A consulting business is a wonderful opportunity for anyone who wants to make a living using their existing skills. Theoretically, you can start generating income in just a few days. All you need is a client and an invoice.
But in reality, there’s a lot of work you need to do: designing your website, incorporating your business, getting your name out there, and more.
Fortunately, the costs required to start your consulting business aren’t as high as you may think. With the right tools, you can spend a few hundred dollars on setting up your consulting business and it will be ready to go.
There’s some uncertainty associated with these startup costs that can scare aspiring consultants away, so we wanted to set the record straight. In this article, you will learn how much it will cost you to start your consulting business so you can crush any excuses and start making money using your skills.
Let’s get started.
Cost: From $50 (US) up to $5,300 (Dubai).
In theory, you could start generating income from your consulting business right away, operating as a sole practitioner, as they call it in the United States.
While lots of freelancers do just that, there are risks involved in doing business as a single person in the eyes of the law. To reduce those risks, you need a legal entity that backs you up.
The keywords that reveal why it’s important to incorporate as a business are “limited liability.”
The concept of limited liability (obtained by establishing a limited liability company, or LLC) means that if you get into legal trouble—for example, you can’t provide the service you said you would, or a litigious client drums up some claim against you—the other party can only sue your business and not its owners or investors (i.e., you).
If you were to lose a suit and have to pay the claimants, as an LLC, you wouldn’t be liable for any debts of the company other than for the amount already invested in it. This means you can’t be forced to sell your house, car, or liquidate your personal savings to pay for any debts coming from the suit (as long as these assets are separate from your business).
By contrast, sole proprietors and partners in general partnerships are both liable for all the debts of the business (called unlimited liability).
There are other potential tax and legal benefits gained from incorporating a business, but the point is that a legal entity protects you. It’s a form of legal insurance, if you will.
Nowadays, you can incorporate a business in pretty much any country (also known as jurisdiction) you want.
In the simplest terms, you should incorporate where you are located. Sam Mollaei from Molleai Law has a simple rule of thumb for entrepreneurs based in the United States: “You should register your LLC or Corporation in the state where you are located (the state where you have a physical presence).”
Note: If you are an American, there are many tax experts who recommend setting up a business in foreign locations so you can lower your tax burden, but that’s a topic of a separate post. Here’s a handy guide that can help you with that decision.
If, however, you are a non-US resident looking to open up a business there, Mollaei recommends you form your company in Wyoming, which he describes as the best and easiest state for non-residents to incorporate in. Another popular jurisdiction for entrepreneurs coming from outside the United States is Delaware, which offers similar legal and tax advantages.
Most states charge anywhere between $50 (Arizona, Arkansas, etc.) to $250 (Alaska), while most charge around $100 for incorporating in their states.
Incorporating a business is still a relatively complex process you don’t want to mess up. That’s why most people use services like MyCompanyWorks or LegalZoom to have their teams of lawyers do it for them. Still, these services add around $79 over the state’s costs, so you can expect to pay around $180-$200 to incorporate a business in the US.
If you plan on doing business in Europe, then you can consider some of the most popular and business-friendly destinations like:
- The United Kingdom
Many Asian nations also offer great tax and legal incentives to set up a business, including:
- Hong Kong
In each of these jurisdictions, the costs will depend on the complexity of your legal structure and your needs. Assuming you want a basic structure, the costs won’t be too high. According to Incorporations.io, the costs of incorporating in the aforementioned jurisdictions are:
- Gibraltar: $3,200
- Estonia: $2,950
- The UK: $1,850
- Dubai: $5,300
- Singapore: $550
- Hong Kong: $950
For more information on how to incorporate your business, here are a few guides that can help you:
- How to Incorporate a Business in the USA
- How to Incorporate a Business in the European Union
- How to Incorporate a Business in Australia
Hosting and Domain
Cost: From $2.75 per month for hosting and from $1 per year for a domain.
The hosting of your website and its domain represent your homebase on the web. Your domain represents your brand, so the name of your site should be representative of your business.
Some of our most successful students all had their own websites matching their names or their business names. For example, Gavin Symes, founder of The Foundry Group, has the following domain:
The cost of a domain depends on the TLD (top-level domain, that is, the extension); here’s a basic rundown of the costs GoDaddy offers for the most popular TLDs:
As a rule of thumb, you should always go with a .com. If you can’t find the exact name of your business, use a prefix or a suffix like “the” or “expert” so you can find the right variation.
A good tool that can help you find the right domain is Name Boy. All you have to do is enter your business’s name and see if it’s available. If it’s not, the tool will provide further ideas for you to try.
