How to Start a Consultancy Business

Many roads lead to the forming of a consultancy, and not all of those roads involve an entrepreneur's passion for independence and intellectual freedom. Many consultants start their businesses after being laid off, and they never really think of themselves as business owners. Others eagerly plan for the day when they can leave their employers and open their own consultancies where they can finally apply the full length and breadth of their knowledge to providing superior service to their clients. With hiring trends indicating more emphasis on consultants and other contract workers, building a consultancy that is a real business rather than a stop gap effort may be a wise move for anyone with strong skills.

Think carefully about what you can do that people will pay you to do. The most difficult part of planning your consultancy is deciding which of your many skills to market. Think in terms of what you can do well that others find difficult. You will make more money if you promote your ability to service a niche demand with hard-to-find skills than if you choose to promote skills that are commonly found in your industry. If you have expert level proficiency in a common skill area, you will be able to build a reputation for quality that should allow you to charge more. Check with your competition to establish market rates for your services, and create a rate card. Always keep your overhead low so you can negotiate your fees and services to appeal to more potential clients.

Plan your business. Once you have arrived at an idea of what you want to do, you should take the time to carefully identify your target market and plan how you will convince them to do business with you instead of your competition. As with any business, you will have to consider the costs of doing business, including what legal form you will use. Will you need to maintain memberships in professional associations and networking groups? Will you need subscriptions to research services? Will you need to keep current in a professional license? What kind of equipment will you need? Will you be able to run your business out of your home, or do local zoning laws prohibit home-based businesses? Your business plan will help you avoid unpleasant surprises while you are trying to build your business.

Try to pick a name for your business that tells people what you do. You may wish to test more than one business name and go with the one that seems to attract more business inquiry. While using your own name as a business name, it is always better to include descriptive words or add a descriptive tag line. You should also buy several different domain names relating to the business names you are considering. Consider naming your business according to what domain names you can acquire. Your online presence will be a powerful part of your business future, so it is important to make sure you have your business name available as a domain name.

Create your image through your website, marketing collateral, community involvement and networking. Face it, if you are a consultant, you own your own business. Even if you are secretly hoping to be hired as a full-time employee by a big company, you need to cultivate your image, or nobody will hire your consulting services. The first thing you will need is attractive business cards. They don't need to be expensive but they shouldn't look cheap. You will also need a website. You should search for providers that match your budget and service needs. Remember that you will want to be able to change your website copy and marketing materials a few times while you are trying to find what works best for your business goals. You also should consider hiring design services to provide your website and collateral with a professional look.

Before you start your business, find out what legal obligations you will have. All consultants should incorporate, so you will need to decide whether you should form a limited liability company (LLC), a professional corporation (PC) or a regular corporation. You should also contact your state, county and city governments to discover what you will have to do to comply with their small business regulations.

Ask people you know to recommend your services. Before you approach customers you serviced while you were employed, make sure to check your old employment contract for non-compete clauses. If you are not limited by any such legal barriers, call everyone you worked with at the company and among its customers, and ask them to recommend you to potential prospects. When you finish a project, ask for recommendations. You never know who will be able to send you business, so make sure your attorney, accountant, dentist, doctor and even the owners of your favorite restaurants know you are starting a business of your own. Give them several of your business cards. Entrepreneurs are always happy to help out another entrepreneur.

Build partnerships with synergistic service providers and product vendors. Your clients will invariably ask you if you can recommend a good attorney, accountant, website developer or other service provider associated with your industry. Make sure you have established a mutual referral agreement with providers you intend to recommend. It is not always necessary to get a referral fee, but it is important to make sure that the other business owner appreciates your help enough to send referrals your way, as well.