How to Start a Marketing Consulting Business
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.
A marketing consulting business helps to build branding and develop marketing strategies for small businesses. They may also offer marketing design services, marketing automation, content marketing, and business consulting.
According to Statista, the marketing consulting services industry generates $475 billion in sales globally, with over half of that being in the United States. Emarketer projects digital ad spending will grow in the U.S. by nearly 50% in the next four years. According to IBIS World, there are 216,519 marketing consulting firms in the United States as of 2021.
The industry is being dominated by digital marketing since a large percentage of people search for products and services online. The pandemic increased this push to digital and also impacted the marketing strategies employed.
Your target market will be small to medium-sized businesses needing marketing services and strategies.
Skills, Experience, and Education Useful in Running a Marketing Consulting Business
There are several specific skills that you will need to open a marketing consulting business.
- Experience. Experience working in a marketing consulting business is valuable, particularly in management.
- Education. A degree in business or marketing would be a huge advantage.
- Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
- People skills. You’ll need to be able to build rapport with your customers so that you retain them as customers and keep them coming back.
Checklist for Starting a Marketing Consulting Business
If you’re thinking about starting a marketing consulting business, it’s important to do your research first. Here is a checklist to help you get started
Step 1: Write your Business Plan
After coming up with the idea, the next step in starting your marketing consulting business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, what sets your consulting services apart from the competitors, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect marketing consulting business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Business Structure
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a marketing consulting business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: 3 steps to forming your LLC
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:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select your Location
Next, determine if you want to work from your home office or rent an office somewhere. Renting office space can be very expensive and may not be necessary to start a marketing consulting business.
Related: Choosing a business location
Step 5: Apply for 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).
Additionally, special certifications may help your company demonstrate education or experience and provide an edge over the competition.
Step 6: Find Financing
While the cost to start a marketing consulting business can be started without outside funding, it may be necessary to get a loan. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A marketing consulting business will need to set aside a budget to cover marketing costs on a continuous basis.
A website and active social media marketing can help attract new clients and give your marketing consulting business greater visibility online.
Most importantly, a portfolio will be key to showing a potential client the quality of your work. As you complete more work, testimonials from satisfied clients should be used in marketing the business.
While most marketing consulting companies start by offering a wide array of services, many successful marketing consultants focus on a particular area of expertise where they can deliver the most value (and profits).
Step 9: Get Business Insurance
A marketing consulting business should consider several types of insurance to fully protect the business. A few of the more common types of insurance a marketing consulting company may need include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hire Employees
Many marketing consulting companies will start out with the owner being the only employee. Some companies will outsource specific functions or handle overflow, but at some point, a growing firm will need additional employees to help complete projects.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your marketing consulting business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost to start a marketing consulting business?
Here are the common costs you will face when you open a marketing consulting business.
– Website setup $100 –$200 for a basic, do it yourself website, $1,000 – $5,000 for a professional site
– Office equipment such as a good computer, scanner, software, etc. $1,500 – $5,000.
How profitable is a marketing consulting business?
According to IBISWorld, the average marketing consulting firm operates out of a single location, employs 7-8 workers, and generates about $1 million annually.
One of the challenges of a newer consulting company where the owner is the person primary working on projects is gaps between work. Project work is demanding and sales calls are put on hold until the project is completed, resulting in breaks between paying work. Additionally, it may be difficult to get payment from some clients as the next project takes the focus off of the administrative side of running a business.
Are there grants to start a marketing consulting business?
It’s extremely rare to find a grant to start a marketing consulting business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
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.