In my last article, we answered the question “Should I become an independent technology consultant?”
In this article, we’ll answer the question “How do I become an independent technology consultant?”
More specifically, I’ll provide you with instructions on how to start your own technology consulting business.
However, if you haven’t already read the previous article, please start there first.
You need to know if you should become an independent technology consultant before you learn how.
The first step is to come up with a name, slogan, and logo for your new business. The name, slogan, and logo must capture the essence of who you are, what you do, and why you do it. In addition, it must uniquely identify your business within your state but preferably across the globe if you plan to grow.
For example, I chose the name “Renze Consulting” for my business with the slogan “Data Science Made Simple“. For the logo, I created a laboratory beaker with 1s and 0s to signify (visually) that our focus is data science. This combination uniquely identifies who we are, what we do, and why we do it.
Your business name will be used for all of the steps below. In addition, it’s a bit of a headache to have to change your business name on so all of these systems. So, it’s best that you choose the right name before you move on to the next steps. However, you can always set up a DBA if necessary.
The next step is to register your new business. In most states in the US, this is a relatively simple process depending upon the legal structure. Based on your specific needs, you can structure your company as a sole proprietorship, a limited-liability company, an S-corporation, a C-corporation, etc.
In addition to registering your business with the state, you may also need to complete tax registration, get business licenses and permits, and get local licenses and permits. You will also need an Employer Identification Number (EIN) from the IRS to file your taxes and identify yourself to other entities.
I structured my business as an LLC that is taxed as an S-corporation. It provides the legal protection and simplicity of an LLC with all of the tax benefits of an S-corp. However, I recommend that you speak with both your accountant and your attorney first before you chose a structure and start your business.
Every successful business will have money coming in and flowing out. So, you will need to have a checking account with a bank in order to receive payments and pay expenses. You will also want to have a business credit card with autopay enabled to pay for expenses. I recommend an AMEX Platinum Card.
You may also want to consider establishing a line of credit if you think you will have times in your business where your expenses will be greater than your income. However, you can also put aside extra money in a Vanguard investment account to gain much higher returns on your money until you need it.
I originally started with a local bank in Iowa that was very friendly to small businesses. However, after I moved to Las Vegas, I switched to Bank of America because they provided more online services. This made it easier to complete most banking tasks from anywhere in the world and at any time of day.
Before you set up your accounting system, you will likely want to speak to an accountant first. Finding a good accountant early in the process is important so that you start your accounting process correctly. It’s much easier to avoid accounting mistakes early on than to fix them when you’re filing your taxes.
Accounting software and good accounting practices are the core of your accounting system. I use Quickbooks Online to handle my bookkeeping and Gusto for my payroll. You may need time tracking software too. I also recommend taking a course on accounting to learn the basics and best practices.
In addition, you will also need to create a digital document archive to store all of your receipts, invoices, pay stubs, tax documents, etc. I use Dropbox folders on my local file system as my primary document archive since it’s simple, low cost, always available in the cloud, and automatically backed up.
Before you start your business, you will want to consult with an attorney. In addition to your accountant, your attorney is one of your most important professional relationships. They will advise you on setting up your business, file the appropriate paperwork, review contracts, and help with any legal issues.
After a few years of consulting my attorney on all legal matters, I now prefer to handle simple legal tasks myself and save my attorney for the more important stuff. For example, I review basic contracts on my own and submit my own annual filing. LegalZoom and Nolo are great tools for these simple legal tasks.
Unfortunately, attorneys are very expensive. So, you need to make sure that you use their time wisely. However, paying for an attorney’s time now is an investment in avoiding future (much more costly) lawsuits later. So, don’t be afraid to use your attorney when your potential losses could be large.
When you’re running your own consulting business, you need to protect yourself and your business from various calamities. This is where insurance and insurance agents become important. However, as more and more insurance services are moving online, I rarely work directly with an insurance agent anymore.
There are a few types of insurance that you may need. General liability insurance provides protection from claims involving bodily injury and property damage — check your homeowner’s policy first. Professional liability insurance, like TechInsurance, provides protection against claims of professional negligence.
You may also need workers’ compensation insurance to protect your employees if they become injured on the job. In addition, you may want to consider getting disability income insurance in the event you are unable to work yourself. Look for own-occupation and guaranteed-insurability riders.
If you’re an independent technology consultant, it’s likely that you will need a lot of information technology (IT) infrastructure to run your business. Luckily, other than needing a laptop, wifi, and a router, most of this IT infrastructure is available in the cloud either free or at a reasonable cost.
In addition to the software I’ve mentioned in other sections of this article, other software that I use in my consulting business includes: Google Workspace for email, calendar, contacts, etc; Crashplan for offsite backup; 1Password as my password manager; and Salesforce to manage customer relationships.
I also use Traveling Mailbox as a virtual mailbox, Cloudways as a web host; HelloFax for sending faxes; Zoom for video conferences; Calendly for booking appointments; and Grammarly for spelling and grammar. All of these are in addition to the software that I use for actual work — like Visual Studio.
It’s hard to sell your services if no one knows you exist. So, you will want to invest in marketing and promotion of your business to potential clients. I recommend you start with a simple WordPress website. Use it to showcase who you are, what you do, and why someone should hire you.
You will also want to have a presence on social media. This could be as simple as posting semi-regularly or actively engaging with followers on a daily basis. I’ve seen both strategies work. However, now that I’m established, I try to avoid spending time on social media so that I can focus my time on delivering value.
Other marketing strategies that work for independent technology consultants involve professional networking, word-of-mouth referrals, public speaking, volunteering, etc. I encourage you to try a bunch of different strategies to see what works well and what doesn’t work well to attract new clients.
If you’re successful with your business, at some point in time you will want to hire an assistant or a business manager so that you can focus more of your time on revenue-generating activities. I waited for 5 years before I hired a part-time assistant and 8 years for a full-time manager — probably a bit too long.
Having an assistant is great for getting tasks off of your plate that don’t require your specific set of skills This is likely half of all the tasks you do. However, it’s important that you understand these tasks well enough that you can document them, teach them to someone else, and assist when something goes wrong.
I started by making a list of all the tasks I performed on a regular basis. Next, I identified which tasks I could hand off to an assistant. Then, how much time I spent on those tasks each month. It became pretty obvious how costly it was to not have an assistant. So, hired my first part-time virtual assistant.
Hopefully, this information will help you take your next steps to becoming an independent technology consultant. If you’re interested in learning more about a career as an AI consultant, I recommend you watch my free online course Preparing Your Career for AI.
