I am doing some consulting work for a big client. I have a second lined up buts a friend and probably free. I am trying to use these as experience to start a firm with me as the employee. As a consultant myself, I have helped several of my clients set up their own consulting operations. In some ways, the steps you go through in setting up a consulting firm are largely the same as setting up other business operations.
Here are some things you'll need to do in setting up a business consulting company (as I did 5 years ago):
1. Set up a bank account. You need to separate all your business funds from your personal funds (for tax purposes and for your own sanity). Your bank account should come with a credit/debit card but you should probably also get another credit card as a backup.
2. Get a lawyer. You won't be talking to your lawyer very much but you need to have one lined up. A lawyer should look over all of your client contracts and help you set up the legal structure for your company.
3. Set up your company legally. I recommend establishing an "S Corporation" or a Limited Liability Company (LLC)." I have started both kinds of companies and find little difference between the two. The main thing is that you need a legal structure that will limit your liability and protect your personal assets. It cost me less than $1000 to set up an S Corporation (and that was with a lawyer). Most of the $1000 goes toward state filing fees.
4. Get an accountant. If you start making a lot of money, the intrusive and greedy federal government will demand that you pay taxes every time you (as an employee) get paid. If you plan to be an employee of your company, you will need to do withholding on every paycheck. You will need an accountant more than you'll need a lawyer.
5. Get professional liability insurance. Most of your clients will require that you carry at least $1MM in professional liability insurance. It can be somewhat expensive but it's often a necessity of doing business. Your insurance company will want to hear that you have your lawyer looking over each and every client contract. By the way, if your friend is working as a sub-contractor, he may need to have some professional liability insurance also. If he is your guy and he screws up something, the client could hold you responsible.
6. Establish a collection of standard forms and deliverables and methodologies. You should have a standard client contract, a standard client invoice, a standard time-reporting form (and process) for you and your sub-contractor. Get in the habit of saving all of your deliverables (what you produce on your projects). You will probably be able to re-use the format and approach on your next client engagement. Methodologies are your "recipe book" for doing certain kinds of work (business requirements, software development, system testing, etc., etc., etc.). Your methodologies depend on what services you provide. If you have your method mapped out, this could help you sell work too.
7. Get a laptop. In fact, get TWO laptops (in case the first one dies all of a sudden). As a consultant and project manager, you should ALWAYS be thinking about what COULD go wrong (for you and your client)! It is CRITICAL that you back up your files on your laptop!! I have a program that automatically backs up everything on my hard drive through my wireless network (at my home office). Every time I come home, the new and changed files are automatically backed up. I can't tell you how many times my diligence in backing up my data files and having a second backup laptop has saved my skin!
8. Get a domain name (even if you don't have a website) and set up a professional email account. In my opinion, nothing looks more unprofessional than getting someone's business card and seeing their email domain is "yahoo.com" or "hotmail.com" or "aol.com." Which one of these email addresses looks more professional? "jsmith@hotmail.com" (or even worse, "jennyizhot@yahoo.com") or "jsmith@superconsulting.com"?
9. Get business cards. And make them high quality! You'll probably be handing out your business card all the time. They're not that expensive. Get good, heavy, quality paper. Keep it simple and not corny!
10. Buy good software. In my opinion, the "must have" applications for consultants are as follows: MS Office (especially Excel, Word and PowerPoint); Outlook (or similar email application); Visio; Adobe Acrobat (to convert all sorts of stuff to PDF); eFax (or similar "virtual" fax service).
Consulting is a great profession. If you can work for a more experienced consultant (or one of the "Big Four" consulting firms as I once did), then that would be great. If not, don't worry about it. The main thing you need to be a consultant is a CLIENT. If you have a good client already, then that's the most important thing. If the consulting doesn't work out, you can always get a normal job. The capital investment is relatively little.
Two great books on consulting as "Flawless Consulting" by Peter Block and "The Business of Consulting" by Elaine Bleich (I think).
If you need more help, don't hesitate to contact me.
Good luck! You are going to need a long resume with many clients before you can go solo. You sell yourself based on your work at this point, then education. One client does not make a consultant. You can get a better sense of how to run a consulting business by working for one of the top 10. You need to learn how to write proposals, do cost estimates, take the certification in project management (from PMI). You are not going to learn any of this by reading a book. There is lots of good information on starting a business at: sba.gov They also have regional counselors who can assist you in writing a business plan to start a company. (former IBM executive consultant/psychology prof) |
