How to start a consulting or agency business: Common mistakes to avoid

This is the last segment of our four-part series. If you’re just joining us, catch up on part one on starting your own agency or consulting business, part two on establishing your financial foundation, and part three on building and growing your client base.

The professional services industry is rife with unique challenges, which many entrepreneurs face when they’re starting out. You’re not expected to know everything from day one. But by digging into best practices, you can get to the “right” way of doing things faster. 

Below, you’ll learn common mistakes new professional service entrepreneurs make — and how to avoid them.

During the hustle to get your business up and running, it can be tempting to skip steps or eagerly take on too much too fast. Learn from these common entrepreneur errors to prevent costly or frustrating missteps.

The top 10 mistakes new consultants make

1. Underpricing services: Research market rates before setting your prices. You may need to charge more than feels comfortable. But, remember, you deserve to be priced competitively with the market, and clients in need of your services will understand that they have to to pay for your expertise.
2. Unclear scope: Always send a detailed statement of work (SOW) to define the scope of your services, including any special terms discussed and agreed upon during sales calls or emails. 
3. Poor cash flow management: Invoice promptly and avoid starting new work until overdue payments are resolved. For large projects, ask for deposits. 
4. Neglecting marketing: Block time each week to work on the business, not just in it. Marketing isn’t optional when you’re trying to grow.
5. Taking any client: It can be tempting to say, “yes” to everyone who expresses interest. But staying focused on your ideal client profile will ultimately pay off. If you can’t deliver results worth showcasing, think twice — especially early on.
6. Scaling too fast: Get your service delivery tight before taking on too much. Happy clients drive referrals — and referrals power sustainable growth.
7. Ignoring legal protection: Even solo consultants need legal basics. Set up contracts, get insurance, and have a lawyer review your documents.
8. Fragmented financial systems: Keep personal and business finances separate. Use tools like Mercury’s financial infrastructure to stay organized and keep your business healthy. 
9. No work-life balance: Entrepreneurship can blur boundaries. But if you want to build something lasting, schedule downtime and delegate as you grow. 
10. Lacking differentiation: The more clearly you define your niche and value proposition, the faster you’ll stand out and build trust.

Today, launching an agency or consulting business is more accessible than ever. With the right foundation — clear positioning, strong financial systems, and a focused client acquisition strategy — you’ll be ready to build a resilient firm that serves your goals as an entrepreneur. 

This marks the end of our four-part series — thanks for reading.