Starting or Scaling a Consulting Business? Here are 15 Things You’ll Need
So you want to start a consulting business…
Many professionals consider freelancing at some point in their careers, but others decide to take the bigger leap into creating a consulting business.
While there are plenty of articles about tools for freelancers, setting a consulting firm up for success can be a little different. Picking scalable tools is critical, and I’ve learned some lessons along the way - especially because I had never worked for an agency before starting one.
We were late to the party on some of these things and hope to help others learn from our mistakes!
While you never want to overpay for software out of the gate (people & software will end up being your two biggest expenses!), some tools have a relatively low cost of entry that can grow with you as you add more people.
Here are some tools I’d suggest if you’re wanting to start or scale your own consulting company or small service business:
Professional Email
When freelancing, it’s easy to get away with a personal gmail address, but if you’re trying to present a professional front, it’s important to get a professional email address. We use Google Workspace and have since day one.
Since the price is based on the number of users with no minimum, your cost can be as little as $6 per person per month. We started out on the Business Starter plan but moved up to Business Plus as we grew.
We use aliases and groups to limit the number of total email addresses we create, and you can set up your Gmail to respond from one of your aliases which can make you seem a little bigger than you are.
One thing you’ll need to decide, however, is what you want to just serve as an alias versus a group or dedicated mailbox.
You may want to consider using groups for things like software, invoices, or other items that you might one day want to have sent to several people on the team. We did this a bit later than we should have, but it’s been helpful now that it is set up.
File storage
Keeping digital files organized is not my strong suit. When it was just a couple of us working on the business, it wasn’t a big deal to keep files in a personal Google drive or using iCloud, but it became problematic as we started adding people to the team.
It finally took one new hire who couldn't deal with the madness to get us started with shared drives. I can’t imagine where we’d be if we hadn’t taken his feedback seriously and started getting it set up at that time.
Shared drives aren’t available in the Google Workspace Business Standard plan, so you’d need to upgrade to the $12/month version - however, by the time you’re ready to add shared drives this shouldn’t be a major financial issue.
Think through your desired hierarchy and folder structures, and get it set up right away. You may want to set up different drives for things that should have limited access - contracts or financials, for example.
Legal templates & a good attorney
It’s always ideal to use your own legal contracts. At a minimum, you’ll want to have a consulting agreement that you have clients sign when they want to hire you or your firm.
You’ll also want to get your hands on a few others:
An independent contractor agreement to use if you add contractors to help you with work. (You’ll likely start by using contractors as opposed to hiring FTEs right away)
A one-sided NDA to have contractors sign
A mutual NDA to have clients sign
In addition to these four standard docs, you’ll probably want to ensure that you have a good business attorney.
Larger clients will often want to use their legal language, and you will want to have someone to tap into to watch out for your best interests.
Your attorney can also advise you on the best corporate structure to use depending on your plans and whether you have partners - whether LLC, S-Corp, or other.
Digital signature account
When you’re starting out, you may be able just to send PDFs of your contract to clients and hope they’ll send them back to you via their eSignature account, or you can go ahead and sign up for your own. (You can also print, sign in pen, and scan to keep costs lower!)
As you get going, however, you’ll want to create an account for capturing digital signatures. There are a few to choose from - Docusign, Hellosign (now Dropbox Sign), Panda Doc, and others. They’re all relatively similar if you’re just using it for a little bit, find the cheapest plan that works for you or track down a free trial.
Meeting account / Calendaring
No one likes to email back and forth to find a time to meet. Set up an account on calendly.com or a similar solution and have it automatically add a Google meeting or Zoom link to the invitation.
This way you can give prospective & active clients a link to your calendar and empower them to choose a time that works well for them. It’s more efficient than exchanging emails to coordinate.
We have set up links for individuals, but also some group ones that are designed to find available times for 2-3 members of our team. Those are great for business development discussions where we want a couple of people to be on the call.
Website
Professional websites are expensive. When you’re just getting started, your site likely won’t reach a ton of people. Think of it as more of something that just proves you’re real and invest more as you scale. Our first few websites were pretty bad, and we’ve still never spent more than about $12K on a site. The cobbler's kids have no shoes!
Though Squarespace isn’t as popular as WordPress, it’s what we’ve chosen to use for now because there’s no need to deal with hosting, plugin updates, security, or template upgrades. This allows us to focus on servicing our clients - especially since most of the changes we make to the website are low touch, like posting new content and adding new team member profiles.
