Want to start a new consulting business?

Or, are you looking for ways to take your consulting practice to the next level by forming a legal business entity?

Whatever the case may be, follow this comprehensive consulting business checklist to get started on the right foot.

The good news is:

We’ve got you covered.

As business owners ourselves, we know what it takes to start and grow a small business and which formation mistakes to avoid.

We’ll guide you through everything you need to create a consulting company – from choosing a consulting niche to completing paperwork, attracting potential clients, and offering services.

Let’s get started.

Factors To Consider Before Starting a Consulting Business

Before diving headfirst into the nitty-gritty of starting a consulting business checklist, assessing your readiness is crucial. Here are several factors to keep on top of mind:

1. Passion and Expertise

Are you genuinely passionate about consulting? Do you possess the necessary expertise to provide valuable solutions in your chosen field? These are crucial questions to ask yourself before acting on your professional consulting business idea.

Consulting requires long hours, dealing with complex problems, and maintaining client relationships over extended periods. If you’re not genuinely passionate about the field, it can be difficult to stay motivated when the initial excitement wears off.

Expertise is equally important. Clients will rely on your knowledge and experience to guide them through complex issues and deliver actionable solutions. If you lack in-depth expertise, it will be difficult to build trust and credibility with your clients.

2. Market Demand

You may have exceptional expertise and a deep passion for consulting, but without a demand for your services, your business may not truly thrive.

Conduct thorough market research to understand the needs of your target audience.

• Are there enough potential clients who require your services?
• What are their pain points?
• How much are they willing to pay for your expertise?

Understanding the market demand will empower you to run a profitable consulting business and tailor your services to meet your clients’ needs.

Also Read:

• How to Register a Business Name in the US: A Guide (Infographic)
• 27 Low-Cost Online Businesses for Beginners to Start in 2024

3. Competitive Landscape

You’ll be competing against many established players and new business startups vying for clients.

So, why should prospective clients choose your consulting firm instead of your competitors?

Identifying and analyzing your competitors is a great place to start. It will provide the insights you need to differentiate your services and gain a competitive edge.

Here are several questions to keep in mind:

• What services do they offer?
• Who are their clients?
• What do they do best?
• What are their vulnerabilities?
• How do they reach and engage clients?
• What do clients say about them?

4. Financial Considerations

You already know that starting a business requires initial investment and ongoing expenses. But just how much are you willing or able to invest?

Here are some of the main expenses to consider:

• Initial Startup Costs: Consider expenses for setting up a home office or renting commercial space. Other costs include purchasing necessary equipment (computers, software, and communication tools), marketing your services, and creating a professional website.

• Cash Flow Management: Plan for periods of fluctuating income by setting aside savings or securing a line of credit to cover expenses during slower periods.

• Registration Fees: Registering your consulting business comes with associated fees. Factor these costs into your initial budget.

5. Tools To Consider

How will you ensure all your business operations run smoothly and cohesively? Choosing the right tools would be a great start. They can help you manage operations, enhance team productivity, and deliver excellent service to your clients.

Here are some essential tools to consider:

• Project Management Software: Tools like Trello or Asana can help you organize tasks, set deadlines, and track project progress.

• Customer Relationship Management (CRM) Software: A CRM tool like Salesforce can help you manage client interactions, track leads, and nurture relationships.

• Accounting and Invoicing Software: Tools like QuickBooks or FreshBooks can assist with managing finances, generating invoices, and tracking expenses.

• Communication and Collaboration Tools: Tools like Slack or Zoom allow you to maintain seamless communication with clients and team members.

Also Read:

• 16 Essential Legal Documents Every Startup Must Have (2024)
• How to Start a Business in 2024: A Step-By-Step Guide

Starting a Consulting Business Checklist: A 13-Step Process

As a consultant, you need to consider a lot of factors and fulfill a set of requirements to start your own consulting business in the United States.

The checklist below will help you make sure that you have everything you need to start a consulting practice business.

Step 1: Choose a Specific Niche to Target As a Consultant

Anyone with a skill or expertise that can help people solve a problem can become a consultant.

You need to figure out what type of consultant you want to become. Some of the most popular options you may consider include:

• Marketing consultant
• Public relations management consulting
• Accounting consultant
• Business consultant
• Legal consulting
• Human resources management consulting

How can you pick the right niche for your small business?

