Most people would agree that one of the easiest businesses to set up is in the consultancy sector. It’s a type of company you can start where you don’t need to invest huge sums of money on machinery or equipment.
In fact, many consultants often set up their new enterprises from their homes! Of course, if you want to target premium markets it would make sense to have some dedicated office space in your town or city centre. You will portray a more professional image when having meetings with key clients.
So, if you wanted to set up a consultancy business, how do you go about it? Today’s comprehensive guide will walk you through the steps needed to set up a successful firm. Here is what you need to know:
Skills and qualifications
Let’s face it; you don’t need to have any particular qualifications to set up a business. Sometimes it can help, as it’s a way of proving to new customers that you know what you’re talking about!
But what is essential is that you have the relevant skills in your industry to make you an expert at what you do. Regardless of how much they spend with you, clients don’t want to pay someone that knows little to nothing of what they are offering.
For instance, let’s say that your firm helps companies to increase productivity and efficiency. Prospective clients won’t be at all interested in what you have to say if it sounds like you are making things up as you go along! Nor do they want to pay for help and advice they could just as well get for free on the World Wide Web!
If you’re going to offer a service to your clients, you need to make them feel like they are getting some real value for their money. If your knowledge and expertise are lacking in some areas, you should consider getting proper training.
In some industries, you might not have a choice but to get qualified in particular areas. Let’s say that you are offering a search engine optimisation consultancy service. If you want to help people with their AdWords campaigns, you’ll get more business if you were an official Google “partner.”
Whatever field you wish to work in, it’s worth checking out whether getting qualified in what you do will boost your revenue or not.
Also, it goes without saying that you should have prior knowledge of your chosen industry. Some people have big ambitions of starting up consultancy firms. But in reality they know little about the industry or, indeed, their target audience!
People that embark on setting up new businesses have spent many years working for other companies first. The skills and experience they got from doing so better places them to be authoritative figures in their industry.
There is no definitive guide to the amount of time you should spend working for your competition first. Some people suggest five years, others suggest more. It just depends on what industry you are targeting and how long you think it will take you to “learn the ropes” as it were.
Before you start your new enterprise, it makes sense to decide where you want to get based and which areas you wish to cover. Some consultants offer a local service while others will cover their region.
Many consultants will even cover an entire country, believe it or not! For the latter option to make financial sense, you’ll need to offer a high-ticket service to justify the cost of your expenses.
If you did decide to cover your country, what will be your likely expenses? First of all, you will need to have a car. From a hassle-free and maintenance point of view, many consultants opt for business leases.
As long as they only use their cars for business use, they can claim back most if not all, applicable taxes and fuel costs relating to them. With companies like Listers Honda around, one can find it easy to get the best deal possible for a business vehicle.
Non-vehicle expenses you’ll have to bear include accommodation, food and entertainment costs. What if you’re wining and dining clients near to where you live? You won’t need to pay for somewhere to stay overnight (and neither will they).
The next factor to consider is how you wish to set up your business. By far, the easiest route into the business world is to set up as a sole trader. Self-employed people still pay taxes on their earnings, but the set-up costs are lower.
For consultants dealing with high-end clients, it makes sense to become incorporated. In some parts of the world, this involves setting your business up as a private limited company. The “limited” bit means that your business has limited liability.
It’s a safer bet from a legal point of view. Why? If one of your clients sues you for something, and they win, your personal possessions might get sold to settle the lawsuit. But, in the case of a limited company, the liability is limited to the money and shareholding in the business. Your home and personal possessions are safe.
For those wishing to go down the incorporated route, I recommend hiring a decent accountant. Not only will they look after your company accounts, they can tell you of ways to avoid paying so much tax!
Spend some time researching accountants that can work with you and do a good job. Consider getting personal recommendations from people you know. When you meet with a prospective accountant for the first time, go with your gut instinct.
If they don’t seem too interested in helping you to set up and grow your business, talk to other accountants. After all; there are plenty of accountants out there!
These hints and tips will all help you to set up a successful consultancy firm. As long as you are confident in your abilities, and you have a proven track record, you won’t have any issues gaining new clients.