The consulting industry in Ontario is also growing rapidly. In fact, according to IBISWorld, the consulting industry in Canada is expected to grow at an annualized rate of 3.5% over the next five years, with management consulting being the largest sector.
With a strong economy, a highly educated workforce, and a diverse range of industries, Ontario provides ample opportunities including funding & grants for consulting businesses to thrive.
However, starting a consulting business also comes with its fair share of challenges. One of the biggest challenges is competition. The consulting industry is highly competitive, and new consulting businesses must differentiate themselves from established firms to attract clients.
Additionally, consultants must continuously upgrade their skills and stay up-to-date with industry trends to remain competitive.
Another challenge is finding clients. Building a client base takes time and effort, and consultants must be willing to invest in marketing and networking to attract potential clients.
Finally, like any business, new consulting businesses must navigate the legal and regulatory requirements to establish their business and comply with government regulations.
Despite the challenges, starting a new consulting business offers many advantages.
From the ability to work independently and set your own schedule to the potential for significant financial rewards, the consulting industry provides an exciting opportunity for entrepreneurs who are passionate about helping businesses succeed.
In this article, we will explore the key steps involved in starting a consulting business:
Step 1: Develop a Business Plan
A well-written business plan can help to define the goals and strategies of the consulting business. It outlines the products or services that will be offered, the target market, pricing strategies, marketing plans, and financial projections.
Having a clear direction from the start can help the business stay focused and achieve its goals.
Define your business concept: This involves identifying the type of consulting services you want to offer, your target market, your unique value proposition, and the benefits your services will provide to your clients.
Conduct market research: You need to conduct thorough research to understand your target market, your competitors, and the demand for your services. This research will help you identify opportunities, potential challenges, and key success factors.
Develop a marketing plan: Once you have identified your target market, you need to develop a marketing plan that outlines how you will promote your services, reach your target audience, and generate leads.
Create a financial plan: This involves developing a financial plan that includes your revenue projections, expenses, cash flow, and profitability. You also need to identify your funding sources, such as loans, grants, or investments.
Determine your legal structure: You need to determine the legal structure of your business, such as sole proprietorship, partnership, corporation, or cooperative. You also need to register your business with the government, obtain necessary licenses and permits, and comply with tax regulations.
Define your team and management structure: Identify the skills and experience required for your team, including yourself, and define their roles and responsibilities. You also need to establish your management structure and governance framework.
Develop an implementation plan: This involves developing a detailed plan that outlines the steps you will take to launch your business, including timelines, milestones, and resource requirements.
Review and revise: Finally, you need to review and revise your business plan regularly to ensure that it remains relevant, accurate, and aligned with your goals and objectives.
Step 2: Choose a Legal Structure
Choosing the right legal structure for a new consulting business is important for several reasons, including liability protection, taxation, and compliance with regulatory requirements.
Understand the different legal structures: There are several legal structures available for businesses in Ontario, including sole proprietorship, partnership, corporation, and cooperative. Each structure has its own advantages and disadvantages in terms of liability protection, taxation, and administrative requirements.
Evaluate your business needs: Consider your business goals, the nature of your consulting services, and your expected revenue and expenses. This will help you determine which legal structure is best suited for your business.
Assess the level of liability protection required: Liability protection is a key consideration when choosing a legal structure. Sole proprietorship and partnership offer less liability protection than corporations or cooperatives, which limit the liability of the business owners.
Consider tax implications: The legal structure you choose will affect your tax obligations. Corporations, for example, are subject to different tax rules than sole proprietorships or partnerships. Consult with a tax professional to understand the tax implications of each legal structure.
Review regulatory requirements: Each legal structure has different regulatory requirements, such as registration, licensing, and reporting. You should ensure that you understand and comply with these requirements before choosing a legal structure.
Seek legal advice: It is recommended to consult with a lawyer who specializes in business law to help you evaluate your options and choose the legal structure that best suits your business needs.
It is also important for protecting your business name, accessing funding and loans, receiving tax benefits, and providing legal protection for your personal assets.
Here’s how you can register your business:
Choose a business name:Choose a unique name for your business that is not already in use by another company.
Conduct a name search: Conduct a name search through the Ontario government’s Business Name Search database to ensure that your chosen name is available for use.
Register your business name: Register your business name with the government of Ontario by completing the registration process through the ServiceOntario website.
Choose a legal structure: Choose a legal structure for your business, such as sole proprietorship, partnership, corporation, or cooperative, and register your business accordingly.
Register for taxes: Register for any applicable taxes, such as the Harmonized Sales Tax, with the Canada Revenue Agency.
Open a business bank account: Open a separate business bank account to manage your business finances separately from your personal finances.
Obtain business insurance: Obtain insurance coverage to protect your business against potential risks and liabilities.
Step 4: Obtain Necessary Permits and Licenses
Many consulting businesses require permits and licenses to operate legally. Failing to obtain these permits and licenses can result in fines, legal action, and damage to your business’s reputation.
The specific licenses and permits required for your consulting business may vary depending on the nature of your business, your location, and other factors.
Apply for a Business Number: Apply for a Business Number. The BN is required for most licenses and permits.
Register for the necessary permits and licenses: Register for the necessary permits and licenses through the ServiceOntario website or by visiting a ServiceOntario centre in person.
