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How to start an IT consulting business

Starting a consulting business involves a lot of risk and uncertainty, but the satisfaction of working for yourself can make it all worthwhile.

4 questions to ask yourself before starting an IT business

Anyone thinking about starting an IT consulting business will likely find themselves in high demand. Many businesses don't have the resources for an in-house IT department. Instead, they rely on IT consultants for technical support.

However, starting an IT consulting firm requires more than printing up business cards. Here are a few questions you should ask yourself before deciding to become an independent consultant.

1. Why would a client choose you?

Take a minute to think about why a client might hire you over a competitor. You don’t need to be better than the competition at everything, you just need to focus on what you're best at.

The more agile and specialized you are, the more successful you could be, according to Lisa Hendrickson, Microsoft Outlook expert and founder of Call That Girl. “I recommend finding a niche that you do better than other people in your area and focusing on that expertise,” says Hendrickson. “There are too many generalists out there right now. If you specialize, that’s really where the money is.”

However, Hendrickson cautions against getting too hung up on money. “If you’re going in it for the money, then you want to do a different business,” she says. “From what I’ve seen, most businesses that succeed go in it for the love of their work.”

Ask yourself what you love to do, and where you excel. Do you know how to set up office networks effectively? Do you want to help potential clients with online security? Figure out what you do best and what you want to do, and then get ready to present your unique consulting services to clients.

2. Are you willing to put in long hours?

Many IT professionals make the jump from employee to self-employed in stages, typically by first working as a consultant on the side. “When I started my business, I still had a full-time IT job,” says Dave Ketterer, president of C.D.'s IT Consulting. “It probably took five years before I started to transition out.”

Before starting a consulting business, Ketterer cautions that future business owners need to ask themselves if they're willing and able to put in some long hours. “When starting a small business, you need to spend more than 40 hours a week running it,” says Ketterer. “Starting your own business is not a regular job. It does offer increased flexibility, but also more responsibility.”

“You will be wearing multiple hats, and doing multiple things,” he warns. “You won’t just be solving IT problems, you will also be finding customers, doing marketing, payroll, HR – the whole nine yards.”

Those long hours include every aspect of running a business: communicating with clients, balancing your budget, drafting client contracts, and keeping up with the latest tech developments. A successful consultant knows IT and how to run a business, too.

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3. What’s your business plan?

If you’re ready to dive into the details, then it’s time to draft a business plan. A business plan clarifies more specific questions, such as:

The Small Business Administration has a handy business plan template [PDF] you can download and use as a guide.

Another useful resource for people who want to start their own small business is SCORE, which offers free, expert advice to new business owners.

When you decide how much to charge clients, make sure you don’t undersell yourself. Many new businesses set their prices too low. They forget to account for costs like rent, equipment maintenance, employment taxes, and liability insurance. Be sure to include all of these in your budget calculations.

4. What about insurance?

Now that you’ve worked out the details of your business plan, it’s time to get serious about compliance. State law, client contractors, or business partners could all require that your IT business carry certain insurance policies.

Insurance requirements for IT businesses vary based on factors like whether your business has employees, an office outside of your home, or a company car.

Even if a specific type of insurance isn’t required by law, essential policies like errors and omissions and cyber liability insurance can protect you and your new business from the effects of a costly liability lawsuit.

Before you turn your business plan into action, make sure you factor in insurance. Learn more about which policies will benefit your IT business.

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