Payroll / HRIS
Payroll and HRIS make you think of big companies, but even if you are just paying contractors, you’ll be responsible for issuing 1099s at the end of the year. I paid contractors through Paypal for the first few years, and it was always a hassle at tax time.
We switched to Gusto, and it has made life a lot easier. Although their starter plan begins at $40 plus $6/FTE per month, they have a contractor plan that costs $6/month - but you only pay that fee if you issue a payment to a contractor that month.
You may not need this immediately if you don’t plan to hire FTEs, but having a scalable and expandable system will save you a lot of heartaches. We manage our benefits through the system, and they handle filing for most state paperwork.
While we’ve chosen Gusto, there are a lot of other solutions out there like OnPay, so shop around and find the one that best fits your needs.
Accounting Software
Most of my “things I wish I’d known” items are related to financial management software and setup. (The other is not using a 3rd party to set up State tax accounts and getting started too late using a payroll system)
When I first started consulting, I never expected that I’d have employees or an agency, so I started out using Quickbooks self-employed instead of Quickbooks online. The price difference between the two can be as low as $7 to $15/month, but the feature set is radically different.
I suggest scrimping and saving elsewhere and choosing Quickbooks online from day one. They may have changed the process, but at the time of our conversion, there was no easy way to migrate from self-employed to full Quickbooks, so we had to recreate the wheel.
Think of how you may want to look at your business in the future and work toward getting that set up as early as possible. Pay attention to consistent naming conventions for items on your invoices, set up line of business tracking (e.g., SEM, SEO, Paid Social, Analytics), and keep things clean.
Alternative solutions include Xero and Freshbooks. Choose a solution that integrates with the rest of your tech stack for future-proofing.
Time Tracking
This is a contentious one - no one likes tracking time, but it’s a staple for most consulting firms and agencies. It’s not about micromanagement though; it’s about making sure you’re serving clients profitably, not under or over-serving clients, billing accurately, and yes, keeping an eye on productivity.
Some marketing channels lend themselves more to pricing by the hour (for example, a retainer of 30 hours for SEO management per month) but even if you’re not selling services that way, clients may request a record of where your time is being spent. Tracking accurately can make it easier for all of these reasons.
We’ve used both Toggl and Harvest, but there are many options out there including some that are directly integrated with Quickbooks and Gusto.
Communication Software
One of the first things I heard from our team when we did a Start/Stop/Continue survey was “get Slack!” We had used the chat solution embedded in Gmail for a long time, and I thought it was fine, but now realize that we should have purchased Slack much earlier.
The tool immediately helped with collaboration and heightened some of the fun bonding necessary for remote environments.
Alternatives include Microsoft Teams, Chanty & Discord.
Project Management Software
We were late to the party on using project management software - something I attribute to the fact that I had never worked for an agency before. I tend to keep lists in a notepad, but recognize that not everyone works that way.
We tried Smartsheets, and Monday.com, but ultimately settled on Asana, but there are other great solutions like ClickUp.
Password Saving / Sharing
Password security is another piece of technology we were a bit late to adopt. We implemented a solution and moved all client and internal account logins into there, granting different levels of access based on need. It’s also a useful way to share passwords securely with outside partners, like a CPA or other service provider.
Solutions include 1Password, Lastpass, Keeper, and others
CRM
CRM seems like something for big companies, but it’s as simple as having a place to store contacts. Start with a free Hubspot or other CRM account and manage your contacts and pipeline there.
We don’t send any mass or automated emails, but getting the data organized and centralized has been an important part of making sure at least a few people have access to all contact information instead of it sitting in individual email accounts.
Performance Management
Employee performance management can come later, but I wouldn’t recommend waiting too long. We use a solution called 15five and manage all check-ins, one-on-ones, and annual performance reviews through the suite.
The weekly pulse checks help us understand how employees are feeling, and make it easy to keep track of what we cover in one on ones.
The best part, however, is their High Five functionality that integrates with Slack. We used to try to get feedback from the team on who had done a great job and it was tough… with 15 five’s high fives, we see a constant stream of praise and kudos. That alone has been a game changer for our culture.
We collect eNPS and anonymous employee feedback using Typeform.
Analytics / Dashboarding
Creating reports takes time, so consider setting up some semi-automated reporting and analytics. Even if you choose not to give clients direct access, automated reporting can make it easier for you to spend time on optimizing instead of manually pulling data.
You can start with something like Google Data Studio (now Looker Studio), or Agency Analytics and then upgrade to a solution built for larger agencies once you have achieved some scale. Possibilities include Ninjacat, Domo, and Funnel.io.
Have a consulting firm or agency? Reach out if we can help with your digital marketing needs.