How to Start a Local Business Consulting Firm

Start a local business consulting firm by following these 10 steps:

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

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.

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 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

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

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.

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.

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 local business consulting firm 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.

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.

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.

Services Contract

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.

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?

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 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.