Do you have a marketing background but are tired of working for someone else? You could open your own marketing consulting business to use your skills, be on your own time, and make a good living.
As a marketing consultant, you get to leverage your skills and experience to help other businesses succeed. However, launching a consulting business also requires careful planning and preparation. This guide will provide an overview of the marketing consulting industry and the steps needed to start your own successful firm.
Business Overview
A marketing consultant provides expertise and guidance to large and small companies, startups, non-profits, and government organizations looking to improve their marketing strategy and activities. As a consultant, you act as an outside advisor, bringing fresh perspective and industry knowledge. Your role may include conducting market research, creating marketing plans, managing campaigns, providing guidance on positioning and messaging, optimizing websites, and tracking performance. Marketing consultants may offer a variety of services or may specialize in a particular area like digital marketing, branding, market research, or public relations.
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Industry Summary
The marketing consulting industry has grown steadily (3.3% increase annually over the last five years) and is expected to generate $79.3 billion in 2023. 2018. As companies face growing complexity in digital marketing and consumer data, demand for marketing expertise continues to rise. Social media, email marketing, SEO, and data analytics represent fast-growing segments. While small boutique firms make up much of the industry, larger consulting firms like Deloitte, PwC, and Accenture also offer marketing consulting practices.
Related: How to start a consulting business on the side
Steps To Start A Marketing Consulting Business
Step 1: Research the Market
Because of the low cost to start and the ability to make a lot of money, starting a marketing consulting business is an interesting opportunity for many who have the skills and know-how. But before you print business cards and launch a website, take a close look at the market demand and competition in your area.
General marketing consultancies are a dime a dozen. So, while examining the competition, be thinking about what will set your business apart. Do you have expertise in a specific niche, such as healthcare, tech startups, or local small businesses? Perhaps you have a unique approach to solving marketing challenges that aren’t being addressed by existing firms. While it can be tempting at first to provide services to everyone, narrowing your focus can make you more appealing to a specific set of potential clients. The question then becomes, is there enough of them to support your business?
Your prospective clients could be one of your most valuable research resources. Talk to them. Find out what challenges they’re facing in their current marketing efforts. What services do they wish were available? Their pain points and needs will offer you invaluable insights into how you can shape your business offerings.
Last, don’t underestimate the value of advice from those who have been there and done that. Reach out to marketing consulting business owners outside your local area and ask if they’re open to sharing what they’ve learned during their business journey. Chances are, you’ll gain insights that could help you avoid some common pitfalls and maybe even give you a competitive edge.
Step 2: Write a Business Plan
So, you’ve got this idea for a marketing consulting business, and the excitement is through the roof. It’s tempting to jump right in. However, before you take the plunge, it’s important to take the time to write a business plan. Think of it as the voice of reason amid all the excitement of starting your marketing consulting business.
One of the more important sections of a business plan is the financial projections section. Here, you estimate your business’s income and expenses for the coming years. The projections help you to gauge whether your business is financially viable.
It’s far better to know during the planning stage whether your idea is feasible rather than discovering it after investing time, energy, and resources into launching your business. If your projections show that your business idea might not be viable, you can pivot or refine your idea until it becomes feasible.
Related: How to write a business plan
Step 3: Secure Funding
Starting a marketing consulting firm requires not only an excellent business plan and market research but also sufficient funding. While funding can be a challenging aspect of starting a business, several avenues can help you secure the necessary capital.
The first source of funding to consider is personal savings. Depending on your business model, personal savings may be enough to get started. If not, outside funding sources will be needed.
If personal savings won’t cover your startup costs, commercial loans are a common next option. Lenders will likely require you to put at least 15% of your own funds toward the total project cost. You’ll also need a good credit score and enough collateral to secure the loan. If a bank considers your project too risky, they might offer you a loan with an SBA (Small Business Administration) loan guarantee, which can make securing a loan easier.
