Once you decided that a career in consulting is right for you, there are a few things you can take care of from the get go to ensure a smooth transition into the world of professional consultancy.  Like we mentioned earlier, organization plays a key role in all phases of a consultant’s career.  From the early stages of planning the business structure and types consulting you wish to engage in, to the execution of daily workflow, to the discipline required to keep legally sound income and tax records, being a consultant can mean being efficient and thorough in the areas of organization and planning.  Whenever possible, it is recommended to plan as far ahead as possible for matters that can be planned ahead for.

• Establish your businesses’ legal/fiscal foundation. It is in your best interest to formalize and solidify your business structure right from the onset.  This is in the interest of having a well thought out plan both legally and for tax purposes. In a nutshell, the three basic ways you can set up your business from a legal standpoint are:

1. Sole proprietorship: This is the easiest to accomplish from a legal point and requires the least investment of time and funds to do.  However, it should be noted, that sole proprietors accept all business related liabilities at a personal level.  To put this in another way, in the eyes of the law, the individual and the business are for all intents and purposes the same entity.  So, for example, if in the course of your business dealings you come under legal scrutiny for any reason (being sued by a client, for instance), resulting litigation may be able to hold your personal finances and assets as damages to the plaintiff in the case.  To put it bluntly, you are putting your butt on the line when you engage in a sole proprietorship.
2. Partnership: This approach is similar to sole proprietorship, but involves two individuals who share legal and fiscal responsibility for the business together.  This partnership can be instituted in a variety of ways and typically involves the interested parties negotiating a contract that elaborates legally on the particulars of the partnership “deal”.  For example, there are “silent” partnerships, which involve certain parties within the contract holding all legal obligations but not participating in the actual running of the business.
3. Corporation: A corporation is the most legally and fiscally complicated method of starting a business, but has its benefits as well.  When a business is incorporated it becomes a legal entity of its own.  Incorporation allows for businesses to take greater strategic risks than sole proprietorships and partnerships because they provide for a legal and fiscal layer between the corporate entity and the individuals involved in the business.  Under normal circumstances, someone starting out in the consulting world will not have the need or the resources to incorporate, but it is common for consulting firms (such as Booz-Allen-Hamilton, for example) to establish their business in this manner.
   

• Build a thorough business plan. It is crucial to have a sound business plan from the very beginning of your consulting endeavor.  A good rule of thumb is: If you can plan for it ahead of time, by all means do so.  This includes, but is not limited to:

• Pre-establishing your strategic approach for running the day-to-day aspects of the business.  This includes considering items such as: Securing a business credit card, establishing standard hours of operation, deciding whether or not to invest in purchasing certain tools as opposed to renting services or tools (like choosing between buying a laser printer or using a service like Kinkos).
• Marketing your business.  Deciding how to market your business in the most cost effective way possible.  Will you need business cards?  Would it be in your best interest to hire someone to design and develop a website for you?  How about radio or television advertisements?  Newspaper ads?
• Establishing principal funding.  Will you be starting this business from scratch out of your own pocket?  Are you interested in acquiring funding from an “angel investor”?  Do you have friends or relatives who may be interested in getting in on the ground floor with an initial investment based on your reputation and experience, which could later pay off for them in the form of a return on their money?  Perhaps you may want to offset the initial investment by applying for a small business loan at a financial institution.  You will also certainly want to investigate grants, tax credits, and loans made available by the federal, state, and municipal government which are often made available to individuals starting a new small business (particularly if you live in the United States, which has many programs available for just this reason).  These are the types of things you may want to take a closer look at when deciding on how to find your venture.
  

• Decide upon, design, and build your work environment:  This is a crucial part of beginning your consulting business and much care and concern should be taken with this step of the process.  What kind of a work environment you will need to do business in will vary wildly depending on many factors including:

1. Your budget: How much money you have at the onset will be one of the major factors in establishing your work environment.  If you are starting this on a very limited budget, you will most likely want to build a home office.  If you are going to need a lot of space for equipment you may want to consider clearing out a garage, spare bedroom, basement, or loft space in your home and using that area to build you place of business.  Any of these areas will be very useful for a wide variety of consulting business types.  If creatively designed you should be able to accomplish nearly any type of clerical, development, artistic, or light manufacturing work in as little as a 10 foot by 10 foot bedroom (or even smaller if all you need is a computer and a desk).  If it is within your budget after all other elements of your business (such as equipment, certifications, and licenses, etc.) are funded, and you absolutely cannot use any space that you currently have access to for free, you may want to consider renting a small studio or office space.  While it is crucial for you to have a separate area that is “for business only”, it is also the least efficient usage of funds as far as getting “bang for your buck”, as real estate is a very expensive part of the business world and the longer you can put off having recurring bills such as rent and various utilities, the better.  Remember, when you rent an office, you not only have to pay rent, deposit and possibly tenancy insurance, but you will also need to pay for separate phone lines, power, water, and Internet connectivity (if necessary).  When you are at the onset of establishing any business your financial mantra should be “is this the BEST use of the funds I have?”
2. The type of business you will be running/the type of equipment that will be necessary: Most consultants will, at least at the beginning, only need enough room to house the equipment necessary for running the “office” portion of the enterprise (ie: computer, desk, phone, filing cabinets, etc.).  However, if you going to be participating in certain types of consulting that will require a more robust workshop you will want to factor that into the decision making process.  Network engineering consultants, for example, will want to have enough room to set up a mini-NOC (Network Operations Center) laboratory for testing configurations and ideas for clients before rolling them out live.  Also, depending on the type of business, the equipment and facilities as well as the space will be important as well.  If you are going to be doing any type of computer consulting, you will want to make sure you have a desktop computer, a laptop computer and broadband Internet connection, at the very least.  If you are going to perform in a consultant capacity for studio musicians, you will want to have enough space to house a small-scale music studio.  Thanks to modern technology making things not only more powerful, but smaller, you should have no trouble fitting a semi-pro level recording studio in a closet sized area (but more room is ALWAYS better).  Consideration should also be taken for equipment you already have.  If you are going to be mixing things you already own with new equipment, take care to ensure interoperability.   There is no point in spending $1,000 for an expensive electronic tool if it going to make $2000 of equipment you already own prematurely obsolete in the process do to interoperability issues.  You goal here is to achieve a balanced synergy between the space you are using, the equipment you bring to the table, and the new gear you will need to invest in.  Think of it as a kind of business oriented feng-shui process.

So, in a nutshell, the above are some of the major considerations you should be investing your initial time and effort into when building your fledgling business.  This is by no means an exhaustive list of everything you should consider or challenges you will likely encounter in the beginning, but it should serve as a strong outline to prepare you for what you will be getting into at the ground level of a consultancy, or any small business for that matter.

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