The Complete Guide to Starting a Consulting Business

August 19th, 2020.
The Complete Guide to Starting a Consulting Business

Have you ever faced a problem — business-related or otherwise — and needed an objective perspective to help solve it? This is likely something that everyone has experienced.

On the other hand, have you ever worked with a friend or coworker to provide an unbiased outlook on an issue? If you have, you’ve consulted with them.

If you’re passionate about helping others succeed by providing niche expertise that’s been honed by years of education, experience, and skill development, a career in consulting may be for you.

We’ve compiled this guide to dig deeper into the wild, lucrative world of consulting — and how to start and market a consulting business of your own.

What is consulting?

Consulting is the process of providing expert advice, opinion, and/or strategies for a fee. Consultants — whether individual or firm-based — specialize in a niche industry or trade.

Let’s hone in on an important aspect of the above definition: expert. Consultants are experts in their field. They possess knowledge so valuable that someone else — an individual, department, or entire organization — is willing to pay for it.

Consulting is about much more than giving advice, though. According to this legacy HBR article, consulting can include a wide range of activities, including problem diagnosis, data collection, feedback, strategy-building, and implementation.

Consultants and consulting firms are highly sought after because they can bring a unique and fresh perspective to a pressing business problem or challenge. Sometimes, business owners and leaders need a new set of eyes when approaching an issue; as a consultant, you can provide that unbiased perspective.

Simply put, consultants work to make their clients more successful. This can require a lot of work, which is why the consulting business is so lucrative.

There are more than 700,000 active consulting firms worldwide. Consulting is a busy, booming industry, and it’s continuing to grow.

Consultant vs. Contractor

You may have heard the words consultant, contractor, and even freelancer used interchangeably.

If you were to open your own consulting business practice, where would you stand?

While all of these parties work with businesses (versus being employed by them), that’s about where their similarities end.

Contractors (including freelancers) are self-employed workers who are contracted out by companies to provide services.

Consultants, as we’ve defined above, primarily provide an assessment and expert advice. They can be self-employed or employed by a consulting firm.

However, if, as a consultant, you were asked to provide a service or deliverable, you could be hired into a contractor-type role.

For example, let’s say you were hired to assess a sales team’s performance. Upon initial assessment, you recommend a new sales strategy and training plan. If you were then asked to draw up and deliver this written strategy and training plan, you would be considered a contractor (in addition to a consultant).

Consultants exist in practically every field. Let’s discuss the different types of consulting in which you can specialize.

Consulting can refer to a variety of specialists and industries.

In this section, we’ll unpack nine common types of consulting practices, any relevant niche opportunities that fall under them, and what your career in these respective trades may look like.

1. Management Consulting

Management consulting is the most common type of consulting and includes many different niche consulting careers under its umbrella. Firms like McKinsey, Bain & Company, and Deloitte primarily work in management consulting. It’s a $250 billion industry — at least, where it stands as of 2020.

As a management consultant, you would work with business leaders to help their companies run smoothly. This typically involves assessing certain processes and providing advice on how to improve or implement new ones.

Not all management consultants are the same — some follow a generalist approach and assess each organization as a whole, and some specialize in more specific departments or fields, such as the four below.

Strategy Consulting

Strategy consulting is an important subset of management consulting. The purpose of strategy consulting is to review key business strategies and provide expert advice on how to improve or develop new ones. Strategy consultants are typically experts in a certain industry or field and advise on high-level, strategic business decisions, such as company vision, resources, and investments.

Operations Consulting

While strategy consultants primarily work with the “why”, operations consulting addresses the “how”. These consultants address operational processes including procurement, outsourcing, supply chain management, and more. Also, operations consultants often do more for businesses than give advice — sometimes they also offer implementation and deployment services to help clients put their new processes to work.

Financial Strategy Consulting

Financial consultants, or advisors, help businesses make informed, objective, and legal financial decisions to improve returns. This sector of management consulting works in corporate finance, financial restructuring, risk management, and even real estate. All financial consultants meet certain requirements and obtain a license to offer financial advice.