• Assess your experience, strengths, and skills.
• Analyze if you can help people solve problems in a specific area.
• Hone in on your skill sets and expertise to make sure that you can offer something valuable to potential clients.
• Analyze the target market you’re considering offering services in. Check out what others are offering and at what prices.

Step 2: Identify Your Ideal Clients

Starting a consulting business without knowing who you’re targeting is like trying to hit a bullseye with your eyes closed.

You must define your ideal clients clearly to tailor your services, marketing efforts, and overall strategy to meet their specific needs.

Here’s how you can identify and target your ideal clients and tick this box in the checklist.:

• Create Client Personas: Develop detailed profiles of your ideal clients, including their demographics, job roles, pain points, and goals.
• Segment Your Audience: Divide your potential clients into segments based on industry, company size, and location.
• Focus on High-Value Clients: Prioritize clients who are willing to pay for premium services and have long-term potential.

Also Read:

• Gusto Review – The Good and Bad for 2024
• Square Review 2024: Is it Right for your Business?

Step 3: Create a Unique Value Proposition

What will set you apart from other consulting businesses in your niche? You will need a unique value proposition (UVP) in your checklist to stand out in your chosen niche and convince potential clients to choose you.

Here’s how to craft a compelling UVP:

• Define Your Unique Strengths: Emphasize the specific skills, experience, and knowledge that make you an expert in your chosen niche.

• Address Client Pain Points: Rather than listing services, articulate how your services will solve the specific problems your clients face.

• Use Simple Language: Your UVP should be easy to understand and free of jargon. It should resonate with your target audience immediately.

• Make It Memorable: Aim for a short, catchy statement that sticks in the minds of potential clients.

Step 4: Create a Business Plan for Your Business

To build a successful consulting business, you need to start thinking like a business owner rather than just a service provider.

And that’s why this next step in the checklist involves creating a proper plan to build, nurture, and grow your small business as a consultant.

• Choose a business name that is unique, relevant to your niche, easy to remember, and scalable.
• Check whether the names you have listed are available to register as domain name, trademark, legal entity, and social media handles.
• Analyze the taxation and operational needs of your business.
• Decide on the right business structure for your company. Do you want to form a sole proprietorship, a limited liability company (LLC), or a corporation?
• Find an office space to work on your small business projects and maintain a work-life balance.
• Define the services and deliverables you’ll offer to your clients.
• Figure out how to fund your small business. Do you have funds? Will you need to find investors?
• Calculate the cost of operating your own consulting business. You should consider office space rent, overhead expenses, internet charges, legal paperwork fees, and marketing budget while calculating your business cost.
• Set up an hourly rate for your services or finalize a pricing structure for specifically-curated service packages.

Are you new to the business world?

Then, our Business Start Up guide can be a useful resource for you. It covers everything that new business owners may need to register and run their businesses.

Also Read:

• 21 Simple Ways To Make Money Online in 2024: A Guide
• Steps to Starting an LLC in 2024 (Limited Liability Company)

Step 5: Register Your Consulting Business As a Legal Entity

Registering your business is a crucial step in starting a consulting business checklist to stay legally compliant and avoid any legal hassles or headaches in the long run.

• Understand your business requirements. How many business owners are there? Do you need help to raise funds? How do you want to be taxed?
• Figure out which business structure aligns best with the needs of your small business.

As an individual consultant, you may start a sole proprietorship. But you’ll be liable for all company profits and losses.

You can choose to form an LLC single-handedly or with partners. This structure will protect your personal assets from business liabilities. Company profits will directly pass on to LLC members, who will then report them on their personal income tax returns.

If you want to start your consulting business with the help of outside investment, you should form a corporation. You can attract investors by selling stocks in the company.

• Register your business with the Secretary of the State’s office in your state by submitting the required documents.

To start an LLC, you will also have to file Articles of Organization and appoint a Registered Agent who will be responsible for receiving legal documents. You should also create an LLC Operating Agreement.

If you want to incorporate, you will have to file Articles of Incorporation and appoint a Registered Agent. You should also create Corporate Bylaws.

• Keep track of the ongoing filing and annual reporting requirements for your registered consulting company.
• Apply for an EIN (Employer Identification Number) with the IRS for taxation purposes. It will allow you to hire consultants and other employees for your firm.

Completing the paperwork involves a lot of tedious work.

