Becoming a Consultant Draft – Setting Up Your Business

This is part of my writing in public project for my new book – Becoming a Consultant. As such, this is a draft version of what will become the final book so although the ideas here are close to finished, there may be typos, mistakes, wild exaggeration or enormous factual errors. Please accept my apologies in advance.

A big part of the writing in public project is to make sure that you get the book that you need so if you see something that doesn’t make sense, or think there’s something missing that would help, please let me know in the comments below.


How to set up your business simply and efficiently (but only when it’s time to do so)

Setting up a business is great fun and it’s even more fun when it’s your business. The first time you get a piece of mail addressed to YourCompany LLC is a great moment. 

However, you don’t need to build out every aspect of your business before you start working for clients, nor should you. That’s time you’re not spending validating your business idea, filling your pipeline, or earning money.

Nevertheless, at some point, you’ll need to formalize things and there are some essentials you should put in place as early as possible. I’ve outlined the essential elements of the business below and provided some examples of how to go around setting these up. With the recommendations, I’ve tried to strike a balance between affordability and simplicity, particularly with some of the technical elements. In general, this is another time where the  KISS mantra applies.

Remember, a lot of what we’re covering here can be amended, improved or built upon as you grow so you don’t have to build the perfect business structure on day one. There are a couple of things that are hard to change – your company name and type of business, for example – so spend a bit of time getting time right but otherwise, most of what you’ll set up on day one will look very different by the end of your fourth or fifth year. So don’t worry too much about getting things exactly right today.

Finally, keep in mind that the more boring the thing seems – such as E&I insurance – the more important it is whereas the more exciting elements – “I’m getting my own business cards!” – don’t matter as much as you’d think. So please, please, please don’t skip the boring stuff; it’s important and will keep you out of trouble.

Two caveats: First this is not legal advice and you may need to put additional measures in place depending upon your line of work and where you are. Please do your own research, ask others in your industry for advice, and get professional help as necessary. Second, some of this is US-focused so please check what the requirements are if you’re setting up somewhere else and also keep in mind that the terminology might be slightly different. Again, please get a professional to assist you where necessary.

These are not day one activities

You’ll need everything in this section at some stage for your business to be successful but none of this is required on day one. On day one, you need to be talking to people to validate your idea and see if they are interested in your services. They’re primarily interested in getting you to solve their problems, not the font on your business card.

Please avoid getting sucked into the business set up (which again is a lot of fun) until you’ve done some legwork to make sure it’s worth setting up.

When the time comes, you’ll be surprised at how quickly you can get set up and I’d be surprised if you couldn’t get most of what follows done in 48-72 hours, notwithstanding any delays in processing applications.

So let’s assume you’ve validated your idea and now need to get the business set up.

Here’s how to do that.

Company formation

Even if you’re flying solo in your consulting career, you’ll want to set up a company. This provides assurance to clients that you’re serious, lets the government know you’re doing business so you can get your taxes right, gives you access to things like business banking and, most importantly, provided separation from you the person and you the business. You’ll also find some clients, particularly bigger firms, who won’t do business with you unless there’s a company registered.

The most simple formation in the US is what’s called an LLC – a limited liability company – which provides the separation you are looking for and is a straightforward thing to set up. And even though you’ll see large firms that are LLCs, it’s just as well suited to a one-person business. Again, you may need something different for your particular needs so do some research.

When you want to set up the business, you’ll need two things. The first is an agent or lawyer to do the paperwork and the second is the business name.

Lawyers or Agents

If you know a lawyer who does company registration, then go ahead and work with them (assuming they aren’t from a white-shoe law firm whose hourly billing will make you weep). You might also know other small business owners who can recommend a local lawyer they’ve used successfully.

Otherwise, there are several firms online that can do this for you. LegalZoom (legalzoom.com) is one of the most popular and I’ve used them for my business filings. They were pretty straightforward and easy to use but beware of the upsells that sneak into the process as you go. Some of what they offer is extremely useful, for example, they’ll act as your registered agent which means they get any official notices from the government so you’re less likely to miss something important. But there will be other premium services and subscriptions slipped in that you might not need or want so click “yes” with care.