Friends and family can be another source of funding. They might be willing to invest in your business either as a gift, loan, or for an equity stake. It’s crucial to put all agreements in writing to avoid misunderstandings or disputes down the line.
Last, if your funding needs are relatively low or you’re unable to secure credit through a lender, microloans could be an option. Microloan programs provide small loans to startup businesses and entrepreneurs. Some programs also offer business training in addition to funding, which can be valuable for first-time business owners.
Related: Finding the money to start a business
Step 4: Register the Business
You’ve got the skills, the business plan, and the enthusiasm to start your marketing consulting company. But before you start counting your profits, there’s some crucial paperwork to tackle. Every state will have different requirements, but here is a general overview to help you get started.
Business structure: You’ve got four main options for how to structure your business: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC). The choice depends on factors like the number of owners, desired level of liability protection, tax implications, and business goals.
- Sole proprietorship: This is the go-to for many new businesses because it’s the simplest and cheapest to set up. The downside is that you’re personally on the hook if the business is sued.
- General partnership: Here, you share everything with your partner: profits, debts, responsibilities. Like sole proprietorships, it’s easy to set up but leaves you personally liable.
- Corporation: A corporation is a separate legal entity owned by shareholders, offering liability protection. However, it’s more complex and costly to set up.
- Limited Liability Company (LLC): This offers protection from personal liability like a corporation but is simpler to set up and run.
Related: Comparison of business structures
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Related: Finding a domain name for your business
Obtain business licenses and permits: While specific licensing is rare for marketing consultants, there are still general requirements for starting a business, such as a business license, sales tax permit, and Employer Identification Number (EIN).
Related: What licenses do marketing consultants need?
Step 5: Set Up Operations
So, you’ve done your research, secured your financing, and you’re all set to launch your marketing consulting business. Before you open your doors, you’ll need to think about operations. This involves everything from choosing your office space to setting up necessary equipment and software, and hiring staff or contractors.
Office Space
The first step in setting up your operations is deciding where you’ll conduct your business. If you’re just starting out, a home office might be the most cost-effective option. It offers flexibility and eliminates commuting time. However, if you need a more professional setting to meet clients or want a clear separation between work and home, a coworking space could be a good choice. They often provide amenities like meeting rooms, reception services, and networking opportunities with other businesses. If your business has several employees or you need a larger space, renting a commercial office could be the best option.
Equipment and Software
Once you’ve chosen your office space, you’ll need to invest in the necessary equipment and software. At a minimum, you’ll need a reliable phone and computer. As a marketing consultant, specific software tools can enhance your productivity and service delivery. Customer Relationship Management (CRM) systems can help you manage client relationships and track sales. Various marketing tools can assist with tasks like email marketing, social media management, SEO, and analytics. A comfortable desk and chair are also essential to maintain productivity.
Hiring Staff and Contractors
Are you planning to go it alone, or will you need a team? You might not need full-time employees right away, but consider hiring administrative help or project-based contractors. They can take tasks off your plate, freeing you up to focus on other things.
Step 6: Prepare to Launch!
Starting a marketing consulting business is a multi-step process that goes beyond creating a business plan and raising the necessary funds. There are several additional steps you need to consider to ensure your business is fully prepared for operation. Each business may have different needs, but here are some common final steps to tie up before launching.
Business insurance: Even with the most careful planning, things can go wrong. Business insurance can protect you from various risks, including client disputes and property damage.
Setting up bookkeeping: Good financial management is key to the success of your business. Establish a system for tracking your income and expenses, either by using bookkeeping software like Wave Accounting (FREE) or Quickbooks, or hiring a professional accountant.
Opening a business bank account: Keep your personal and business finances separate by opening a dedicated bank account for your business. It makes everything from accounting to tax preparation much easier.
Defining your pricing structure: Decide whether you’ll charge hourly rates, flat rates, or project-based fees. Your pricing should reflect the value you provide, cover your costs, and align with market rates.