While many business owners hire a lawyer to do the paperwork for them, their services are quite expensive.

But the good news is:

Our well-curated business formation packages can make it easy for you to start a consulting business easily and efficiently. Check out our pricing plans here.

Step 6: Fulfill Other Legal Requirements of Starting a Consulting Business

Registering your business with the state and the federal governments is not enough. There is other paperwork involved in this checklist as well.

• Create independent contractor agreements for freelancers or other contractual employees.
• Create unilateral or multilateral non-disclosure agreements.
• Create employee agreements.
• Create confidentiality agreements.
• Check with your state and federal governments to find out about any business licenses or permits you may need.
• Buy suitable business insurance plans to protect your business from losses and debts.
• Open a business bank account for your consulting firm with one of the best banks for small businesses in your state to separate business finances from personal finances. This will help you reduce your liabilities and risks as a business owner.
• Set up an accounting and bookkeeping system to keep track of the cash flow, profits/losses, and tax liabilities of your firm.

Also Read:

• S-Corp Checklist: Essential Steps to Set Up Your Business
• How to Start an S-Corp in 2024: Everything You Need to Know

Step 7: Develop a Pricing Strategy

You don’t want to set too high or extremely low prices for your consulting services. However, hitting the sweet spot can be challenging if you’re not sure how to price your services effectively.

A well-thought-out pricing strategy is a vital step in this checklist that allows you to attract clients while also maintaining profitability. Here’s how to create an effective pricing strategy:

• Research Competitor Pricing: Analyze how your competitors price their services. This will give you a benchmark and help you understand where your pricing fits in the market.

• Determine Your Costs: Calculate your business costs, including overhead, marketing, tools, and your desired salary. Ensure your pricing covers these costs while leaving a healthy profit margin.

• Choose a Pricing Model: Decide whether to charge by the hour, by the project, or through a retainer model. Each model has its advantages and suits different types of consulting businesses.

• Consider Your Target Market: Your pricing should also reflect the budget and expectations of your target market. If you’re targeting high-end clients or larger businesses, premium pricing may be justified. Conversely, if you’re serving small businesses or startups, you may need to offer more affordable options.

Step 8: Hire the Right Team

Handling all aspects of your consulting business can be overwhelming. You may need to hire a team to help manage the workload, lower your risks and expand your services.

You’ll need to build a team with the right expertise and experience. Consider hiring individuals who complement your skills and bring strengths in areas where you may lack.

Here’s how to build a strong team:

• Identify Your Staffing Needs: Determine what roles you need to fill based on your business operations and growth plans. This may include administrative support, marketing, sales, and financial management.

• Define Job Profiles: Clearly outline the responsibilities, qualifications, and expectations for each role. This will help you attract the right candidates and ensure they understand their duties.

• Recruit Top Talent: Use various channels to find the best candidates, including job boards, social media, networking events, and industry associations.

• Conduct Thorough Interviews: Assess candidates based on their experience, skills, cultural fit, and passion for the consulting industry. You can use practical tests or case studies to evaluate their problem-solving abilities.

Hiring the right team allows you to scale your business effectively over time while maintaining high service standards.

Step 9: Build a Business Website

The next crucial step in starting a consulting business checklist is building a website. A well-designed website makes it easy for potential clients to find your consulting services. It gives you a chance to create a positive first impression of your brand, expertise, and professionalism.

Here’s how you can achieve that

• High-Quality Content: Publish high-quality, authoritative blog posts, infographics, videos, and case studies that speak directly to your target audience’s needs and pain points.

• User Experience (UX): Ensure your website has a clean and intuitive design, straightforward navigation menu, clear calls to action (CTAs), and fast loading speed.

• Mobile-Friendliness: Ensure your website adapts seamlessly to different devices and screen sizes.

• Chatbots and Live Chat: Incorporate chatbots or live chat features to provide potential clients with instant responses to common inquiries, and guide them through your services.

Also Read:

• How to Start a Retail Business: Everything You Need to Know
• Business Startup Checklist: What New Businesses Need

Step 10: Create a Robust Marketing Plan to Get Clients

Successful consulting businesses are built on a solid client base. To attract more clients, you need to create an effective marketing strategy as the next step in your checklist.

Here are several tried and tested marketing channels to consider:

Search Engine Optimization (SEO)

As mentioned earlier in this starting a consulting business checklist, your online presence is key to attracting clients.