Other company formation services are Rocket Lawyer (rocketlawyer.com) or LexGo (lexgo.cl).

Naming your business

You’ll need a name for your business when you go to register it and you should give this some thought. It is something that can be changed later but it is easier to get it right the first time. There are three options, each with pros and cons. 

First is just YourName LLC or YourName Consulting LLC. This is straight to the point, easy to understand and, unless you have a very common name, unlikely to be in use already. The downside is that if you have aspirations to be more than a solo consultant, then you’ll maybe need to change the name farther down the line. It also highlights the fact that you are a solo operator with may or may not work against you, depending upon your business. Some sectors may like the personal approach while others might not. Generally, it probably matters more to you and how you want to present yourself.

Second is to use something descriptive. Jenny might want to call her firm Manhattan Interiors LLC whereas Bruno might opt for The Leadership Academy LLC. Both are clear and descriptive but might be names that are already in use so they’d need to do some research on the State business registries to make sure the name was available.

Third and finally, you can just conjure up a name that you like. This is a great way to come up with something distinctive and unique but – and I say this as someone who has to explain the pronunciation and meaning of Tarjuman all the time – remember a name that is meaningful and obvious to you might not be clear to others. 

You should also do a check of other uses of the name (and meanings) and where it might be in use already to avoid offense or disappointment. (Also run what I call the teen boy test: tell a teenage boy the name of your firm or product and if they snicker, change it. It doesn’t matter why, and you probably don’t want to know: just change it and repeat the test.)

If you experience buyer’s regret with your business name at a later date, you can change it or add a doing business as (DBA) designation which isn’t the end of the world so don’t get too hung up on this decision. Still, save yourself some time and effort later and try to get something you’ll be happy with for the long term.

While we’re talking about names, it’s worth taking a moment to discuss your domain name.

Domains

Similarly, you need to check the name you want to use for your business is available to use online. Even if you don’t need a full website right now (I’ll explain why not shortly) you’ll want to try to have a domain name that’s as close to your company name as possible.

As with the company name, the simplest domain name you can get, and the one most likely to be available, is some variation of your name. Jennysmith.com is perfectly acceptable as a place to start for both your website (see below) and email (jenny@jennysmith.com).

Unfortunately, if you’re actually called Jenny Smith (or Juan Perez or Mohammad Khan) a lot of people share your name so you will have to be creative about finding something that fits. Similarly, if you have a common business name, like Bruno’s The Leadership Academy, you may find the domain is already taken or very expensive. 

Finally, don’t make things too complicated. jennysmithmanagementsolutionsinc.com is very descriptive but will be a little unwieldy.  Both my family name and business name fail the ‘simple’ test and I assure you it is a real pain for everyone to have to spell your email address out every time so try to find the simplest form you can. Looking for different domain suffixes (the bit after the ‘dot’) will give you other options to help describe your business either by type (.biz, .info) or geography (.co.uk, or .za).

GoDaddy and other services will help you get a domain name quickly and easily and can also help you set up your email and web hosting. Similarly, you will find that web hosts like WordPress offer a similar package of a domain, website and email. (More on websites and email in a moment.)

Licenses

In a lot of cases, you will need a license of some kind to practice whatever business you’re in. You may already have whatever you need if you’ve been working in your field for a while (for example, if you’re a CPA) but check that there’s not any additional license required for the exact service you’ll be performing as a consultant. I don’t know of any places where you need a consulting license specifically but pay attention if you do anything associated with a highly-regulated industry like finance, insurance, or healthcare.

A Mailing Address

When you register your business and set up your bank, you’ll probably have to use your home address unless you already have a separate physical office. (If so, I’d ask why you’re spending all that money on an office but let’s leave that for now.) The government and banks like a good, solid door to knock on when they want to find you.

However, there are lots of other times you’ll need to give a business address when you might not want this to be your home so you’ll need a mailing address. The two main options here are a PO Box or a mail service.

