Starting a data analytics business could be your next professional step if you have experience dealing with numbers and seeing patterns that signal trends. The data sector is rapidly expanding, so get in early to stay ahead of the game.

A data analyst converts raw data into relevant information. This procedure is frequently referred to as “storytelling.” Data is organized to communicate a specific story about a problem, process, or campaign, to mention a few examples. This organized data is presented to clients through the perspective of a story, which is visualized in easy-to-read charts and infographics. Because many people block off when they see numbers, data analysts utilize storytelling to capture and maintain their audience’s attention.

Just as a story has a beginning, middle, and end, so does analyzed, visualized data. It is the analyst’s job to tell this story in a compelling way, clearly translated. The analyst will present findings during meetings, often supplemented by documents and slideshows so that clients can visually connect with the data themselves. To say this another way: the communications side of this profession is just as important as the analytics side.

Most often, data analysts work with entities and individuals who are already tracking data. With the numbers in hand, it’s the analyst’s job to figure out what those numbers say. (Why do sales always drop in the winter? Will our bottom line be impacted by a drop in tourism? Do employees perform better when they take more time off?) By taking raw data and identifying patterns, data analysts enable organizations to better understand what’s working, what’s not working, and where there are opportunities to improve.

Create a Business Plan

Before you get started, you’ll need an idea of what resources you’ll need—and how to monetize your business in a practical way. We’ve answered the biggest questions about clients, costs, and profits below.

• Who is the target audience?

The target audience for a data analytics business is any individual or entity seeking to make meaning out of numbers and stats. Schools might hire an analyst to determine why there’s been a drop in graduation rates. A political candidate might hire an analyst to assess which voters to focus on during the campaign. Nonprofits could hire analysts to figure out why a fundraising campaign didn’t work. A retail business might hire an analyst to break down customer habits when visiting their website.

Some data analysts may only work with clients in a specific industry. Political and business analytics are entire fields on their own. So, if you have knowledge about a singular industry, you could focus your business on that. Otherwise, your potential clients may be as varied as the data they offer.

• How do I get clients?

The most surefire way to bring clients into your data analytics business is—you guessed it—networking. Because you’ll be dealing with sensitive data, establishing relationships and trust with potential clients is essential. Joining your local chamber of commerce is a good way to get yourself in front of owners and executives. You might also consider setting up meetings with potential clients to discuss their data analysis needs and how you can help fill those information voids. Even if you don’t get hired on the spot, these potential clients might reach out later or introduce you to their business friends.

Read Also: How do You Clean up Data Analysis?

Before you even begin seeking clients, however, you’ll want to create a website that showcases representative work. Perhaps your website could offer useful information or resources, as well. You’ll also want to create professional social media accounts and potentially buy social media advertisements.

• How much money will it take to get started?

Starting a data analytics business won’t set back your bank account too far. You’ll need a reliable laptop (at least $1,000 if you don’t already have one). You’ll also likely want to invest in data analytics software, which aids in data mining and visualization, among other things. Tableau is a popular choice starting $70 a month. With a bit more flexibility in terms of pricing is Zoho Analytics, which starts at just $22 a month. Other platforms such as Looker and InsightSquared offer individualized quotes based on your unique needs and situation. With these platforms, you’re able to pull in data from multiple sources, and then use the available features (there are many) to organize and mine that data before turning it into infographics.

While you could absolutely use a program like Adobe Illustrator to create your data visualization sets, programs like those listed above are created specifically to help organize, mine, and interpret data, in addition to visualizing it.

• How much should I charge?

Data analysts generally charge anywhere from $50-$250 an hour, determined by location, experience, services offered, and project complexity. Since you’ll be working as a consultant on a project-by-project basis, it’s a good idea to lay out how many hours a project will take ahead of time. If you charge $50 an hour for an 80-hour project, you and the client will both understand from the get-go that the project will cost $4,000.

Select a Name

Have a great name idea? Before you start marketing and branding your business, you’ll need to ensure your name is available. Most states prohibit or restrict businesses from adopting names that are already in use. Even if it’s legally allowed, a copycat name puts your business at risk of a lawsuit.

• Trademarks and Domain Names

Plan to trademark your business name? You can see if the trademark is available on a website like Trademarkia. It’s also a good idea to see if the domain name is available, which you can do on websites like Network Solutions and GoDaddy. Even if you don’t plan on putting together a website right away, you can buy the domain name to make sure no one takes it in the meantime.

Choose a Business Structure

Should you form an LLC? A sole proprietorship? Your choice of business structure will affect many aspects of your business, from liability to taxes.

Legally Form Your Data Analytics Business

If you opt for a sole proprietorship or general partnership, there’s no formal paperwork to file to legally create your entity—you just start selling your product or service. However, you will not have any liability protections or tax flexibility.

LLCs and corporations are formed by filing paperwork with a state agency, typically the Secretary of State. To start an LLC, you file articles of organization. To start a corporation, you file articles of incorporation. In most states, you can file these forms online or download a paper form from the state’s website.

Whether you’re forming an LLC or corporation, your articles will require certain basic information about your business, such as your company’s:

• name
• business address
• registered agent and office
• business purpose
• members/managers or directors/officers’ names and addresses
• number and type of authorized shares (for stock corporations)

You’ll also need the signature of someone authorized to sign on behalf of the business, along with the state’s filing fee. Fees vary by state but are typically between $100 and $200. If you hire Northwest to form your LLC or corporation, we complete and submit your formation paperwork on your behalf for just $100 plus state fees.

Get an EIN and Register for Taxes

Nearly all LLCs and corporations will need to request a federal employer identification number (EIN) from the IRS. If you file corporate income taxes, have employees, or file certain franchise taxes, you must have an EIN. An EIN is also a common requirement for opening a business bank account. Most businesses can request an EIN by filling out the IRS’s online form.

Your EIN is for federal taxes—but you’ll likely have state and local tax obligations as well. You will most likely need to set up an account with the state’s Department of Revenue, and you may need to apply for a state tax ID or a sales tax license as well.

Open a Bank Account

A business bank account keeps your personal finances separate from your business finances. For LLCs and corporations, keeping separate finances is essential for maintaining liability protection. To open an account, LLCs and corporations typically need to bring to the bank a copy of their articles, their operating agreement or bylaws, and their EIN.

Obtain Required Licenses and Permits

Many businesses will need a business license to operate. Licensing information—as well as any zoning requirements or other permits—can usually be found on the city or county website.

If your home is part of a homeowner’s association, you’ll also be subject to any of their restrictions for home-based businesses. Some areas may also require home-based businesses to obtain a Certificate of Occupancy (a document certifying the property owner has given the business permission to operate).