Human Resources Consulting

The purpose of human resources (HR) consulting is to help companies hire and retain remarkable employees. These specialists address HR processes including training and development, conflict resolution, management philosophies, benefits and pensions, and employee satisfaction. HR consultants also ensure businesses are following legal and ethical personnel practices.

2. IT Consulting

Information technology (IT) consultants implement and manage new technologies, such as systems integration, software development and management, and enterprise architecture.

As an IT consultant, you might help businesses figure out what software to invest in and how to use it to meet goals, solve challenges, and implement important changes. This consulting division is a highly specialized and lucrative industry, worth almost double the management consulting industry — $460 billion.

3. Business Consulting

Business consulting is a broad term that refers to specialists who work with businesses on anything from financial advising to training and layoffs. (You’ll see that this category overlaps with others in this list.)

As a business consultant, you’d typically work with small to mid-size businesses (SMBs) — as opposed to management consulting, where you’d work with enterprise-level businesses — to objectively assess challenges and provide solutions.

4. Sales Consulting

Sales consultants work to improve the performance of sales teams, regardless of size or industry.

As a sales consultant, you’d typically work in sales training and development, but you could also be brought on for other purposes, such as choosing a CRM, improving the sales process, or boosting team morale. Because sales is considered one of the most important parts of a business, financially-speaking, quality sales consultants are highly-valued and sought-after.

5. Marketing Consulting

The purpose of marketing consulting is to evaluate a business’s marketing efforts and provide guidance on how to improve to meet goals and bring in revenue.

As a marketing consultant, you might specialize in a certain field of marketing, such as content marketing, PR, or social media marketing. Or, you might focus on a niche marketing process, such as defining target audiences, customer acquisition, or brand awareness.

6. Environmental Consulting

Are you passionate about environmental laws and regulations? Environmental consulting may be for you. As an environmental consultant, you may advise businesses on how their practices affect the environment around them and often work with industries like construction, waste management, real estate, and energy (but can be hired by any type of company).

Environmental consulting is particularly important as companies work to reduce their permanent impact on the environment.

7. Financial Consulting

Financial consulting overlaps somewhat with the financial strategy consulting we discussed above. The main difference, however, is that this category also includes independent financial consultants that work with individuals, families, and entrepreneurs.

As a financial consultant, you may help with everything from day-to-day expenses, investments, and taxes to cash-flow issues, insurance, and financial legalities.

8. Career Consulting

Individuals and businesses alike use career consulting to either equip themselves or their employees to grow in their jobs. As a career consultant, you may help clients with skill development, resume building, job applications, interviews, and understanding the job market as a whole. If you have a background in HR or recruiting, career consulting may be for you.

9. Healthcare Consulting

The purpose of healthcare consulting is to maximize the impact and output of healthcare organizations. Healthcare consultants are basically management consultants that work in the healthcare industry. They analyze the personnel, profits, and processes in an organization and provide advice on how to improve and solve pressing challenges.

Are you specialized in a certain field or niche industry and believe you could offer quality advice to others? You may consider opening your own consulting business.

Here are six steps to follow to start a consulting business that helps both you and your clients succeed.

1. Assess your skills and strengths to choose your niche.

Before anything else, brainstorm and define what skills and strengths you believe would make you a good consultant. Remember — consultants are experts in a certain niche. Their knowledge is valued so highly that they’re paid to share it.

More importantly, good consultants aren’t experts in everything.

What makes you an expert? What do you love to do and talk about? If you had to stand in front of a classroom and teach on any subject, what would that be? What do your friends, family, and coworkers ask your advice on?

These are just a few questions to ask yourself to start thinking about what skills and strengths would make you a consultant. Jot down your answer before moving forward.

