If you’re thinking about starting your own consulting business, you want to make sure you start with a strong foundation. In fact, there’s a lot you can and probably should do before you even close your first client.
The key is to focus on the things that matter the most and ignore the rest. If you spend too much time working on the foundation, after all, you might just never start building the business itself.
So, what should you spend most of your time on? What things will help you build a proper foundation for growth?
In this article, I’ve narrowed the list of possible answers down to nine things you need to get done, before you start your consulting business.
A Consulting Business Checklist
Here’s a basic rundown of the checklist. It falls into four categories, and we’ll cover each one in detail:
- You have a specific target audience and offer
- You have at least one marketing channel
- You have a domain, hosting, and website
- Sales Generation
- You have a basic sales script in place
- You know how to respond to typical sales objections
- You have systems and procedures in place
- You have incorporated your business
- You have an accountant or a bookkeeping service
- You have an office or place to work
Without a strong marketing strategy, even if you have a set of initial customers lined up, you can’t expect to keep your business flourishing. These three steps will help you attract the right clients and guarantee a strong flow of business.
1. Target Audience and Offer
If you’re serious about starting a consulting business, you must think like a successful business owner. Among the many characteristics such people must have is the capacity to define a specific offer that’s relevant to a specific audience.
If you can clearly state the audience with whom you want to work and their needs, more clearly than they can themselves (or your competition can), you are guaranteed to succeed.
To define the offer and the audience, start by defining your area of specialization. Think about your existing skills, your past results, your work experience, and your interests.
In this search for clarity, answer the following questions:
- What specific skills do you have that you can use to help other people? If you’re in doubt, Google other comparable consultants. Better yet, go to Upwork and check for others who offer similar skills and see how they present themselves and how much they charge.
- What type of results have you brought to previous clients or companies using your skills? Focus on tangible business results you can use to sell yourself and prove you’re worth the price.
- What do your clients want? What are they willing to pay for? Make sure to do your research—talk to potential clients and explore the pains they are experiencing.
- What do you enjoy doing? Passion isn’t all that matters when you’re figuring out how to start a consulting business, but it is important.
By the end of your exploration, you should have a positioning statement that clearly summarizes what you do, for whom, and how you do it.
In his book Crossing the Chasm, Geoffrey Moore offers the following template for a positioning statement:
For (target customer) who (statement of the need or opportunity), the (product name) is a (product category) that (statement of key benefit – that is, compelling reason to buy). Unlike (primary competitive alternative), our product (statement of primary differentiation).
2. Marketing Channels
A survey of 34,000 consultants found that 37% listed referrals as their primary means of generating new business. That’s because most consumers trust the recommendations of others over advertising or marketing. But hoping to grow your business solely through word of mouth won’t cut it.
The problem is that relying on referrals isn’t sustainable or consistent. There will inevitably be months when you will have to reject work and others where you will have no work whatsoever. In other words, you won’t be in control of your destiny.
Recognize word of mouth and referrals as what they are—just one marketing channel. If you can use it to get started, by all means, use it. But a much smarter decision is to have at least one other clear marketing channel that you can trust (and control) to bring you a sustainable stream of leads every month.
There are many such channels you can use to promote your business, including:
- Social media: LinkedIn, Twitter, Instagram
- Paid ads: Google Adwords, Facebook ads, retargeting
- Organic search: Google
- Content marketing: Blogging, guest blogging, webinars, podcasts
Each of these channels represents a world unto itself, so think carefully before picking one. The key is to focus on one channel only and work on it until you master it—that is, until you start to get a steady volume of leads.
If you are going to use podcasts because you like them, you know people in the industry, you and are willing to do the work, then go all in. Round up a few dozen podcast interviews until you run out of options.
At first, you may not see results—most marketing channels take time to master and then to kick in. That’s exactly why you want to start this work before you need the leads. But after six months to a year, you should start to attract interest, and that’s when your business will start to grow.
3. Domain, Hosting, and Website
If you are going to start an online business, you obviously need an online presence. You need to have a domain that represents your brand, hosting that will give it a home, and a website that highlights what you can offer.
Start by picking a domain that’s representative of your brand. If your company is called “John Doe Enterprises,” then ideally, your domain should be “johndoeenterprises.com.”
Check the availability of your company name on a site like GoDaddy.
If you can’t find a .com for your exact company name, then use a variation with the help of a prefix (“the”) or suffix (“agency”). What’s more, you can get an alternative top-level domain like a .org or .co.