PO Boxes

The PO Box is straightforward and the USPS and other mail carriers like UPS offer these services. These are tried and trusted but have two downsides. First, you will occasionally find some services that don’t allow you to use a PO Box in your address when you’re registering. Second, you have to go there to get your mail. The first is easy to overcome and that’s when you can use your home address but set a reminder to check the mailbox regularly, especially if you have clients who pay by paper check. There’s nothing worse than a check sitting in a PO Box uncashed.

Mail Services

Mail services come in two flavors: mail only or as part of a serviced office. Mail only services are just like a PO Box but with a couple of additional advantages. These addresses don’t look like PO Boxes, more like the suite address you’d have as part of a larger office which can be more presentable and get around the PO Box problem, I mention above. However, the real value of this kind of service is that they offer mail handling too. That way, you don’t need to go there to get your mail. They tell you when something arrives and ask you what you want to do with it. 

I’ve used one service for years and they alert me via an app when mail arrives. I can select from ‘forward’, ‘open and scan’, ‘deposit a check’ (although I’ve never had to use this) or ‘shred’ with a click of a button for around $10 per month. This works well for me and I’ve found it very convenient, particularly as I move around a lot – visiting a PO Box in person would be a challenge. I use Anytime Mailbox but Earth Class Mail is also an option and they were also the pioneers of this kind of service.

Serviced offices are just like they sound: an office that provides you with whatever services you need on a subscription basis. Regus is the biggest international name in the space but WeWork also fits in here and most cities will have several home-grown options. Although these are more geared towards giving you a place to work, these offices often offer a mail handling service too. I’ve found these to be too expensive to use just to have a mailing address but, if you think you’d make use of the office facilities and conference rooms that these places offer, then this might be a good option for you to get an office space and a mailing address. 

Plus if you see yourself traveling for work, having a place to set yourself up in a different city can be a lifesaver so a Regus or WeWork subscription is worth considering. However, again, these are expensive options just for your mail so if you aren’t sure, go with a simple, cheap option of a mailbox to start with.

Insurance

I don’t know what insurance you need for your business exactly but I do know that you need insurance.

The most common for consultants is E&O (errors and omissions) insurance which basically means that you’re covered if you make a mistake and a client suffers a loss and sues you. However, there are plenty of other times you might need insurance so do your homework on what’s required for your industry.

Also, spend some time researching what clients normally ask for. It’s common for a contract to stipulate that you (the consultant) have to carry a specific amount of insurance cover (often $ 1 million or more) for you to even get the contract so work out what you need in advance. 

However, don’t panic if this seems overwhelming. 

Firstly, the costs of these policies aren’t as terrible as you might imagine. Second, you can get the insurance set up pretty quickly, in a matter of minutes with an online broker.

That way, if you land a client early and need to get insurance set up, you’ll have the certificate by the close of business and not slow things down.

The key thing is to make sure that you have the cover in place you need to satisfy your client’s requirements and to protect you and your family. Remember, the point of having an LLC and insurance is that your family and personal life are somewhat insulated from any errors you make at work.

Which brings us on to….

Banking

Even as a one-person LLC you should set up a business bank account and keep your personal and business finances separate. This will seem odd to start with when you’re paying for all of your business expenses from your own pocket (these will appear as Loans from the Owner in your P&L) but you should keep these separate for several reasons.

First, you can’t accidentally spend your mortgage payment on office supplies. Similarly, you won’t pay for your family vacation to Disney with the money you need to pay for your website hosting.

Second, this separates your business’s finances from your personal finances from a credit perspective. You don’t want your personal credit card rates to skyrocket because your business card has a bunch of expenses on it. (I am thankful for this separation every day.)

Third, it makes accounting easier. This doesn’t seem like a big deal when the IRS treats your one-person LLC as just an expansion of your personal tax return but it is important that you have a way to track your business spending to see where money is coming from and going. It’s much harder to do this when you also have to weed out your grocery bills and payments to your vet.

Plus, a credit card in your company name is a pretty cool thing to have in your wallet (at least, I think so).

But, and there’s always a but, business bank accounts can have higher charges than personal accounts so shop around to see where you’ll get a good deal. 

Email address

Your business email should be separate from you personal email for several reasons, the main one being its just more professional. Using your yourname@gmail.com address doesn’t seem professional, even if you change it to yournameconsulting@gmail.com. 