Operational processes: Document your systems and processes for taking on new clients and managing engagements. This might include steps for initial client consultations, proposal development, project management, and communication protocols.
Contracts and agreements: It’s important to have templates for client contracts, scope of work documents, and non-disclosure agreements (NDAs). These documents protect both you and your clients, define expectations, and provide a clear understanding of the work to be delivered. RocketLawyer and Law Depot have free and inexpensive templates that may be helpful.
Creating a marketing strategy: Develop a comprehensive marketing strategy to let potential customers know about your new business. This should include creating a professional logo and website, leveraging social media, email marketing, content marketing, and SEO strategies.
Joining industry associations: Joining associations like the American Marketing Association (AMA) or the Society for Marketing Professional Services (SMPS) can provide networking opportunities, professional development resources, and credibility for your business.
Common Questions When Starting A Marketing Consulting Business
How much does it cost to start a marketing consulting business?
The total costs to initially start and open a marketing consulting business can range from $2,000 to $15,000, depending on the specifics. Here are some of the key startup costs.
Business registration: $50-$500 for licenses, permits, legal fees
Office space: $0 if working from home or $5,000 for an initial deposit on a small rented office
Equipment: $500-$2,000 for a computer, software, phone, furniture
Insurance: $1,000-$2,000 for general liability insurance
Marketing: $500-$5,000 for a website, branding, materials
How profitable is a marketing consulting business?
Profit potential for a marketing consulting business can differ greatly depending on a variety of factors like location, specialization, and client base. However, based on industry data, the average marketing consultant can charge anywhere from $50 to $300 per hour.
Let’s do some simple math for a clearer picture. Say you charge $100 per hour and work 30 billable hours a week. Your potential monthly revenue would be $12,000 (30 hours/week x 4 weeks/month x $100/hour).
Now, let’s factor in some average monthly expenses. Office rent might be $1,000, utilities around $200, software subscriptions can be $300, and let’s say you spend another $500 on marketing and other miscellaneous costs. That adds up to $2,000 in monthly expenses.
So, to find the potential monthly profit, you would subtract your expenses from your revenue: $12,000 (revenue) – $2,000 (expenses) = $10,000 in monthly profit. Annualized, this would mean a potential profit of $120,000.
Of course, this is a simplified example, and actual numbers can vary. You’ll have to account for taxes, any employees you might hire, and fluctuating business. But as you can see, this can be a lucrative business if managed effectively.
What skills are helpful when running a marketing consulting business?
Rnnning a successful marketing consulting business requires a variety of skills, both hard and soft. Here are some key abilities that can be beneficial:
Marketing expertise: As a marketing consultant, you’ll need to have a solid understanding of marketing strategies, techniques, and trends. This includes knowledge of digital marketing, social media, SEO, content creation, and analytics.
Business acumen: Understanding how businesses operate, including knowledge of finances, operations, and strategy, can help you provide the most effective advice to your clients.
Analytical skills: You’ll often need to analyze data to understand market trends, measure campaign effectiveness, and make strategic recommendations. Being comfortable working with numbers and analytical tools is crucial.
Problem-solving skills: Clients hire consultants to help solve their problems. You’ll need to be able to think critically and creatively to come up with effective solutions.
Communication skills: As a consultant, you’ll need to effectively communicate your ideas and recommendations to clients. This includes both written and verbal communication skills.
Relationship building: Building strong relationships with your clients is key to running a successful consulting business. This includes networking skills and the ability to build rapport and trust with clients.
Project management skills: You’ll often be juggling multiple projects at once, so being organized and able to manage your time effectively is important.
Adaptability: The marketing landscape changes rapidly, so being able to adapt and learn new skills is crucial.
Sales skills: As a business owner, you’ll need to be able to sell your services to potential clients. This includes being comfortable with negotiation and understanding how to close a deal.
What is the NAICS code for a marketing consulting business?
The NAICS code for a marketing consulting business is 541613.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