Then, you need web hosting. There are countless cheap hosting companies you can use, among the most popular being GoDaddy, Bluehost, and Mediatemple. Each of these companies has cheap hosting plans, some of which start at $2.75 per month, while most range between $5 to $15 per month.
When getting started, you can go with the cheapest plan possible from a reliable hosting company. Eventually, you can upgrade it to a more robust hosting service that’s better suited for higher volumes and stronger security.
Once this is done, you need to install WordPress on your site so you can then upload a theme. All of the largest hosting companies, including the ones mentioned above, come with a feature called “1-click WordPress installation,” which does exactly what it says—no need to explain that.
Next, get a premium theme, which you can purchase from companies like Themeforest and StudioPress. If you can, as explained in this post, get a front-end developer to customize your theme to fit your company—this can increase cost but will make your company look much more professional.
Finally, you need to write some basic copy that explains your offer and target audience, as defined previously.
You don’t have to write word-class marketing copy—your job is to cover the basics and let your positioning speak for itself.
Start by explaining what you do and who it serves—that is, your value proposition. Then, include some results you have provided to your clients and quotes you’ve received from them so you can prove that your services work.
If you have no past clients, consider your past employers. If you have a day job doing work similar to what you plan on offering as a consultant, ask your former bosses and co-workers for some quotes. Even if it’s only one quote, it can go a long way toward showing proof of your talents.
Foundr student Gordon Higgins made extensive use of past customer results on his company’s website, something that allowed his agency to generate almost £1 million in revenue.
A homepage, a service page, and a contact page are more than enough to get started.
Sales and Lead Generation
Getting people to come to your website is half the battle. The other half is to close the deal.
If the leads that come in trust you—because they come from referrals or because they like your positioning—your sales will be relatively easy. But don’t count on it; you need to make sure you have a sales process that can close deals.
These next three steps will help you with that.
4. Sales Script
Steven Pink, author of the book To Sell Is Human, said, “To sell well is to convince someone else to part with resources—not to deprive that person, but to leave him better off in the end.”
Often sales are seen as a zero-sum game, where the salesperson tries to close a deal at all costs, just like in the movies.
The Boiler Room/New Line Cinema
In the case of a small business where the owner is responsible for sales, it’s all about building trust and delivering on the needs their leads have.
Assuming you lack sales experience, you may have a hard time with this. Most amateur salespeople often fall into the “What-I-Can-Do” pitch, where they talk about the things they do, instead of focusing on the problems their prospects have.
Instead, you want to lead the conversation, while making sure you understand the client’s needs and pains so you can then see if your offer fits. After, and only after, you’ve figured out there’s a fit between their company and yours, you can start talking about your services and prices.
A sales script brings structure to this often messy process. It will help you how to start, what to ask, when to ask it, and how to gather up valuable information that you can then use to sell yourself.
A sales script doesn’t have to outline the conversation; rather, it should guide you. You want to define a set of questions you think you need to answer to understand the client.
Some questions you can ask include:
- What do you do?
- What challenges do you currently face?
- If you had a magic wand, what would you change in your business?
- How much money does cost you?
- How much money are you willing to invest to solve ?
The script should be flexible—some questions may not be necessary to ask, just as some new questions may pop up in the moment, all with the intention of helping you understand the client.
5. Respond to Objections
Throughout the sales process, you will run into objections. The prospect may think you’re too expensive; they may struggle to grasp what you can deliver; they may think they can solve their problems on their own.
Whatever objection they raise, your job is to overcome it, assuming you want to work with that client and you think you can indeed help them.
Among the many sales objections that will arise, your prospect will want you to justify your prices. This objection, common among new consultants without proven track records, often drives people to undersell themselves.
You may think that because you need a client, you need to lower your price. This doesn’t just lower your margins—it establishes a bad business relationship from the start.
As long as you know your work delivers a value that is multiple times the cost to the client, you are justified to charge whatever you charge.
This is the exact concept Sabri Suby, CEO of King Kong, espouses. His rule of thumb states that you should charge 10% of the value generated..
If you ask good questions and know how to justify your value, you should never underprice yourself.
One of the most overlooked aspects of a consulting business is its operations—the way the actual work gets done.
The operations of any successful consulting business are made up of systems and procedures that allow you to systematize the work as needed. Operations allow consultants to separate themselves from the work done so they can focus on making sure their clients can get the results needed.
The following steps will show you how you can create these systems so you can spend more time doing billable work.
6. Systems and Procedures
For the purpose of your business operations, a system is an interconnected set of tasks that work together in order to achieve a certain goal.