But keeping these separate also means that important business messages don’t get buried under your NextDoor updates and Shoprite coupon. Most importantly, it lets you focus on work more effectively and keeps things separate.

You’ll use your domain for the ‘@‘ part of the address and then your name to start with. E.g. jenny@jennysmith.com.

As far as setting up your mail, there are a lot of options here ranging from turnkey (all done for you) to 100% DIY. The DIY road is much cheaper but, unless you really know what you’re doing, I’d advise against this as it’s too easy to get wrong. (I write this having turned off an email account by accident for two weeks by forgetting to toggle a switch in my domain management dashboard.)

You’ll also find that several web hosting and domain management firms offer mail hosting as part of the package so, again in the interests of simplicity, this is a great way to get set up quickly and easily. GoDaddy and other domain registries will offer you this service while you complete your domain registration which is a simple way to get this done.

Which Mail Platform?

Again, because of bundling (in this case email and things like documents, spreadsheets, and slides), you have two real options: Google Suite or Microsoft office. I’d recommend that you go with whichever you are most familiar with.

Both are easy to set up and give you access to a range of business services for a decent price. Part of your choice will be personal and what you’re used to and both have pros and cons. Keep in mind that if you are looking for a turnkey solution, using GoDaddy will mean you have to opt for Microsoft, whereas WordPress will offer you Gmail. You can still take DIY approach but if you want everything done for you this might drive your decision on how you get your domain and set up your website.

Phone Number

You can use your personal cell number to start with but at some point, it’s worth getting a phone line just for business. Google Voice, Skype and Openphone are some of the options that allow you to set up another phone line you can use for general inquiries. Several of these also allow you to forward calls to another number (such as your cell) or record voicemail. This is a great way to make sure you aren’t missing calls when you’re with a client or otherwise engaged. Plus having a separate phone line for work will help you break away from work when you need some downtime as you can let those calls go to voicemail and follow up later.

Business cards

Depending upon your line of work business cards are either essential or something you think died out along with Filofaxes and tasseled loafers. If you do a lot of in-person meet-ups, then get some made but don’t worry too much about the design or card weight. Canva has some great options that will help you design a clean business card quickly and get it to you within the week. Again, this is something you can do when needed, not a day-one priority. 

Keep in mind that you should have already set up your email, additional phone line, and mailbox before you get business cards made. Otherwise, you’ll have folks using the wrong contact information for you and, once someone has your cell, it’s really hard to get them to call anything else.

Logos, branding, and images

Unless you’re a designer, you don’t need a logo. And even if you decide you want one anyway, most people won’t care too much about it. I say this because getting a logo designed can eat up a lot of time and cost you a pretty penny: time and money you don’t have in abundance. A nice clear font with your business name is just as good as an expensive logo to start with. 

Similarly, you don’t need to spend too long worrying about color schemes and fonts. This is a rabbit hole you can get lost in – remember, there’s a whole industry that specializes in this.

Instead, I’d suggest you follow some simple rules:

  • Keep it simple
  • Make everything easy to read (light grey text on white looks elegant but is impossible to read)
  • Use slightly boring colors, not the trend of the day (it won’t age well)
  • Don’t use the first stock image you find – everyone’s already using that one and you want to stand out
  • Less is more

These apply to your website, business cards, reports and any marketing collateral you make. The simple solution to all of this is Canva which is the best value for money any business will get. It will help you choose a color scheme, make business cards, create handouts or report covers, and even create a logo.

These rules don’t apply if you’re a designer or in the creative industry. Then your website, logo, and any marketing collateral are part of your portfolio so you’ll be spending a lot of time and effort here.

But for everyone else, keep it simple.

A Web Presence

I’ve left this until the end as there’s a lot to cover in this section but you’ll also need your email, business name and address before you set up a website. However, I’ve also left this until the end as this can be an enormous demand on your time. Even a simple set up will take a few hours and that’s before you write anything, fiddle with the font and pictures, and choose a color scheme. So proceed with caution.