Provide required documentation: You will need to provide documentation such as identification, proof of residency, proof of insurance, and other supporting documents, depending on the type of license or permit you are applying for.
Pay the application fee: There is usually an application fee for each license or permit, which can vary depending on the type of business and the jurisdiction.
Wait for processing: Wait for the licensing and permitting agency to process your application. This may take several weeks or even months, depending on the complexity of the application.
Renew licenses and permits: Many licenses and permits are subject to renewal, usually on an annual basis. Be sure to keep track of renewal dates and renew your licenses and permits in a timely manner.
Step 5: Set Up Your Finances
Setting up finances for your business allows you to manage your cash flow, expenses, and revenue effectively. This can help you make informed decisions about the direction of your business, identify potential issues early on, and avoid financial problems.
Here are steps to take to set up your finances:
Create a budget:Create a budget that includes projected income and expenses for your consulting business. This will help you plan and manage your finances effectively.
Choose a business bank account: Choose a separate business bank account to manage your business finances separately from your personal finances. This will help you track your business income and expenses and simplify tax filing.
Obtain a business credit card: Obtain a business credit card to separate business expenses from personal expenses and to build credit for your business.
Set up accounting software:Set up accounting software to track your business finances, such as QuickBooks or Xero. This will help you manage your finances and generate financial reports.
Hire an accountant: Hire an accountant or bookkeeper to help you with your finances, including tax planning and preparation.
Set up a system for invoicing and payment: Set up a system for invoicing and payment, such as using online payment platforms like PayPal or Stripe.
Manage cash flow: Manage your cash flow by tracking your accounts receivable and accounts payable, and by having a plan in place for managing fluctuations in cash flow.
Step 6: Establish Your Brand and Marketing Strategy
It is essential to build a strong and consistent brand identity and marketing message that resonates with your target audience to achieve success in the competitive consulting industry.
Establishing your brand and marketing strategy can help you with differentiation, visibility, credibility, long-term success, and return on investment.
Here’s how to establish your brand and marketing strategy:
Identify your target market: Identify your target market, which is the specific group of people or businesses that you will be providing consulting services to. This will help you tailor your marketing strategy and messaging to reach your ideal clients.
Develop your brand identity: Develop your brand identity, which includes your company name, logo, tagline, and overall brand personality. Your brand identity should be aligned with your target market and your consulting services.
Build a website: Build a professional website that showcases your consulting services and provides information about your company. Your website should be easy to navigate and optimized for search engines to help potential clients find you.
Develop content: Develop content that provides value to your target market, such as blog posts, case studies, whitepapers, and e-books. This will help establish your credibility as a consultant and attract potential clients.
Establish a social media presence: Establish a presence on social media platforms that are relevant to your target market, such as LinkedIn, Twitter, and Facebook. Use social media to share your content, engage with potential clients, and build your brand awareness.
Network: Attend industry events, conferences, and meetups to network with potential clients and build relationships with other professionals in your industry.
Implement marketing tactics: Implement marketing tactics such as email marketing, advertising, and search engine optimization (SEO) to reach your target market and drive traffic to your website.
Measure results: Measure the results of your marketing efforts and adjust your strategy as needed. Use analytics tools to track website traffic, social media engagement, and other metrics to see what is working and what needs improvement.
Step 7: Find Clients
New clients are the primary source of revenue for any business, and especially a new one. Without new clients, it can be challenging to generate sufficient revenue to sustain the business and cover expenses.
Additionally, acquiring new clients is crucial for business growth. By expanding your client base, you can increase your revenue and build a stronger reputation in the market.
Here are some steps to find new clients:
Develop your target market: Identify your ideal clients and target market based on your consulting services and expertise. This will help you tailor your marketing and outreach efforts to reach your ideal clients.
Leverage your network: Reach out to your personal and professional network to let them know about your consulting services and ask for referrals. Attend industry events, join relevant groups on social media, and participate in online forums to expand your network.
Use LinkedIn: Use LinkedIn to connect with potential clients and build relationships with other professionals in your industry. Use LinkedIn groups and articles to establish yourself as a thought leader in your area of expertise.
Offer free consultations: Offer free consultations to potential clients to showcase your expertise and build trust. This will help you establish credibility and potentially lead to new client engagements.
Create valuable content: Create valuable content such as blog posts, case studies, and whitepapers that provide value to your target market. This will help you establish yourself as an expert in your field and attract potential clients.
Leverage online directories: List your consulting business on online directories such as Yelp, Google My Business, and industry-specific directories. This will help potential clients find you when they search for consulting services.
Partner with other businesses: Partner with other businesses in your industry or complementary industries to offer joint services and cross-promote each other’s services.
Advertise: Consider advertising on social media, search engines, or industry publications to reach potential clients.
Conclusion:
Starting a new consulting business requires careful planning, dedication, and hard work. While it may be challenging to differentiate yourself from established firms and attract new clients, with the right strategies, networking, and marketing efforts, you can build a thriving consulting business in this growing industry.
Maurice (Moe) Muise learned the ins-and-outs of government while an employee of the Government of Canada in Ottawa for 10 years. His current focus is helping small businesses in Ontario to identify and maximize government grants to grow their business.
Click here to learn more about Moe’s background and how he can help your business.
