A good friend of mine contacted me this week asking about how he should go about how to start and build a business for consulting with companies on their marketing efforts. Given the challenges of the economy, you may have found your position is at risk or even been laid off. Having started several businesses, including owning my own agency and merging it with another, I wanted to provide the advice I offered to him.
This article is an opinion piece based on my experience. A couple of disclaimers before I start:
- Invest some time with a local business attorney, business insurance agent, and accountant to ensure you’re getting the best advice possible. I’m not going to get into all the fine details here – these are just my highlights on what I believe you should focus on.
- One important accounting / legal process is whether you should put yourself on payroll or just take withdrawals from the company… that’s something you should be advised by a professional for.
- I’m not going to discuss how to finance your business. I have grown all of my businesses organically, without any business loans, partners, or investments. You may wish to finance and launch your business differently… I’m not knocking it, it’s just not how I’ve launched mine.
Step 1: Launching Your Business
- Name Your Business – there are quite a few strategies for naming a business. I’d encourage you to go through all the advice we provide in another article we’ve published for naming your business – it’s a branding strategy that leaves a lasting impression so I would put all the effort you can into it.
- Locating Your Business – just a decade ago, not having an office was sometimes a detriment to a business being treated as viable. Fast forward to the working-from-home trend and I personally don’t believe that’s an expense you need to build a great business. You still may want to get out of the house and join a coworking space or sublet an office from a colleague. I like working from my home office… but I don’t want my home address plastered everywhere. Instead, I rent a box at the local UPS store, and I use that as my business address. The only downside is that Google Business doesn’t like this, so you may not get your business listed in local searches.
- Register Your Corporation – While the small business administration (SBA) has a ton of information on how to launch your business, it’s horribly organized and difficult to follow. If you’re starting out independently, I’d recommend getting assistance in starting your limited liability corporation (LLC). This is a corporate structure where your personal property is protected from your corporation’s liabilities. An LLC is taxed on a pass-through basis — where profits and losses are filed through the member’s personal tax return.
- Register for an Employment Identification Number – Just as I don’t want to use my home address for my business address, I also don’t want to provide my personal social security number to clients for tax purposes. Registering for an EIN with the IRS gives you a nine-digit number assigned by the Internal Revenue Service. As you work for people, you provide them with your W-9 that provides your business name and EIN for them to report their payments to you.
- Business Checking Account – Keeping business income and expenses separate from your personal income and expenses is essential for bookkeeping, analyzing your business performance, and ensuring your business is accurately accounted for tax purposes. Starting a business checking account typically affords you a debit card that you can use for business expenses. You don’t have to worry about cherry-picking through your personal finances to find when and where you spent money on the business.
- Register with Dun & Bradstreet – Registering with DNB enables you to get a DUNS Number, a unique identifier for your business that can be used to generate and report on your agency’s business creditworthiness. Many large companies will research your business by looking it up with Dun & Bradstreet.
- Invoicing System – Your customers are going to need invoices. And you’re going to want a platform that does a great job at auto-scheduling invoices, sends reminders, tracks your revenue for you, and provides a means of accepting different forms of payment. I recommend getting yourself a Freshbooks account… it has everything you need to get started.
- Business Insurance – Having a business comes with liabilities, so I’d encourage you to buy business insurance. It’s incredibly reasonable and can cover your equipment, additional liabilities, and even life insurance. For example, if you hurt someone in a car accident on the way to see your client you can be sued and so can your company. Sometimes clients (especially large companies) will require a minimum liability amount and you’ll need to provide them with proof of insurance. It’s worth your peace of mind.
- Accounting Software – Areas of the business I despise are bookkeeping, accounting, and doing taxes. I do have online accounting software and then I have a bookkeeper and accountant that can both access that account. Many bookkeepers and accountants will have their own software, but I prefer to have my own account in case I ever decide to move those services with another vendor.
- Domain, Website, and Email Address – Just as you want to keep your finances separate from your personal life, you’ll definitely want to keep your email communications separate. I still cringe when I see a business operating off of a yahoo, gmail, or AOL email address (yes, they still do). It does make me wonder if they’re just testing the waters or if they’re determined to build an actual business. It’s incredibly inexpensive to register a domain and get a Google Workspace account for your email, do yourself a favor and do that!
- Contracts – While you may feel comfortable just shaking hands with a new client, I wouldn’t recommend it. After working with clients for several years, we now require:
- Statement of Work (SOW) – a legal document that defines the deliverables and timelines that are expected with a specific engagement. We ensure that our clients sign the SOW, the SOW refers to the MSA, and we collect the billing and invoicing details to ensure we know who will be paying our invoices and if they have any specific process.
- Master Services Agreement (MSA) – a legal document that defines the contractual relationship between the vendor and client. It’s a general document that doesn’t define specific deliverables, just the overall expectations of the vendor and client when working with one another.
- Branding – Having a visual representation of your business is a good investment – aligning your sales materials, website, business cards, and other documentation that you’re distributing about your business. You don’t have to spend a lot of money on a logo… and there are many resources out there that will design one for you that is quite inexpensive.
- Web Presence – Build your website, register it with Google Business, and reserve all of your social media accounts.