If Foundr started its own agency and we wanted to buy an exact match domain (that is, we wanted to have the words “Foundr agency” in the domain), here’s what Name Boy suggests:
A much more important decision is deciding on your hosting company. You want a reliable, safe, cost-effective company that you can easily do business with. Otherwise, you risk ruining your reputation fast.
If you don’t think you will have more than a few thousand visitors per month, either of these companies can work. They are a good starting point, if you will. The problem is that they offer such low costs by bundling multiple sites together on a single server, which means it’s not as safe or reliable as more expensive options.
While they cost more than the other options, they offer much heartier hosting solutions. If you want security, reliability, and better customer service, these mid-range companies are the best investment you can make.
Cost: From $39 for a standard premium WordPress theme to thousands for a custom-made site.
The way you present your company is critical to the success of your consulting business. Most consultants can’t expect to command high prices or attract high-quality clients if their web design looks terrible. Unless you have a rock-solid reputation to start with, appearance often translates to trust.
Fortunately, you can meet this baseline requirement without spending a ton of money. At this early stage of your business, you have two options:
- You can buy a pre-made WordPress theme and install it on your site with some tweaks.
- You can get a web design company to create a template from scratch.
While there are lots of web design options out there (Squarespace, Wix), I recommend WordPress. It’s used in about 32% of all the sites on the Web, it’s free, it’s easy to use, and it makes your entire online operations a walk in the park.
Once you install WordPress on your hosting platform—something that all top hosting companies provide with one click—you need to decide which design road to take.
If you are the type of perfectionist entrepreneur who wants your website to look flawless before you even open your doors, then stop right there.
Here’s what you need to think about:
Custom web design is very expensive. Until you make enough money to make such an investment practical, you want to spend the least amount possible on this, while still presenting your business in a positive light. Otherwise, if something goes wrong, or you change your mind about how you want to present yourself, you could be spending a ton of money for no reason.
So it’s best to start with a pre-made, premium WordPress theme, maybe get a web designer to make some cosmetic changes so it looks unique, and move on.
You can also go to ThemeForest and look for premium themes from independent developers.
Some basic themes start at $19, but most range between $39 and $59.
Once you buy the theme you like the most, you’ll want to go to a platform like Upwork and get a web designer to adapt it to your company.
You can find cheap WordPress theme developers at $15 per hour. Assume that a simple theme customization will take the developer anywhere between 10 to 20 hours, so you are looking at $150 to $300 at a minimum.
You don’t have to get a premium developer or spend more than a few hundred dollars on this, but making these adjustments will help you stand out from the other companies that use the same theme.
In case you do want to take the custom web design road, then search for “WordPress design agencies” or “WordPress site development agency” to track down a quote.
According to Tomaž Zaman from Codeable, the development of an entire custom theme for your company starts at $26,400. That includes:
- Planning the project
- Theme development
As Zaman explains:
Usually, when I explain these numbers, people ask me why on earth then use WordPress if they’re not saving that much, and the explanation is pretty simple: You’re saving hundreds of thousands of dollars because you don’t need to develop a custom content management system. This is where your savings are.
Finally, you can also use a platform like 99Designs, which helps you find top designers to create a WordPress theme from scratch at a cheaper price. Their basic “Bronze” plan starts at $599.
In this case, you will get a Photoshop file (PSD), which you then need to take to a company to get them to code it into a functioning WordPress website. A company like PSD2HTML charge $298 for the design of the first page, and $149 thereafter for the other internal pages.
Cost: It depends on the software used.
No matter your specialty, you’ll have to use some kind of software to run your business.
The use of software will automate and free your time from menial tasks so you can spend it on the things that matter—sales, marketing, and providing great services.
Here are some of the most popular software tools that will help you run your business.
Thanks to this software, you can lower your time managing invoices and reduce billing errors (forgetting to send an invoice, sending it too late, etc.).
Proposal software allows you to simplify and automate the process of creating a proposal for your new clients. With this software, you can quickly generate and send customized documents and close deals in record time.
E-signature software allows you to get digital signatures on documents like invoices, proposals, and other legal documents (NDAs, contracts, etc.). By eliminating the need for physical signatures, you can guarantee the legal binding of any document you send your clients.
CRM software (Customer Relationship Management) helps you maintain an overview of the statuses of your different accounts, throughout the entire sales funnel.
Starting a consulting business has never been easier. With these cost approximations, you can now know how much you can expect to pay to get started.
Remember to err on the side of action and not perfectionism. You can always improve your positioning, design, or copy—but save it until after you’ve started to close new clients.
Now let’s hear from you:
Are you considering starting your own consulting business? If so, what’s stopping you from starting? Share your thoughts in the comments below.