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Local business consulting firms offer the guidance, planning, tools, and solutions local small businesses need. By focusing on growth and scale simultaneously, a local business consultant helps decision makers create ongoing solutions while being able to support themselves.
Who is this business right for?
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.
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 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.
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.
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 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 steps to start a local business consulting firm?
Once you're ready to start your local business consulting firm, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your local business consulting firm is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your local business consulting firm keeps your finances organized and makes your business appear more professional to your customers.
- 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.
- 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.
- 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.
- 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.
- Establish a 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.
Select your state below for an in-depth guide on completing each of these steps in your home state.
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 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 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.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
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.
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.
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.
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.
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.
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.
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.
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.