As the Great Resignation storms on (nearly 4.3 million people quit their jobs in January 2022 alone), which is creating more opportunity for entrepreneurs than ever. In 2021, more people searched Google for “how to start a business” than they did “how to get a job.” For those who have been considering a leave from corporate America to try consulting, the timing has never been better.
Setting up a legal entity, considering office space, designing business cards seem like the appropriate early steps to start a business. While all those items are important, they all cost money; and new businesses need to be focused on making money. I did the opposite of what most people would recommend when I started my business. I was still able to grow a highly successful six figure consulting company in only one year. It was all thanks to using these low-cost tools and spending just a few thousand dollars all in.
Get Started (0-3 months) Total Cost <$200.00
They say “luck is what happens when preparation meets opportunity” and if you’ve cultivated a strong network, they’ll come through for you when going off on your own. When you’re ready to take the plunge, focus mostly on the client work and these four elements to help you kick things off:
- Statement of Work: you need a contract between you and the client that you can sign and agree to the terms of the engagement (price, deliverables, and timing). Here are some examples [$0]
- Invoicing: Your invoice doesn’t need to be fancy – for the first year I used the following invoice template and it worked great. [$0]
- Track expenses: For the first few months, keep expenses on a spreadsheet and save your receipts. You don’t need an accounting system quite yet. [$0]
- Tracking your hours: This function is worth investing in immediately. As a new consultant, you have no idea if the work is profitable if there’s no insight into how many hours you’re spending on a project or client. I tried to do this via spreadsheet at first and quickly stumbled. A fellow consultant turned me onto Toggl ($9 per month). I’ve spoken to others who use clockify.me which is free. [$0-$120]
Time to Refine (3-9 months) Total Cost $340.00
Ninety days in, you’ll begin to get a sense if the consulting company feels viable. While the money might not be rolling in yet, there’s enough to start implementing some more infrastructure:
- Company Name: It’s tricky to triangulate what you want to be called, which website names are available, and what you can register in in your state. Try writing out about 25 names, then check a site like GoDaddy to see what’s available. Once locked in on one or two, go to your Secretary of State office website and check to see if there’s a similar name out there. You can register a similar name as someone else’s if you’re working in different industries. Once you have the name, the URL is an easy purchase via domain registrar. [$30 for 2 years]
- Website & Email: Decide on an email service (like Google Suite) and hosting and CMS (such as Squarespace). They have basic templates you can design yourself to keep things simple. [$250 for Google Suite + Squarespace for 1 year]
- Logo & Materials: Fiverr is a great resource for designing things like a logo and a branded PowerPoint. [$60.00]
Professionalize and Plan (9-12 Months) Total Cost ~$2,750.00
This is the time to decide: go or no-go on your consulting company. If it’s not for you, you’ve invested under $500 and now you pivot to looking for a full time role. If you do love it, you will need to put in place more substantial elements to take you beyond:
- Incorporation: After three quarters, it’s time to incorporate. Small law firms or online services can do this work at a reasonable price. [$350 for an attorney + $200 state and federal fees]
- Master Service Agreement and SOW: Your attorney can review your Statement of Work and provide you with a Master Service Agreement (MSA) that protects you and your newly created company. [~$2,000 attorney fees]
- Bank account and credit card: This will make life easier when tax time comes. Choose a credit card with no annual fees, that will give cash back that can be put towards the business. [$0 in annual fees]
- Accounting software: While basic invoices are fine at first, they don’t tie into a larger system and don’t help keep track of cash flow and spend. Products like QuickBooks Self-Employed is terrific for year-end tax work, organizing your receipts, etc. [$196 per year]
Mistakes will be made along the way, and I certainly made a few. I paid for a calendaring system I thought I would need but didn’t. Then, I also used a free Zoom account for way too long (and kept having to end meetings early). I went slow and reached profitability early, which gave me the confidence and capital to keep going to succeed.
The post The Non-Traditional Route To Set Up a Six Figure Consulting Company appeared first on KillerStartups.
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May 4, 2022 at 10:39AM by Aimee Schuster, Khareem Sudlow
