In this article, we outline the most common fixed and variable expenses you will likely come across when starting a consulting business as well as some potential income that can be expected.
The fixed costs for any consulting business consist of your startup expenses and regular operational costs. Startup costs may include:
- Consulting Business License – $100+ (required only if you work from a physical location, such as an office)
- Business Entity Fees – $100+ (Initial fees required to form your legal entity, such as an LLC)
- Insurance Policies – $100+ (Required monthly, quarterly or annual depending on your consulting firm needs. Recommendations include general liability insurance coverage and insurance that covers all employees of the consulting company.)
- Equipment, Office Furniture & Supplies – $1,000+ (purchase computers, printers, desks, chairs, etc. for your office)
- Promotional Materials – $250+ (Business cards, letterhead, brochures, etc.)
Variable costs are the costs that fluctuate depending on your consulting company. They include expenses such as marketing, recruiting, and more.
- Advertising – $250+ (Paid monthly to create buzz around your products through social media platforms, pay-per-click, or other paid ads)
- Hiring Software/Systems – $1,000+ (Recruiting the right employees and independent contractors can be difficult and costly.)
Other variable expenses:
- Conferences – $250 (A few times a year to stay up-to-date with the latest trends and ideas by attending industry events.)
- Software – $1,000+ (Technology is constantly changing. Buy or subscribe to software that helps you work more efficiently.)
Depending on your field of consulting, you may have additional costs such as the cost of education, certifications, and licenses. For example, those in the healthcare field may need to attain certain certifications and licensure before they can work as consultants for that industry.
Total Startup Costs
The typical cost associated with starting a consulting firm ranges, but the costs will likely fall between $5,000 and $10,000. If your consulting firm is a brick & mortar location with a physical office space you can expect to pay over $20,000.
Tips for Making Your Money Stretch Further
Here are some tips for saving money:
- Consider hiring independent contractors instead of hiring full-time employees. This will help you avoid costs such as insurance benefits, payroll taxes and unemployment insurance premiums
- Learn to be a savvy shopper. Take advantage of Amazon and other websites that offer free or discounted business resources such as software, advertising, and marketing materials.
Learn more about the funding options available for your consulting business.