Most enthusiastic millennials, especially those who wish to break free from the rut race involved in traditional 9-to-5 jobs, consider starting their own business venture. The quest for creative freedom and work-life balance are the most-cited reasons for so many people making the leap from corporate jobs to independent start-ups.
There are n number of options available to the American people who wish to start their own business in the country. But the consulting business is somehow grabbing the limelight in the present times.
Take, for example, management consulting, which is a growing industry in the US. The number of management consultants in the country has grown every year, hitting 709,750 in 2019 (Source). From strategy planning to operations to human resources, the industry is involved in a wide range of activities, products, and services.
Given the demand for consulting services, starting an independent consulting firm has become a lucrative idea for many young Americans. You should go for it too. The business involves providing specialist advice to other businesses and professionals. It’s quite a profitable business model, but setting it up will involve some costs. Let’s check them out here:
- Registration costs
First and foremost, you will have to register your consulting business by applying for the necessary license as a DBA or “doing business as” name in most states. You will have to approach the Patent and Trademark Office of the US to trademark your business name. The cost you must incur for registering your business’ name is generally less than USD 100. However, this amount often varies from state-to-state. You can even register your business name for as little as USD 5 in some states.
Then you should insure your consulting business with a professional liability insurance policy. This insurance is recommended since you will be providing professional service for third parties. Not having this insurance will require you to bear legal expenses and compensation costs out of your own pocket in case your client files a lawsuit against you for breach of duty or professional negligence. To know more about professional liability insurance, you can visit www.bizinsure.com.
- Employees’ salaries
Depending on the scale of your operations, you will have to set up a team of employees to assist you with different functions and processes involved in your consulting business. You will have to consider the amount of money you will have to spend on their salaries. In the United States, employees generally earn circa USD 94,700 a year. Their salaries range from USD 24,000 (the lowest average figure) to about USD 423,000 (the highest average figure). This is the average annual salary of an American employee that includes transportation, accommodation, and other benefits. This, however, will depend on the state where you are setting up your business.
- Office space
This again depends on the scale of your business operations. If you are planning to run your business from home, then you don’t have to think about paying rent for an office space. However, if you are planning to grow your business by hiring more employees, then you will have to take this cost into consideration. The rental amount for office space will depend on the city where you are operating and also the locality within the city. In the Q1 of 2020, the price index for commercial space in the country hit 185.62. If you go for a co-working space, this rate will differ.
No consulting business can sustain without having the right infrastructure in place. You will need the right set of equipment to carry out different processes and functions in your consulting business. The amount of investment required in equipment and infrastructure, such as computer systems, business software, printers, internet, furniture, coffee machine, and so on, will depend on the size of your business. Ideally, you should set aside 30 to 40 percent of your business budget for these types of equipment and infrastructure. It’s important to do research on their costs properly and get in touch with the right supplier to get a good deal.
Additional costs to consider
The above costs are fixed costs that you will have to bear while setting up your consulting business in the U.S. However, there are a few additional costs that you will have to factor in. One of them is web development. Y
our consulting business will probably require a website to inform your clients about the services you are offering. Professional web development may cost you somewhere between a few hundred to a few thousand dollars, depending on the design and style you are aiming at. You should get in touch with an affordable agency for the purpose.
You also need to consider the cost of sales and marketing. Without proper sales and marketing practices, your consulting business will not be able to generate leads or survive in a competitive landscape. You can either hire an in-house BD and marketing team or outsource the function to an agency. This cost will differ according to the promotional campaigns you are running.
Setting up a consulting business in the US will involve a few challenges in the initial stages. But keeping the above costs in mind will help you make the best use of your budget and fulfill your business needs in an efficient manner. Make sure you meet all the requirements without fail to avoid operational complications in the future.