At its most basic, your website needs to do four things:
1 – Say what you do simply and clearly.  
2 – Explain who you are.
3 – Include a portfolio, blog, demo page or case studies where you can give people an idea of your work.
4 – Provide a way to contact you

None of these need to be long, complicated or perfect the first go-around with the exception of making sure that whatever you want to show off in (3) is some of your best work. If you haven’t been flying solo long enough to have anything to include there, you can skip that for now.

Prepare the content

No matter how to present yourself online (we’ll look at some different options in a second) you should think about the contents of each of the sections above and prepare these before you build anything. This gives you a chance to mull things over and edit your text plus the grammar and spell checking will be better in a text editor than in a website builder.

Keep it all simple and get some feedback from folks. Your short tagline describing the business will make absolute sense to you but what about other people? Unless you catch their eye and describe yourself exactly in one second or less, they might just scroll by or hit the back button.

Decide on your platform(s)

Originally, I called this section ‘A Domain and a Website’ and was going to start down the ‘how to build a website’ path but I quickly realized that this isn’t necessary in a lot of cases. There are multiple platforms out there that, if you knit them together neatly, can offer you the same benefits as a website with much less hassle. I still discuss self-managed websites here but I want to give you a couple of other options which I hope are beneficial if you are less tech-savvy and don’t like the idea of having to worry about managing a site.

So before we dive into the DIY option, keep in mind that there are lots of centrally-managed platforms like LinkedIn, Medium or Behance that can help you professionally and give you the same benefits as your own site. 

These are particularly important if you work in an industry where there is a recognized platform for showcasing your work and you should prioritize building your portfolio there before you worry about your own website.

However, if there’s not an industry favorite, sites like Medium allow you to publish your ideas quickly, easily, and cheaply without the headache of managing a blog. Similarly, YouTube lets you do the same with video and both of these have the benefit of enormous reach and audiences, something your website will not have. 

The 800-lb gorilla in the room for professional services is LinkedIn which lets you do everything you want to in one place plus it’s where your leads hang out. 

What this means is that you essentially have two options, each of which has pros and cons.

ProsCons
An all-in one websiteFully personalized
Consistent messaging
Complete control over the design and layout
Easy to navigate for the user
Creates a distinct online presence
Allows you to build and mature over time
You have control over who sees what
Set up and management take time and / or the expense of paying someone
Require ongoing maintenance
Can become a distraction
A series of linked sitesFast, easy and cheap to set up
No maintenance required
Often come with a built-in audience
Comes with some platform authority
Moving between sites can be hard for users
Messaging and theme can get blurred between platforms
Changes to algorithm can make your site disappear in searches  

Immediately, you’ll see that having your own site has the most going for it and this is where you should be working towards in the mid- to long-term. However, the cost and time required to set up are not insignificant, nor is the need for ongoing maintenance. So even though you should aim to have your own site eventually, this isn’t a pre-requisite for day one. A well written, carefully curated LinkedIn page will let you do everything you want to, quickly, and efficiently. 

What this means is that you can approach your web presence in three phases.

  • Phase 1- Get online. Set up the most appropriate platform for your industry, such as LinkedIn or Behance. If you already have your domain set up, you can easily set this to redirect to the appropriate page so when I type in jennysmithconsulting.com, it will take me to her LinkedIn page. It’s far from perfect but for now, it will be more than enough.
  • Phase 2 – Personalize it. Set up a simple site with a clear description of what you do, an about page, contact info and some examples of work, case studies or white papers. WordPress is my go-to for websites as they make it so easy to get set up but there are lots of other options. 
  • Phase 3 – Build your online empire. Build out your website to add more resources, information, tools, a payment portal and whatever else you need to service your clients. 

A big part of the writing in public project is to make sure that you get the book that you need so if you see something that doesn’t make sense, or think there’s something missing that would help, please let me know in the comments below.

2 thoughts on “Becoming a Consultant Draft – Setting Up Your Business

  1. Great writing! I wish I had read a book like this years ago… it would have saved me some headaches, and also it would’ve made me realize I didn’t need to have every single thing ready before starting my business. Thank you for sharing, Andrew.

    1. Hi Yari – thank you so much and I’m so grateful for your comments. Hopefully this will save others (and our future selves) some heartache!

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