Effective management helps a business form stronger strategies and goals for their future, increasing their ability to thrive in the business market. Expertise in the area of management is often well sought after by other business owners, as they recognise the benefit of having someone from the outside with a particular set of skills come in and provide constructive advice.
If you’re well informed in the art of business management, then your knowledge could be put to great use starting your own management consulting business. If owning a business while simultaneously helping other businesses with theirs is something you’re keen to do, then this could be a fruitful path for you.
However, before you start helping other businesses maximise their management processes, it’s important to get your own ducks in a row first. Starting a management consulting business requires a number of legal considerations that will help protect your business- keep reading to learn more about them.
What Is Management Consulting?
Management consulting is providing expert advice regarding a business’s higher level operational aspects. Naturally, whatever happens on the higher end of a business, trickles down to other parts of the business. So, if the management processes and strategies are working effectively, it gives the rest of the business a better chance of improving.
Is Management Consulting The Same As Business Consulting?
Business consulting and management consulting can often be used interchangeably, however they are distinguishable from one another. Business consulting is a broader term and is frequently used to refer to matters like complaints handling, human resources, marketing, product or service quality. However, management is more specific to how decisions are being made and the business is being run.
How Do You Become A Management Consultant?
There’s no linear, single path that determines your rise as a management consultant. Rather, having the relevant skills and experience will determine whether or not you’re at the level to be a management consultant.
Remember, consultants are hired for their expert advice that can’t be found in a standard person. So, it’s important to build on your knowledge and experience before starting your management consulting business. As you consider your qualifications, you might hone in on a niche aspect of management that you’d like to focus on, which will help when you’re planning out your business.
How To Start A Management Consulting Business
As much as we believe in taking the leap to start your dream business, even the leap requires some careful planning and consideration. That leads us to the first step in starting your management consulting business- creating a Business Plan.
Your business plan can be a document you choose to share with others or just something for your eyes only. It really depends on your unique circumstances. The point of a business plan is to create a blueprint or guideline for your business, which can help you stay on track. Plus, having everything down in writing can help you better strategise and plan, as it’s much easier to spot any strengths and weaknesses your business might have once you have a plan in place.
With that kind of clarity, you’ll be in a better position to make important decisions regarding the foundations for your business, such as what kind of legal structure will be best for it.
Legal Structure Of My Management Consulting Business
When choosing a legal structure of your management consulting business, you’ll need to consider things like upkeep, liabilities and set up process. The three most common legal structures for a business are:
- Sole trader
These three are distinct from one another, properly understanding them and making a careful decision from there is crucial.
Let’s do a quick breakdown of them here:
Sole Trader: A sole trader business structure has an easy set up process (more on this later) however, the business will not be considered separate from you. That means, as a sole trader, you will be personally liable for everything that happens within your business.
Partnership: When you choose to start your business with a partner, it’s important to make sure all partners are clear on how the management consultancy will be run. However, simply discussing these things is not enough – getting them in writing through legal documents like a Partnership Agreement is an important step.
Company: A company is a legal entity on its own- think of it as the opposite to a sole trader business. It has a more demanding set up process however, in the end your company will be it’s own legal person. This offers more legal protection and limits your personal liability. For this reason, we recommend a company structure for any serious management consulting business.
Register Your Management Consulting Business
Once you’ve figured out the right legal structure for your management consultancy, it is time to register your business. The process for registering your business will depend on the specific legal structure you have chosen.
If you have chosen to set up your management consulting business as a sole trader or a partner, then all you need to do is go online and apply for an Australian Business Number (ABN). Once you fill out the relevant details and submit your application, you should receive your ABN shortly after. With that out of the way, your next step is to Register A Business Name (you only need to do this if you’re using a name different from your personal one).
A company set up is a little more complex, however it’s much better for long-term growth. To Register A Company, you will need to follow ASIC regulations. The general process involves getting all your company details sorted, deciding on governance and lodging your application with ASIC. Finally, you’ll need to think about things like taxes and your ongoing obligations. This can be a lot to deal with, so having the help of a legal expert is recommended.
To learn more about business structures, take a look at our free, helpful resource here.
Get All The Important Legal Agreements For Your Management Consulting Business
The next phase in getting your management consulting business set up requires taking care of all the important legal documents. The exact documents your business will require is going to depend on your business itself. Generally though, legal agreements are there to protect your business, secure your revenue streams, limit your liability and ensure all matters are properly communicated. A few legal documents you may look into getting include:
- Consultancy Agreement
- Non-Disclosure Agreement
- Business Terms and Conditions
- Contractor Agreement
For more guidance on getting the right legal documents for your management consulting business, talk to one of our legal experts.
Protect your Management Consulting Business’s Intellectual Property
Another factor to consider when setting up your business is protecting your intellectual property (IP). Safeguarding your IP is essential, as it plays a crucial role in your business’s key functions and identity. Also, if you don’t have the right legal protection for your IP, it can be really difficult to secure your rights when someone decides to infringe it. Prevention is always better than a cure and understanding how to protect your IP can keep you a step ahead.
There are two main ways to protect your IP- either through registration or the right legal documentation. Things like Trade Marks can be registered through IP Australia. For example, if you have a logo or a business name you want legal ownership over (keep in mind, simply registering your business name doesn’t give you ownership of it) then you’ll need to go through the process of registering it. This can be a complicated process that takes several months, so it’s best to enlist the help of a legal expert.
Another type of IP your business may generate is copyright. Copyright is an original work that was created independently by the owner of it. Copyright materials your management consulting business might own include things like presentations, reusable strategy decks, methodologies and other templates you innovate for your business. Your best bet is to protect this kind of IP is through legal documents like an IP Assignment Deed or an IP licence.
An expert in IP can help you determine the best legal instruments to protect your marketing consulting business’s IP, so get in touch with one of ours today.
Starting a management consulting business is an exciting way to utilise your skills and experience, however it’s important to make sure you’ve taken care of all your business’s legal considerations prior to helping other businesses. To summarise what we’ve discussed:
- Management consultants provide expert advice on high-level operational aspects of a business
- Management consulting is distinct from business consulting, focusing on how decisions are made and the business’s operations
- Becoming a management consultant requires relevant skills and experience
- Creating a business plan is the first step in starting a management consulting business
- Choose a legal structure for your consulting business, such as sole trader, company, or partnership
- Sole traders are personally liable for business activities, while companies offer more legal protection
- Partnerships require clear agreements in writing, like a Partnership Agreement
- Register your business with the appropriate legal authorities based on your chosen structure
- Obtain important legal agreements for your management consulting business, including a Consultancy Agreement and Non-Disclosure Agreement
- Protect your intellectual property (IP) through registration or legal documentation
- Ensure all legal considerations are addressed before helping other businesses in your management consulting venture
If you would like a consultation on starting a management consulting business, you can reach us at 1800 730 617 or email@example.com for a free, no-obligations chat.
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