We earn commissions if you shop through the links below. Read more

How to Start a Project Management Company

Written by:

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by:

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

How to Start a Project Management Company

Fast Facts

Investment range

$2,550 - $5,800

Revenue potential

$78,000 - $156,000 p.a.

Time to build

0 – 3 months

Profit potential

$70,000 - $140,000 p.a.

Industry trend

Growing

Commitment

Flexible

Project management firms are consulting companies that help develop and manage projects for businesses and organizations. Often, project management firms specialize in a certain field, such as marketing or financial management. Many companies outsource project management to these specialized firms to reduce the burden of their internal managers. 

Project management companies are part of the U.S. management consulting industry, which has expanded more than 30% in the last decade to reach over $260 billion. If you have project management experience, you could start your own project management company and get a share of that growing market. 

But first, you’ll need to know how to manage the process of starting a business. Fortunately, this step-by-step guide will prepare you to launch a successful project management company. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a project management company has pros and cons to consider before deciding if it’s right for you. 

Pros

  • Boost Businesses – Help businesses with projects that can boost their growth
  • Good Money – Make $50 to $100 per hour for project management
  • Low Costs – Start for only the cost of a computer and software
  • Flexibility – Manage your company from home

Cons

  • Experience Necessary – Project management work history gives credibility
  • Deadlines – Pressure to finish projects on time

Project management industry trends

Industry size and growth

project management industry size and growth

Trends and challenges

project management company Trends and Challenges

Trends in the project management industry include:

  • AI and automation are increasingly being used in project management to eliminate small tasks, allowing project managers to focus on higher level management.
  • Data analytics in project management is becoming a focus since companies are becoming more data driven.

Challenges in the project management industry include:

  • Remote and hybrid work environments are making it more difficult for project managers to manage the human resources involved in projects.
  • Evolving technology creates a necessity for project managers to continually educate themselves about emerging project management tools and software. 

Demand hotspots

project management demand hotspots
  • Most popular states – The most popular states for project managers are Massachusetts, Rhode Island, and New Jersey.((https://www.zippia.com/project-manager-jobs/best-states/))
  • Least popular states – The least popular states for project managers are Montana, Arkansas, and Wyoming. 

What kind of people work in project management?

project management industry demographics
  • Gender – 31.1% of project managers are female, while 68.9% are male.((https://www.zippia.com/project-manager-jobs/demographics/))
  • Average level of education The average project manager has a bachelor’s degree.
  • Average age – The average project manager in the US is 46.6 years old. 

How much does it cost to start a project management business?

Startup costs for a project management company range from $2,500 to $5,800. Costs include a computer, a website, and project management software. 

Start-up CostsBallpark RangeAverage
Setting up a business name and corporation$150 - $200$175
Business licenses and permits$100 - $300$200
Insurance$100-$300$200
Business cards and brochures$200 - $300$250
Website setup$1,000 - $3,000$2,000
Computer$800 - $1,400$1,100
Software$200 - $300$250
Total$2,550 - $5,800$4,175

How much can you earn from a project management business?

project management company earnings forecast

Project management companies generally charge between $50 and $100 an hour for an average of $75. For projects that require specialized knowledge or skills, these numbers could be much higher. Your profit margin should be around 90%.

In your first year or two, you could work 20 hours a week, bringing in $78,000 in annual revenue. This would mean $70,000 in profit, assuming that 90% margin. As your brand gains recognition, you might get to 40 hours a week. With annual revenue of $156,000, you’d make an outstanding profit of $140,000.

What barriers to entry are there?

The only barrier to entry for a project management company is the skills and experience needed to have credibility with clients.

Related Business Ideas

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
How to Start a Project Management Company

How to Start a Packaging Business

How to Start a Project Management Company

How to Start a Consulting Business

How to Start a Project Management Company

How to Start an Advertising Agency

Step 2: Hone Your Idea

develop a business idea

Now that you know what’s involved in starting a project management company, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research project management companies in your area and online to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a project manager with advanced certifications or a project management company that specializes in agile project management. 

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as financial project management or cultural change project management.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your services

Essentially, you will be a project coordinator. You may help with the project planning and development which would include setting project objectives and project goals and determining the work breakdown structure. Then you’ll provide project task management and resource management. You’ll oversee the entire project execution and track project progress. 

How much should you charge for project management?

Rates charged by project management companies range from $50 to $100 per hour, although for complex projects that number can be much higher. After your costs, you should aim for a profit margin of about 90%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be businesses and organizations. You can connect with business owners on LinkedIn or find them on Google and Yelp and call them directly. 

Where? Choose your business premises. 

