How to Budget for Your New Consulting or Coaching Business? [Behind-the-Scenes Tutorial]Sep 30, 2020
Thinking about starting your own consulting business or coaching business and want to know exactly what it'll cost to make that happen and keep it running?
Then you're going to LOVE this week's tutorial video.
I asked my partner Jen Hamilton - our community Chief Operating Officer to be my guest today and share all the deets on the what you'll need and how much it all costs so that you can plan in advance for both the startup and ongoing costs.
As you watch this video, here's what I would love you to consider. Yes, there are some costs with business ownership in terms of tangible costs that Jen is going to share and in terms of psychic costs of stepping into the unknown.
But don't forget the benefits of having control over your career, time and earning power. Think about how your life will transform when you have work that you love with the ability to set your own schedule.
Bottom-line - be smart. Be strategic. And stay inspired about the difference that your consulting and/or coaching success will make to the world, starting with your own.
Jen Hamilton: Hi, it’s Jen Hamilton with Betsy Jordyn International and I’m here to give you a Quick Win around your geek side of your business, operations. And, we’ve got a lot of questions around what does it cost to start your own consulting business and what is the ongoing expenses, things to expect when you have a consulting or coaching business. Today I’m going to walk you through a little understanding of what are the different operational pieces and the things that you do need to consider as you are, either starting your consulting and/or coaching business or you are looking at what does it take from an ongoing commitment point of view on the financial side of things.
Let me go ahead and share my screen with you. This is a cheat sheet that I created for our clients related to giving them an understanding of where they should be budgeting themselves on an ongoing basis and if they are starting up, it’s also very beneficial to see what are some of those additional startup costs.
First of all, when you are starting a consulting or coaching business, you really need to get the legal side of things set up. As you can see here, I have some ranges and estimates. The legal fees to set up an entity, if you are truly going to set up something more formal, you would want to budget about $1,500 to $3,000 as in attorney costs. It depends on, of course, how detailed you wanted, if you have a partner, things could get a little more complex, but the basic average LLC or S-Corp or the typical way of getting a more formal entity set up, you shouldn’t be charged more than say, $3,000. If you are, you might want to look for a different attorney.
This is a reasonable range for getting those pieces set up. Then you also have your required initial and annual forms. Those depend on what is required for the state, what is required for the city and the county. It really depends if you’re doing a DBA and those vary on, by location. For our clients, I help them figure out what are those requirements because they can get really tricky. Of course, an attorney or a CPA can help you with that as well and it does vary by location. Me in California, we have more little added taxes and a little added fees and things. Like, you can see here, I have to pay for an LLC $800, whether I get profits or not as a California, but that’s the LLC and Florida has zero. It just really depends on the state. And again, that’s something that we support our clients in understanding their requirements or you can talk with an attorney or CPA that you use to be able to support you with what is it you need to set up.
I want to note that there are the initial setups and then there are annual costs too. You do not want to miss this. These are where you can get fees and penalties and nobody likes to have to pay anything extra then you really have to. I suggest putting something in your calendar every year that reminds you of those annual requirements that you have. I know for me, sometimes it’s as little as $20, just the filing fee to make sure they, the State, has the most updated information.
All right, moving on to insurance. I’ve listed two types of insurance that I recommend for consulting and coaching clients. And, first of all, business insurance, the general liability, it’s just good for any business. It’s just going to cover anything that might happen while you’re out at a client. Even if you’re completely virtual, you just never know, you might be on business and something happens. It’s one of those things that’s kind of like the cost of doing business. Everyone should just have their general liability.
Now, I’ve added in here a professional liability recommendation. Sometimes you’ll hear them called E&O or Errors and Omissions. This is when we are giving advice to our clients and if for some reason they took that advice and something bad happened to them, whether it’s an individual or a company, this kind of insurance protects us from our own advice or them may be listening to it wrong, which often is the case, or taking it the wrong way. This is really good protection for you to make sure that you are covered. And, that if something happens to that business and they want to come back and blame you that you’ve guided them wrong, or that you gave them bad information, this insurance covers you.
I recommend for all professional service individuals, putting this into place. Now, in terms of the price, $500 to $1,000. I actually like to try to get it closer to $500. I think that’s pretty reasonable so that the total cost for the year is around $1,000. It depends on, of course, where you are, the type of services you provided, all sort of varies, but I have found that using a company Hiscox has the best rates for individual companies, like ourselves, little small independent or small partnerships. And I find that it’s very easy. You can go online and you can fill it out and they can give you a quote. A lot of insurance agents don’t really serve such small companies and when they do, it tends to be in my own experience a little bit more expensive. That’s another little tip and trick to save some money.
Accounting Costs (6:58)
Moving on to your accounting costs. You can do your bookkeeping as simple as free in using an Excel spreadsheet or Google Sheet as a way of tracking your revenue and your expenses, as well as, highly recommend having everything flow through your bank account and your credit card account. If you’re collecting payments online, everything goes through your bank account and if you are making payments, you’re using your credit card that all goes through your bank account. It makes it very simple and one place to really find it.