A procedure (also known as SOP, or “standard operating procedure”), on the other hand, is a set of exact steps needed to achieve a goal—invoice your clients, create a report, carry out a specific analysis, run a piece of software, etc.
A lot of your systems can be automated. For example, you can have a system for handling incoming leads, similar to the one Brennan Dunn recommends. Take a look at this automation he’s developed:
This automation takes a lead through an automated email sequence that starts by asking them some basic questions that the consultant (i.e., you) will use in the sales call.
After filling out this questionnaire, the lead gets an automated link to schedule a call with the consultant. The lead then gets a final email that helps them prepare for the call.
The consultant doesn’t have to do anything; all they have to do is get people to fill in the initial form and the rest is done for them. This system reduces a lot of the back and forth associated with scheduling calls and helps them reduce their time on non-essential tasks.
Procedures, similarly, allow you to systematize a specific task (or set of tasks) so you can liberate yourself and focus your attention on providing high-quality service. You can write the tasks needed to achieve the goal of the procedure, document everything in detail, and outsource it to someone—whether to lower your costs, your time, or both. Otherwise, you can carry out the procedure yourself, only with greater ease.
Anything that can be documented and/or delegated can be turned into a procedure, Ryan Stewart, founder of Florida-based SEO agency Webris, says that procedures have been one of the keys he’s used to grow his agency to over seven figures. Here’s an example of Stewart explaining an SOP for his SEO services:
Similarly, Sabri Suby was able to transform King Kong from a small his operation running out of his girlfriend’s bedroom to a $10 million agency in only four years, thanks to the use of systems and procedures.
You don’t need to get too caught up with getting your systems 100% correct at this stage. Your systems and procedures will change as your business grows. You can adapt as you get clients and you realize what works best for you.
What’s important is that systems and procedures bring discipline and uniformity to your service, which also helps you build a reputation and grow your business indefinitely.
7. Business Incorporation
In theory, you could start generating income from your consulting business right now. All you really need is a client and an invoice.
But the risks involved in doing business on your own are too high to ignore. Consider setting up a legal entity that backs you up.
- Personal asset protection: A business gives you limited liability—your personal assets are separate from your business, so if you lose a suit, you won’t lose a dime except for the money you’ve invested in your business.
- Additional credibility and name protection: Consumers, vendors, and partners frequently prefer to do business with an incorporated business.
- Perpetual existence: The business can continue existing after you change it or sell it.
- Tax flexibility: Depending on your jurisdiction (the country, state, and county where you incorporate), you can lower your taxes by incorporating in special low-tax jurisdictions.
- Deductible expenses: Both corporations and LLCs may deduct normal business expenses, including salaries, before they allocate income to owners.
We’ve already written an article where we go over the steps you can take to incorporate a business, check it out here.
As an entrepreneur, your energies should be entirely focused on running your business. Sadly, entrepreneurs often spend too much time on tasks like accounting, which don’t provide a direct benefit to the business.
Having an accountant that keeps your books organized can be of great help for any new consultant.
Interestingly, a recent report found that 53% of small business owners don’t use an accountant at all. And even more shockingly, 27% use pen and paper to keep track of their finances.
The truth is, there’s no hard rule about how you handle your accounting; you can choose to work with an accountant or not—as long as you keep your books in good shape and avoid any tax liabilities, you’re good.
But consider the benefits having an accountant can bring to your business.
Accountants aren’t just experts at tax filing. They give you a complete overview of your finances, identifying oversights, helping you manage expenses and revenues, or suggesting potential tax deductions.
If you feel you’re not ready to work with an accountant, as your business is too new, you can still make your own bookkeeping easier with a tool like Xero or Wave. Still, you should definitely make sure you get an accountant’s help before filing your taxes (at least the first time) so you avoid any potential penalties.
Last, but not least, you need an office where you can work. As Foundr itself can attest, you don’t need a fancy office to run a business—any type of business—you only need a quiet space where you can implement deep work.
Your office should have a fast and reliable internet connection, a place to work on your computer, and an environment that allows you to focus. This can be a quiet place, a coffee shop, your bedroom, or any place that helps you concentrate.
You can consider working from home, from a coworking space, or a mix of both. As long as you can work at the best of your capabilities, you can call that place your office.
Complete Your Checklist and Blast Off!
Before you start your consulting business, run through this checklist and make sure you cover all of your bases. If there’s anything you need help with or don’t understand, let us know and we’d be happy to help. With this consulting checklist, your new business will be ready to start on the right foot.
Now it’s time to hear from you:
Are you working to start your consulting business? Which of these checklist points were you missing and will now implement? Let us know in the comments below!