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed
project management company idea rating

Step 3: Brainstorm a Project Management Business Name

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, like “project management” or “project consulting”, boosts SEO
  • Name should allow for expansion, for ex: “ProjectWise Solutions” over “IT Project Management Solutions”
  • A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Here are the key components of a business plan:

what to include in a business plan
  • Executive Summary: Provide a snapshot of your project management business, its objectives, target market, and how it will meet clients’ project delivery needs effectively.
  • Business Overview: Outline what project management services you offer, the types of projects you specialize in, and your business’s unique value proposition.
  • Product and Services: Detail the project management solutions you provide, such as planning, execution, monitoring, and closing of projects.
  • Market Analysis: Evaluate the demand for project management services within your target industry and client base.
  • Competitive Analysis: Identify your competitors and describe your business’s competitive edge in methodologies, technologies, and client service.
  • Sales and Marketing: Explain your approach to attracting new clients and retaining existing ones, including your marketing channels and sales tactics.
  • Management Team: Highlight the expertise and roles of your management team that will ensure successful project delivery and business operations.
  • Operations Plan: Describe the processes and systems you will use for project management services delivery and client engagement.
  • Financial Plan: Outline your financial projections, funding requirements, and revenue model.
  • Appendix: Include supporting documents such as your business’s certifications, detailed biographies of team members, or case studies of past projects.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to project management companies. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your project management company will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

types of business structures
  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2024

starts at $0, plus state fees

4.7/5

starts at $0, plus state fees
Visit ZenBusiness

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

types of business financing
  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a project management business. 

Step 8: Apply for Business Licenses and Permits

Business Licenses and Permits

Starting a project management business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your project management business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

types of business insurance
  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

Launching a Business

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as Adobe Workfront, Monday, or Zoho, to manage your tasks, workflows, and resources. 

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

  • Leverage Social Proof: Encourage satisfied clients to provide testimonials or case studies highlighting the success of your project management services. Share these on your social media channels and in marketing materials to build credibility.
  • Specialized Workshops and Webinars: Host workshops or webinars on trending project management topics, showcasing your expertise. This not only positions you as an industry authority but also provides a platform to connect with potential clients.
  • Strategic Partnerships: Establish partnerships with other businesses, especially those in related industries like IT, construction, or finance. This can lead to referrals and collaborative projects, expanding your reach and client base.
  • Local Community Engagement: Actively participate in local business events, community fairs, or industry conferences. Networking in person can lead to valuable connections and word-of-mouth referrals within your community.
  • Content Marketing with a Niche Focus: Develop high-quality content, such as blog posts or downloadable resources, that addresses specific challenges within a niche or industry. Tailoring your content establishes you as an expert in solving industry-specific project management issues.
  • Client Education Programs: Offer free or low-cost educational programs on project management essentials. This not only helps potential clients understand the value of your services but also positions your company as an educational resource.
  • Referral Programs: Implement a referral program to incentivize existing clients, partners, and even employees to refer new business. Word-of-mouth remains a powerful marketing tool.
  • Online Reviews Management: Actively manage and encourage online reviews on platforms like Google My Business or industry-specific review sites. Positive reviews can significantly influence potential clients researching project management services.
  • Targeted Email Campaigns: Develop targeted email campaigns tailored to specific industries or businesses that might benefit from your project management expertise. Personalized outreach can yield higher conversion rates.
  • Attend Trade Shows and Conferences: Participate in relevant trade shows and conferences to showcase your company. This provides a platform to engage with potential clients face-to-face and stay updated on industry trends.

Focus on USPs

unique selling proposition

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your project management company meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your project management business could be:

  • Professional project development and management for retail businesses
  • Looking to transform your company culture? We’ll manage the process for you
  • Financial growth management and execution

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a project management business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in project management for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in project management. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

Building a Team for a New Business

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a project management business include:

  • Project Managers – assist with project management
  • General Manager – scheduling, accounting
  • Marketing Lead – SEO strategies, social media 

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Project Management Business – Start Making Money!

Running a Business

Companies often need to develop and manage projects, which is why project management is a growing consulting field. If you have experience in project management and a willingness to work hard, you could start a project management company and help businesses grow while making great money. 

You’ve learned how to manage your own business project now, so it’s time to get your successful project management company up and running.

Project Management Business FAQs

How can I learn to be a project manager?

You can get a project management certification by taking five online courses in various aspects of project management methodology through a school like Cornell University. There are also several certifications that you can get from the Project Management Institute.

How do I find clients for my project management company?

Networking and building relationships with professionals in your industry is important. Attending industry events and joining business associations can help you connect with potential clients. Utilize online platforms and social media, particularly LinkedIn, to showcase your expertise and services. 

How can I ensure effective team collaboration and coordination for projects?

Effective team collaboration and coordination for projects can be ensured through several practices. Clearly define project objectives, roles, and responsibilities for each team member. Utilize project management tools and software to streamline communication, task assignment, and progress tracking.

What types of projects can a project management company handle?

A project management company can handle a wide range of projects across various industries. Some common types of projects include software development, construction, marketing campaigns, event planning, product launches, business process improvements, organizational change initiatives, and more. 

How can I handle client communication and provide regular project updates?

Establish clear communication channels with clients, such as email, phone calls, or project management software. Schedule regular meetings or status updates to discuss project progress, milestones, and address any questions or concerns. Provide comprehensive project reports or dashboards to offer transparency and keep clients informed. 

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

How to Start a Project Management Company