Step 2: Building Your Business
When I first told colleagues I was launching my business, everyone cheered me on. I was pretty optimistic that I’d have a nice stream of clients and great revenue when I opened my doors. The reality was quite different. Your network will be optimistic for you… but don’t expect that is going to translate into lucrative contracts. Human nature is a complex thing, encouragement isn’t the same transaction as signing a contract. You may be discouraged when you first launch if you set your expectations too high. Just put your head down and keep working your network to get those first sales in the door!
- Build Your Value Statement – The first question everyone asks is What do you do? What you do isn’t necessarily what people pay you for, though. I’d encourage you to spend time developing a unique value proposition that instead answers, Why you should hire me! An example: Perhaps you are consulting with clients on SEO. Why they should hire you is that you assist clients with growing their business online using search engines.
- Build Your Reputation – Every prospect is going to ask you about your previous work, so be sure to illustrate it and try to collect as many testimonials as you can to publish your reputation online. I requested testimonials from previous bosses, friends who I’d assisted, as well as clients that I helped at the companies where I worked at. I’d encourage you to build out a company page on LinkedIn as well. This is where you can market your business, collect testimonials, and build your network. When used well, LinkedIn is an incredible asset. You may even want to invest in LinkedIn Sales Navigator, a tool for outreach across the platform.
- Build Your Network – Your business is set up, now it’s time to exhaustively reach out to everyone that you’ve ever worked with and to let them know the business that you’ve launched and how you might help one another. Building your network isn’t just for finding prospects, it’s also critical for having resources. And those resources can grow your revenue. We have extended the service offerings we have through partners and we’ve also built a lucrative referral business introducing our partners to our clients when they require services outside of our offerings.
- Be Agile – While you may have spent months working on your business plan, your sales material, your value proposition, your website, etc… it could all go out the window when you can’t sign a single client. Much of the poor advice I received when I started my business was that I needed a niche, I needed competitive pricing, I needed simple contracts… all of it was nonsense. I’d encourage you to listen to your prospects and clients in the sales process to notice what resonated and what didn’t… then adjust your messaging and process accordingly.
Step 3: Get Prospects To Say No
We were working recently with a prospect who was upfront with us that they were collecting offers from multiple agencies. About a month with a lot of back and forth on deliverables and budget. We had been unable to sign them and started to wonder whether or not we were going to close the deal.
The next step was pretty easy – we called them up and let them know that we were lining up our resources for the following month and we were curious about what it would take to close the deal. And, we outright told them that it was absolutely okay if they’d chosen to go with another vendor. That permission was all they needed… they let us know that they’d signed with the other agency.
When people like you, they just don’t want to give you bad news. The problem with this is that it wastes your time with many prospects that were never going to sign. Getting a prospect to say No! is sometimes more difficult than getting them to say Yes. But you need to get to No as quickly as possible.
Step 4: Learn To Say No
As important as it is to get a prospect to say no, it’s also important for you to say no as well. I’ve seen many agencies fail over the last decade and it wasn’t because they did bad work. It was because they did too much work. They never said no to the client… so while the revenues for each engagement were static, the number of deliverables continued to climb. As a result, they’d get upside down on cash flow, which required them to get more clients, who also asked for more and more… until the agency couldn’t survive and went under.
We’re currently doing some pay-per-click advertising for one of our clients and it’s going quite well. So well, in fact, that they called a meeting with us to develop advertising programs for two of their other service offerings. We were excited at the opportunity to grow the relationship but once we got into the meeting, we realized their expectation was that we’d just add this effort to their current engagement. We politely let them know that adding the two additional services would require effort that wasn’t negotiated in our original contract but that we’d be glad to provide them with a new statement of work that covered the additional effort. They didn’t object and signed the agreement.
Most people are concerned that asking for a bigger budget may lead a client to leave. It’s simply not the case… great clients who come to you for more work understand your value to their organization and will gladly compensate you for the additional effort. You don’t want clients that won’t.
Step 5: Always Get Paid
We have a simple statement we share with our clients… work starts when we get paid and work stops when we don’t. You’d be amazed at how many businesses have poor payment processes or simply slow pay to try to keep their cash flow healthy. If you negotiate a contract, and deliver the services, you get compensated. It’s not an understatement to say that anything else is theft. If you take the money and don’t deliver, it’s theft. If you delivered and didn’t get paid, it’s theft.
I’d encourage you to have a zero tolerance for not getting paid. Losing a client that’s not paying you isn’t losing any revenue. It’s getting rid of a terrible client that doesn’t respect you and has stolen from you. Replacing them with a great client who does value you is the best thing you can do for your business.
Launching my business when I was 40 was the best thing that I ever did professionally. I have the utmost respect for other business owners because I understand now the complexities of sales, leadership, mentoring, consulting, growing, profitability, agility, hiring, firing, etc. Owning a business has been financially liberating (most of the time), has provided me with amazing personal growth, and has connected me to an incredible network of resources and professionals.
If you have questions or comments, just leave them below. You’re also more than welcome to connect with me on LinkedIn.
Disclosure: Martech Zone is using affiliate links in this article.