You don’t necessarily need, especially as you’re getting started, a full tracking system. If you don’t have very many expenses each month and you have maybe one or two income checks or payments coming through, there’s really not much that you need to track. I would certainly expect you might get some feedback or guidance from your CPA, that’s the best person to advise you on what you need. If you’re doing a detailed tracking where you know who is it from, what it’s about, so if you know you spent some money on education or you spent some money on an attorney or insurance, that you explain what it is, when it came in. It matches the bank account. It’s pretty simple. There’s not too much you need to do. Of course, you can always outsource this to a bookkeeper or a virtual assistant, but when you’re getting started, you really don’t need to.
If you do start to get more sophisticated or you want a little bit more ease in your tracking, that’s where that $25 a month comes in. We are affiliates with QuickBooks online and that’s something that we encourage people to use, QuickBooks online, if it’s a little bit more complicated or if they just want to make it really, really easy for themselves to track all their expenses and their revenue. It also transfers very easily when we move into this next piece of getting all of the information you need at the end of the year to give to a CPA to put together your tax returns.
Tax Returns (8:58)
I am an inactive CPA. I used to be a Certified Public Accountant, as an active member of that community and industry, and even at that point, when I was active, I outsourced my taxes. It is a very specific knowledge set and just as you and your own coaching and consulting practice is niched and should only work in your specialty, same with accounting.
You definitely don’t want a bookkeeper doing your taxes. You want someone who knows taxes and ideally, maybe even knows some ways you can get some tax benefit for yourself, ways that you can write off some things so that they can try and help you save taxes. That’s where you can actually make some money back from the investment that you put into your CPA.
Now, it just depends on what your CPA charges, but it shouldn’t, just to do the year-end taxes, it shouldn’t be more than $350 to $1,500 a year. If they’re going to do additional services for you that might bleed into your personal taxes or filing your estimated taxes, or anything along those lines, of course, the prices are going to go up. To keep it really simple, this is about all you need.
Let’s move into technology. In terms of a consulting and coaching business, there are certain things that are just the basic technology that we need to do. It is so much better to have your own domain. Whether it’s Google or GoDaddy, these are the folks that we like our clients to get their name registered. We also like them to use their name when possible. Hamilton Consulting, BetsyJordyn.com, those kinds of things.
If you can get those setup, it just depends on how popular your name is or what you’re using, but usually, the cost per year is pretty low. And then you’re going to actually have that website have a platform. This is where you want to not only have your website be designed but also have a secure host and secure is really important. Security is a big issue these days. That cost can vary from $50 to $150 a month. You can see another how-to video about trying to decide which web domain and platform to use. Really, I would say you could keep your cost within this amount per month.
The other pieces that you can look at are email providers. Usually the web provider, the platform doesn’t have the email. Some people think it does. Again, if you have your own custom domain, it makes it super professional for you to have your name at your custom domain.com instead of it being your name at gmail.com. It just up levels the professionalism and the credibility that your clients have. This is not too expensive and it’s very helpful. I personally like Microsoft Exchange, through GoDaddy because I have my domains through GoDaddy, but it’s just my preference because it also allows you to use Microsoft 365.
Speaking of more of those computer type things. You definitely want to have a managed system for your filing. You want to have something where you have it—that is backed up, because the last thing you want to do is do all this amazing work, create these things for your clients and then have them poof, disappear because your computer goes down. I personally like Dropbox. I know a lot of people love Google Drive because it’s free. One Drive can sometimes come with that Microsoft, but I know Dropbox is something I like to share with people. It makes it easy. A lot of people are familiar with it and I know it’s backed up. The other thing I like about Dropbox is if I accidentally delete a copy, I can go back and get old versions and bring back something that I thought, you know, sort of bringing back from the dead, when you have those days, oh my gosh, I lost this, I was working on this for hours. You can go back and get old versions. Google Drive has that option too, so that’s really nice. I love that investment and it allows, for me, it allows me to have peace of mind, knowing that my entire online business is backed up somewhere.
I am currently recording this video to you through Zoom. This is a Zoom world. Whether you use some other platform to have web conferencing, but you can do Zoom free. You can do it up to $15 a month, but it’s definitely, especially if you’re doing webinars or you’re having meetings with clients through Zoom, you’re going to want to have some way of communicating. I love that you can record as well.
Scheduling software, something that I think is so vital and really cheap compared to the time you put in. Before I got my own scheduling software, I would spend so many hours, back and forth, trying to schedule with a client or potential client, do these days work for you and these times, yes, no, that kind of thing. Scheduling software is like the cheapest way to save you time, instantaneously. What that really do is it’s a link to your potential clients to pick a time to meet with you. And then what can happen, which is really nice, is they can just see what’s available on your calendar. You don’t have to go back and forth. I have got so many compliments from people I meet, it’s more common now that they just really appreciate how time-saving it is to not have to go back and forth and also the rescheduling. When things come up, people just know they can reschedule. They don’t have to call or email, they know I got the message. It’s also really nice from a customer service point of view. Because you’re not only saving you time but you’re saving them time and ease and make it very much approachable for you to be reached.