Having a website is not enough. You must also optimize it for search engines to increase your visibility to potential clients.

Here are a few tips:

• Research and use relevant keywords in your website content
• Optimize meta tags
• Create high-quality and informative content
• Ensure your website is technically sound (fast load times, mobile-friendly design)

Email Marketing

Email marketing enables you to directly interact with prospective clients and nurture relationships. Here’s how you can maximize the potential of this marketing channel:

• Use lead magnets like free resources or newsletters to build an email list.
• Regularly send out value-packed emails that provide insights, tips, and updates related to
• Run email campaigns to promote new services, share success stories, or invite subscribers to events and webinars.
• Personalize your emails to address the specific needs and interests of different audience segments.

Social Media Marketing

Social media platforms allow you to expand your reach, engage with your target audience, build your brand, and attract clients.

Here are some tips and tricks to get the most out of these channels:

• Choose platforms where your ideal clients are most active, such as LinkedIn for B2B consulting or Instagram for creative or lifestyle consulting.
• Consistently share content that showcases your expertise, such as blog posts, industry news, case studies, and client testimonials.
• Network with industry peers and participate in discussions to stay informed about trends in your field.

Step 11: Deliver Great Consulting Services

Solving problems and delivering great services is the key to growing your business and a crucial part of this checklist that you should take seriously. Here’s how you can achieve that:

• Upskill yourself and enhance your expertise.
• Learn about the latest updates and strategies in your field.
• Deliver high-quality consulting services to your clients.

Remember, satisfied clients will bring you more business and greater recognition in your target market.

Step 12: Build Strong Client Relationships

Winning your first consulting client is a great achievement. But how do you plan to retain them?

Attracting clients is just the beginning: the real work in this checklist lies in building and maintaining strong client relationships over time.

Here are a few strategies to help you build lasting relationships with both new and past clients:

• Understand Client Needs: Find out your clients’ desires, goals, and challenges. Regularly engage with your clients to gather feedback and ensure your services are aligned with their expectations.
• Set Clear Expectations: Establish clear expectations regarding deliverables, timelines, and communication from the outset.
• Deliver Consistent Value: Ensure your professional consulting services consistently meet or exceed client expectations.
• Build Personal Connections: Take the time to understand your clients on a personal level, celebrate their successes, and show genuine interest in their business.

Step 13: Monitor and Make any Necessary Adjustments

As you continue to deliver exemplary services, remember the consulting business is dynamic and ever-evolving. In fact, the worldwide management consulting business market size increased from $876 billion to over $1 trillion in just 3 years (2020-2023):

Image via Statista

Your consulting business must adapt to changing market conditions, client needs, and industry trends to remain relevant.

Regularly monitoring your business is the last item in this checklist that can help you identify strengths, weaknesses, and opportunities for growth. Here’s how to stay agile:

• Track Key Performance Indicators (KPIs): Regularly track the most important metrics for your business, such as revenue growth, client retention, and project profitability.
• Seek Client Feedback: Continuously gather feedback from your clients to understand their satisfaction levels and areas for improvement.
• Stay Updated on Industry Trends: Attend conferences, read industry publications, and participate in professional networks to stay informed about the latest industry trends and developments.

Also Read:

• 7 Best ZenBusiness Alternatives & Competitors (2024)
• Top 7 LegalZoom Alternatives and Competitors for 2024

Mistakes to Avoid When Starting a Consulting Business

Even with this comprehensive starting a consulting business checklist, you might find yourself making some mistakes.

Don’t fret though.

Understanding common pitfalls can help you steer clear of trouble and run a successful independent consulting business.

Here are some key mistakes to avoid:

1. Neglecting Market Research

Failing to research your target market and competitors thoroughly is equivalent to trying to see blindfolded. If you don’t understand the market demand, client needs, and competitive landscape, you risk offering services that don’t resonate with prospective clients.

And without clients, who are the lifeblood of your business, your business might fail even before it finds its footing.

2. Underestimating Startup Costs

While financial planning and budgeting is a crucial process in starting a consulting business checklist, many new consultants often underestimate the initial costs required to launch their businesses. These costs can add up quickly, from registration fees and office equipment to marketing expenses and insurance.

