain good rapport, and be sure to translate all information into actionable strategies quickly. In many industries, businesses are incredibly competitive. Seek outside expertise, yourself, and don’t be afraid of adapting assisted businesses, brands, and collectives into new spaces.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Local Business Consulting Firm Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your local business consulting firm is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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.
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.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a local business consulting firm. Learn more about licensing requirements in your state by visiting SBA’s reference to state 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:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
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 local business consulting firm.
- 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 local business consulting firm will be in compliance and able to obtain a CO.
Local business consulting firms 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.
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.
Learn more about General Liability Insurance.
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.
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a local business consulting firm
Your local business consulting firm will be best promoted by creating long-lasting, effective business relationships. A wise consultant promotes by listening before speaking. Do not discuss costs before discussing specific client needs. To market effectively, maintain a positive reputation. In the world of consultancy, reputation is everything. Direct your consultancy’s reputation into the above-mentioned networks, and promote your business by selling results, rather than services.
How to keep customers coming back
To attract ongoing clients, you’ll need to understand the many limitations small businesses face. At the end of the day, you’ll need to sacrifice marketing dollars for creativity. You’ll also need to work alongside small businesses to attract and retain new, lucrative clients. To assist your clients, become familiar with their challenges, opportunities, and goals. In doing so, you’ll increase your retention. Business consultation is incredibly reliant on professional relationships.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Local Business Consulting Firm In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Business consulting is great for any professional-minded individual who wants to find their professional niche, become familiar with the local business scene, discover industry limitations, and garner the expertise needed to help others achieve success. Business consulting is similarly a good idea for those who are experienced with taxes, accounting, management, legal areas, and insurance.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a local business consulting firm?
A local business consulting firm must focus on finding new ways to develop solutions to knowledge gaps. Because they’re well-known and relied upon for their ongoing expertise, business consultants must constantly provide value to their customers. On a daily basis, business consultants use objective insight that a business’ in-house staff is unable to provide.
Similarly, they focus on emerging tech markets and trends, translating them into actionable strategies. By creating cutting-edge products and services, a business consultant adapts business brands to new spaces. Local business consulting firms operate on an “always close” basis. Thus, they devote a lot of time to acquiring new businesses as performing, assigned tasks.
What are some skills and experiences that will help you build a successful local business consulting firm?
To run a successful local business consulting firm, an operator needs to gain insight on industry practices, effective business strategies, and flexible techniques. Join the Association of Accredited Small Business Consultants, and earn certification. Additionally, become knowledgeable about mergers and acquisitions, cash flow analysis, budgets, financial projections, estate planning, financial planning, litigation support, inventory controls, and operations review. In general, a local business consulting firm needs to remain effective on multiple professional fronts. They must learn to network, micromanage in-house processes, and be effective risk management analysts.
What is the growth potential for a local business consulting firm?
A business consultancy can garner quite a lot of growth. As a consultant, your consultancy’s pricing structure determines both the success and failure of your business. If you monitor your clients well, identify each client’s decision makers and establish goals based upon an ever-growing system of clients, your consultancy can garner success on the national realm.
TRUiC's YouTube Channel
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe below to view later.
Take the Next Step
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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a local business consulting firm?
When starting, maintain an “always close” mindset. To succeed as a consulting firm, devote as much time as possible to acquiring new businesses and performing assigned tasks. Between initial contact and engagement, between six and 36 weeks can pass. Because thousands of independent, established, and home-based businesses currently compete for visibility, partners may be proactive about investing in your vision. Make sure your consultancy’s vision is clear-cut from the beginning, so as to make yourself an attractive investment.
How and when to build a team
Fortunately, you can run a business consultancy by yourself. Your ‘team,’ thus, will be a loose network of other consultants, business professionals, and marketers. While you can operate alone within the first one to three years, you should consider hiring knowledgeable resources before five years have passed.