We use and recommend Acuity as a scheduling system.
Customer Relationship Management - CRM (14:55)
All right, next is with a CRM. We love the platform Kajabi, for the web platform here. It’s on the higher end but what it does include is not only a CRM but as you’ll see a lot of other things which is why one of the big reasons we like Kajabi because you can eliminate some of these other expenses by having it already incorporated into your web platform. If you don’t have Kajabi that includes it, you will need a CRM. This is where you collect all of the leads, all of the names of your clients, of your potential clients, anyone who is even interested in you, and this allows you to email them, send newsletters, to keep track of where they are.
Basically, this is where the lifeblood of your business is because these are where sales happen. You want to know the people who have purchased from you, who are current clients, and who are interested. You want to continue to connect with them. They have been attracted to you in some way and we love attraction marketing because they’re coming to you, but this is the way you collect them. You want to know who came to you, who was at all interested in you, and keep talking to them because you don’t want to miss out on that connection and that possibility of turning them into a client or having a client return because of those great newsletters that you’re sending with your content. It’s a must, must, must. There are some free ones that you can use to manage your system, your client management system. Certainly, look into all the different options as you’re doing your cost analysis and as you’re doing your tech and ease analysis.
Other Marketing Pieces (16:36)
Landing pages and sales funnel. Again, these are already included into Kajabi, and why am I including these in a start-up, they seem a little fancy, well, more than ever when you’re starting up or you’re restarting, you want to make sure that people can come and collect the information. If they’ve come, if they’ve taken the time to come to your website, you want to have a landing page where they can get your opt-in, a free way of getting a resource for you or this could also be where they purchased. If you have an online product, maybe it’s an e-book. Maybe it’s a free e-book, part of that opt-in.
You want to have somewhere they can land and it’s professionally done where you can share the information they need, collect their information and along with the sales funnel is being able to have them purchase, capture their email, and then automatically send that thing they purchased. Whether it’s a conversation with you, it’s a training, it’s an e-book, you want to have it automatically sent, including follow-up emails, to make sure they’re using what they got from you that again, was free or paid for. And inviting them. If it is an opt-in, a free opt-in to a conversation at some point, or maybe another product that you want to sell them.
This is how you develop that relationship and that trust by having technology do all that heavy lifting for you. I’m sure you’ve heard that the fortune is in the follow-up, well if you could have your technology do the follow-up and share that information to build the trust and credibility with your client, wouldn’t you prefer that? It’s a lot easier. It’s your words, it’s your language. It’s your authentic way of connecting with people and making it a lot easier and a lot more automatic. Highly, highly recommend these pieces. Especially as you’re starting up and you’re trying to get more people interested in you.
Graphic Designer (18:38)
A couple of other things that may be beneficial, especially as you’re starting up or maybe as you go along and you have a new product, you can invest in a graphic designer. We have our graphic design team that can support you with that as well. This is everything from logo to thumbnails to the different pieces that you want to really show consistency and visual branding that people get to recognize, oh that’s you. And so, along with that, you can get your initial graphic design and graphic images and your branding figured out, but then you can also do your own type of management with it with Canva. This is what we like to do. We’ve invested in different pieces and then we take say, our thumbnail basic model, and then we’ll update it for ourselves for every video or for every different blog. There are some pieces that you can do on your own to keep from investing every single time in a graphic designer, because that can add up.
Merchant Services Account (19:38)
Lastly, we got to catch that money. We need to have that way for those online purchases and even our larger consulting clients that we are doing larger projects with, Betsy and I will have a place for them to purchase online. Again, it goes back to that accounting, it makes everything smooth. It goes back to the sales funnel, it just makes it so much easier for you to know and they to know that you’ve got it in there. But, there’s a charge. You are using credit cards. There’s going to be a charge. Know that there are extra costs coming in, especially as you’re pricing, you want to include those into your prices when you have a credit card that they’re going to be using to pay. But also, just know this is a common expense and we like this expense because it only pops up when you make money, pretty much.
These are again the overall considerations of the costs. If there’s anything you need support within setting up your consulting or coaching business, managing the ongoing expectations, the marketing pieces, making sure everything is connected together, you can reach out to me at [email protected], of course, you can check out more of our services and support that we provide our clients on our website at BetsyJordyn.com.
I hope you found this really helpful and I hope you take that plunge. If you haven’t started your consulting and consulting business, this isn’t really that much of an investment if you consider what it takes to start a restaurant versus starting your own coaching and consulting practice, you can see that this is doable. You can do it. I believe in you. I know you can make this happen. And, we’re here to support you.
Thank you very much for watching this video and going through this tutorial with me. I hope you got some valuable information and will take this into consideration as you are operating your own consulting and coaching business.
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