Failing to budget appropriately can lead to financial challenges and operational setbacks. Here are some risks of inadequate financial planning:

• Cash Flow Delays: Inaccurate cost estimates can disrupt your cash flow, making it difficult to cover operational expenses or unexpected costs. This can lead to service delivery delays and a tainted business reputation.

• Reduced Quality of Services: If your budget is too tight, you might have to cut corners on essential tools, resources, or professional services. This can negatively impact the quality of your consulting services, leading to client dissatisfaction.

3. Not Seeking Professional Help and Advice

It may be tempting to try and handle all aspects of starting a business alone. While your enthusiasm and determination are valuable, attempting to manage every detail without professional help can lead to costly mistakes.

Professionals like accountants and marketers can provide insights into market trends, business strategy, and growth opportunities. Without their help, you might miss out on valuable opportunities to expand your business, enter new markets, or attract more clients.

4. Ineffective Marketing Strategies

Not all marketing strategies will have clients streaming into your consulting business. As mentioned earlier in the checklist, you must have a sound marketing strategy. Unfortunately some consultants use generic tactics that fail to resonate with their target audience.

This translates to wasted time, money and effort in strategies that reap no results. You might also miss key opportunities to connect with prospective clients.

Over time, ineffective marketing can lead to business stagnation. Without a steady influx of clients, your consulting business may struggle to maintain momentum, leading to decline and even failure.

5. Over-Promising and Under-Delivering

It’s easy to promise the world to your prospective clients when marketing. But can you deliver?

Setting unrealistic expectations is a common mistake that can have detrimental effects on your new consulting business.

If you consistently fail to meet the expectations you’ve set, clients are likely to share their disappointment with others. This can damage your reputation, making it harder to attract new clients and retain existing ones.

6. Overlooking Legal and Regulatory Requirements

Ignoring the law is often inexcusable, even when you genuinely don’t know the legal requirements of starting a consulting business.

Failing to comply with regulations regarding contracts, intellectual property rights, or client agreements as discussed in the checklist above can lead to severe consequences, such as:

Here are some repercussions of overlooking legal requirements:

• Fines and penalties that can strain your business’s finances and impact your profitability.
• Costly and time-consuming legal disputes that can damage your business’s reputation.
• In extreme cases, failing to meet legal and regulatory requirements could result in the forced closure of your consulting business.
• If clients discover your business is not legally compliant, you risk losing their trust.

Also Read:

• How to Open a Small Business in Florida in 2024 – 9 Steps
• Incorporate in Texas: 7 Easy Steps for Entrepreneurs in 2024

FAQs

Q1. What do I need to know before starting consulting?

A. Here’s what you need to understand before starting a consulting business:

• Your passion and level of knowledge
• The market demand for your services
• The competitive landscape
• The specific needs and pain points of your target clients
• Financial requirements for starting a business

Q2. How do I start a consulting business from scratch?

A. To start a consulting business from scratch, consider this checklist:

• Identify your niche and ideal clients
• Develop a unique value proposition
• Formulate a business plan
• Register your business
• Fulfill all legal requirements
• Set your pricing
• Create a marketing plan
• Hire the right team
• Monitor and adjust your strategies

Q3. Is small business consulting profitable?

A. The profitability of small consulting businesses depends on factors like your marketing strategy, value proposition, pricing model, and client relationships. Small business consulting can be profitable if you offer valuable services that address the specific needs of your target audience.

Q4. How do I start a consulting business with no experience?

A. Starting a consulting business without experience can be tricky. You must build your expertise by researching your chosen niche and gaining relevant certifications. Consider offering free or discounted services to a few clients to build your portfolio and gain hands-on experience.

Q5. How do I get clients for my consulting business?

A. To get clients for your consulting business, start by defining your target audience and creating a strong value proposition. Use marketing strategies like content marketing, social media, and networking to reach potential clients. Offering incentives and showcasing case studies can also help attract clients.

Are You Ready to Start a Consulting Business?

Business owners have a lot of questions when opening a business. This checklist covers all of the major steps involved in setting up a consulting business.

While setting up and building a business from scratch might take time, it is worth the effort. You should follow your passion and think like a marketer and a business owner at the same time.

Another start-up tip we would like to give you is to keep learning. As a consultant, you need to be aware of the latest things happening in your niche and industry. Make sure that you offer great value to your clients at all times to keep them coming back for more services.

Do you have other questions about starting a consulting business? Ask them in the comments below.