Should I Invest in Startup Costs for My Consulting Business?
I love this question, because it really digs into one of the ways in which we create an inequity around entrepreneurship, which is by putting financial barriers in place that people have to climb over in order to start their business. There are all of these “rules” around how much money you have to put into your business in order to even get your foot in the game, but my personal philosophy is that if you have not brought in revenue, you should not be spending money on your business.
Your revenue should be funding any and all business expenses when you start. If you adopt that mindset, you’re much more likely to think about who you already have in your network that can provide a consulting opportunity, instead of saving and planning your perfect business launch. Once you find someone in your circle to tap for that first opportunity and you get that revenue, you can begin to invest in your business, rather than paying for things out of pocket and spending money on your business before you've even made any money.
I share this to say that it’s my personal belief that you don’t need to invest in startup fees at all. I know this sounds crazy if you’ve ever read or watched or listened to anything about entrepreneurship, but in order to step into this mindset, you’ll need to do some unlearning. Sometimes, we create this imaginary checklist of all the things we have to do before starting our business. While some planning is helpful, there’s a difference between planning to be prepared to start your business, and planning to avoid taking the scary leap into starting your own business.
For example, I hear plenty of aspiring consultants saying “I can’t start my business yet, I don’t even have a website or a logo!” Well those things usually cost money and if you haven’t even started bringing in clients, you’d be paying for that out of pocket, which as you’ve read, goes against my philosophy.
I’m gonna be real with y’all, when I started my consulting business in October of 2017, I did not have a website, I did not have a logo, I did not spend a dime on my business. And you know what? I got three contracts before I even had a website. In the end, some of those contracts were the funding I used to build my website.
So I want to encourage you all to think about the opportunities that are already in your network that you can tap into and leverage for that early revenue that can set you with a foundation, before you start spending money on your business.
Now, there comes a time where you do need to invest in your business. So, I don’t believe it should cost to start, but it absolutely costs to grow and scale. Some people will feel a sense of freedom by not having to come out of pocket to start their business, but they may also struggle or feel some discomfort around investing. They may avoid spending money on the tools they need to grow their business and improve the client experience which in the end will cost them. That just shows the two extremes of my philosophy, but just remember this, you don’t need to start with a large investment, but you’ll need to invest to grow.
For example, when you first start, you don’t need a website to get a client. But there will come a point in your business where having a website is beneficial to actually gaining new leads, which will in turn increase revenue. To do so, you’ll need to invest in a website.
Another example is that of having an LLC. You don’t need to have an LLC in order to start your business. An LLC does have a fee, and depending on your state, the fees are different. It is a legal protection for you that you will need to have, but you won’t necessarily need it to start.
Here are a few more things that you don’t need to start with, but will need when you grow your business:
Website Domain Name: When you buy a domain, you can then purchase something like G Suite where you can connect the domain so that you have a company email address. Rather than the email address just being yourname@gmail.com, you can have your email address being yourname@yourwebaddress.com
Virtual Assistant: A virtual assistant can help you with some of the administrative tasks, thus giving you more time to take on more clients, or work on different projects.
Business Coaching: You might decide to invest in business coaching to help you grow and scale with the support and guidance of a coach.
Those are just a few examples of things to think about when you’re considering the growth and scale of your business. But to answer the question one more time, you don’t need to have any startup costs for your consulting business. You should be bringing in revenue that you can then spend on your business before you ever spend your own money.
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