What steps to take to start a consulting company?

I am writing today to understand and read what your take is in starting a consulting company.

Currently I hold a day job, which I am happy with, but I want to become more flexible in terms of locations to live, so I want to try this experiment for 2yrs and see what happens.

My goal for this year is to get a consulting business were I can generate 20K for the year. I know is not a lot, but I am only counting with my after work time. Also I am not interesting in making profit (not primarily), just building relationships with customers.

What is your take on this?

Thanks for your ideas. Geo

As a clarification on what I am thinking as consulting is the following:

I will like to establish a small business that will help other small business on decisions around technology management. Including electronic marketing, systems to improve processes and communication. I will have product type packages with flat prices that will be targeted to specific audiences, and will include a x amount of hours of my advice. I just don't know were to start.

Should I start doing a business case first, or should I first approach a few of the businesses to survey the market, or something else.

I hope this helps.

Geo - some specific comments about your scenario:

1. You say you want to start a business to give you more flexibility on where you live, but this isn't the only way - you could just become a consultant/contractor and take short-term roles wherever you fancy. A business is a different kind of commitment to a full-time job, but it's a commitment nevertheless.
2. If you decide you want to start, focus on getting your first customer. I would agree with Pierre that you should aim to delight your customer(s), but be aware that everyone likes to get as much out of their suppliers for as little money as possible, and you will struggle to hit your 20k target if you give away too much time. (Personally, I wouldn't worry about getting to 5 customers - I currently have 2/3 after one year of business and they generate more than enough business and "reference-power").
3. Pricing is tricky - I would consider a discount for your first customer, but ultimately you need to charge a decent amount for your services, for the following reasons:
   • People associate a value with the amount they have to pay - if you charge little, they will assume your service isn't worth much
   • If you don't charge much, you won't hit your target of generating a decent amount of money (your 20k)
   • Charging a representative fee is an important part of validating your business proposition - in other words, in general, will people be prepared to pay what I plan to charge for the service I propose to offer?
4. It only makes sense to write a business case if you are planning substantial investment and the returns may be some time coming. Consulting businesses shouldn't be like that. You'll learn a lot more about your prospective business by just getting on with it.
5. I would be cautious about targeting small businesses. Invariably they have very small budgets but can be quite demanding. Another issue is that working with them can be very frustrating because they often don't have the time to help you do your job - to deal with your questions or put focus on your project. You talk about packages services which makes a lot of sense, but I would definitely test this ideas with a handful of businesses before committing a lot of time/effort in the packaging. You may be able to hit a niche, but be aware that it is a tricky market to service well and generate decent income at the same time.
6. Having said all the above, if you have a desire to do something entrepreneurial, I would encourage you strongly to go for it - given we all have to work for our living, there is nothing better than being your own boss.