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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 project management 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 startup and ongoing 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.
What are the costs involved in opening a project management consulting business?
A project management consulting business is a low overhead business. You only need access to a computer, a phone, and a small office to run this business. You can start for less than $1,000.
What are the ongoing expenses for a project management consulting business?
Ongoing expenses are minimal and include costs for office space, computer maintenance and software maintenance and upgrades for project management applications. These costs may range from several hundred dollars per month to several thousand dollars, depending on how large the agency is.
Who is the target market?
Target market for this service are reasonably successful businesses that need help planning and completing complex business projects.
How does a project management consulting business make money?
Project management consulting businesses make money by charging clients a fee for service (per project) or a per-hour fee for consulting. Service contracts are common in some industries, but many businesses hire consultants on a per project or even a per-month basis.
How much can you charge customers?
Project management consultants can charge anywhere between $100 and $500 per hour for consulting. Consultants can also charge on a "per-project" basis, with fees ranging from $1,000 to several hundred thousand dollars.
How much profit can a project management consulting business make?
Project management consultants can make anywhere from $50,000 per year per consultant to $1 million or more in fees for large projects with large corporate clients.
How can you make your business more profitable?
If you want to make the business even more profitable, consider partnering with other non-competing consultants. For example, a project management consultant may need the help of a marketing consultant, a customer service consultant, or some other outside agency which can implement some or all the solutions your agency proposes for your client. By becoming a "one stop shop," you can simplify the process for your clients, making it more convenient to do business with you.
This, in turn, can command higher consulting fees.
What will you name your business?
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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your project management consulting business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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?.
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
- 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.
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 project management consulting business. 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 project management 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 project management consulting business will be in compliance and able to obtain a CO.
Project management 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.
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.
How to promote & market a project management consulting business
Promote your business locally through networking, local pay-per-click advertising, website advertising, email marketing, and direct mail. Once you get your first few clients, you can work off referrals.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Attract more clients through referral business. This will become your main source of leads and clients. In addition to this, you can retain existing clients by providing exceptional customer service and by making projects profitable for your clients.
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.
Start A Project Management Consulting Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
This business is perfect for seasoned business owners and advisors who have extensive experience in business management, project management, and who perform well under stress. Because many high level business projects are under strict deadlines, consultants must also be excellent at managing their time well.
What happens during a typical day at a project management consulting business?
A typical day at a project management consulting firm consists of meeting with clients, reviewing a project's scope, analyzing key performance indicators, and assessing the viability of various projects a business wants to undertake.
Consultants must perform detailed analysis of a project and submit reports to management and sometimes the board of directors to get approval for funding and even the project itself.
A project management consulting business may juggle many different projects at once, relying on an organized system of assistants and templates to complete various project milestones.
Consulting companies must also manage client expectations, behaviors, and attitudes toward the project and set realistic expectations about completion times and budgets.
What are some skills and experiences that will help you build a successful project management consulting business?
Business consultants are highly specialized in their education. They often have extensive experience in business management, project management, and financial management. Project managers must have excellent time management and communication skills. Finally, the consultant must understand all aspects of the project management process that most corporations use.
What is the growth potential for a project management consulting business?
This type of consulting business can grow into a large enterprise, but most businesses are run as small agencies. This is because project management consulting is a highly specialized industry where only one or a few individuals have the expertise to advice a business through all stages of a project. Therefore, it's difficult to scale this business.
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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 project management consulting business?
Work with local businesses that you already have relationships with. Consider approaching local businesses and offering them complimentary services in exchange for testimonials or referrals for successfully completed projects. You may have to offer discounted rates until your name recognition is enough to command higher fees.
How and when to build a team
Building a team isn't necessary, but some agencies decide to hire assistants to handle various aspects of the consulting process. Sometimes, an assistant can reduce some of the workload of a consultant by performing routine tasks, working from a template. This can save clients money and simultaneously increase total revenue for the consulting business by streamlining various processes.
For example, the project management process is mostly the same for all businesses. Initial interviews reveal basic information, like costs, project goals, scope, and budgets. This information can be gathered and analyzed by an assistant before a consultant comes in to take over the project. Maintaining a "pipeline" of leads this way, where assistants are completing the initial phases of the consulting work, helps optimize workflow for the consulting business.