If I were answering for myself, I’d say I’m an expert in writing and content marketing (as much as one could consider herself an expert at 25 years old). I’ve worked in this field for my entire career and genuinely love creating content and helping others do the same.

2. Analyze your market needs and pain points.

Once you establish your consulting niche, you should have a better idea of what industry and market you’ll be targeting. Following my personal example from above, I would be targeting the marketing industry and specializing in content marketing and creation.

Pinpointing your market as a consultant allows you to understand the needs, challenges, and pain points your potential clients face, which can help clarify how you can use your skills to provide solutions.

For example, let’s say my target audience as a content marketing consultant often struggles with consistent content creation, SEO, and tracking published content.

Defining these factors allows me to know precisely how I can help my clients (e.g. with writing, SEO, and metrics) versus simply saying, “Hey, I can help you with words!”.

Just as you specialize in a certain skill set as a consultant, you should also specify what services you provide for your clients. This information can also help you better market to clients, which we’ll talk about below.

3. Develop your brand, website, and service offerings.

The next step in getting started as a consultant is creating the external-facing components of your business. This includes your website, branding, and service offerings. These resources can help clients identify you and can help your business stand out among competitors.

Whether you identify your business with your name (e.g. Allie Decker LLC) or with another name (e.g. Content Marketing Consulting LLC), you should give it an official name and website to boot.

The other important part of this step is outlining how you work with clients and how much your consulting costs.

Whether you organize your services into clear-cut packages and prices or simply list your services and request that clients call you for more information, you should at least give visitors an idea of what you specialize in and how you can help them (hence what we defined in steps 1 and 2).

4. Open your business.

You know what your skills are, how your skills can help others, and how potential clients can discover and learn more about you — it’s time to open your business. This step is a bit more complicated than flipping a proverbial sign from Closed to Open.

First, consider the legal structure of your business. Legitimizing your business gives it credibility and gives you direction when it comes to taxes, staffing, and other legal details.

Next, think about what tools you may need to conduct business and connect with clients. These might include tools to help find new clients and jobs — like a LinkedIn membership — and video conferencing software like Zoom or Skype.

At this stage, you should also open a business bank account, invest in an accountant (and eventually an assistant), and order business cards with your branding and information.

Download The Complete Consultant's Success Kit to access 8 free templates for planning, researching, and client onboarding.

5. Market your business to attract new clients.

Now that you’ve opened your business, it’s time to grow.

A consulting business isn’t a business without clients. Selling your consulting services isn’t like selling a car, a house, or software. Sometimes, you may find yourself selling your services to people who aren’t even aware they need them.

Consulting marketing can adopt a variety of marketing methods:

Regardless of how you promote your consulting business, invest in consulting marketing methods that will get you in direct contact with your potential clients.

Methods like blogging, podcasting, and social media marketing don’t necessarily draw a direct line to new revenue, but they are powerful for growing awareness and establishing expertise.

A healthy mix of direct marketing and awareness marketing will help your consulting business succeed.

Once you get in front of potential clients, have an established elevator pitch and client proposal template ready to go. Half the consulting “battle” is providing advice; the other half is selling your advice in the first place.

As you grow your client base, use a CRM like the HubSpot free CRM. It can help you keep track of client information as well as the context of your relationship with each client.

6. Stay organized and scale.

As you grow and master your consulting business, stay organized and consistent. High-quality results are the best way to incite referrals from previous clients — and referrals can be your best source of new sales.

In fact, as you build successful relationships with clients, don't be afraid to ask for referrals for new leads.

Once a month or so, sit down and analyze your consulting business. Look at your client list, software tools, and other business practices; analyze what’s working and what’s not.

Understand where you can cut extra effort and resources to ultimately save money. Lastly, subscribe to industry trends so you can keep your business relevant to the challenges and trends your clients are facing.

Starting a consulting business is a remarkable feat, but that's not where the work stops. These six activities will help you grow your consulting business, too.

1. Conduct a competitive analysis.

Examining your competition can be intimidating, but with the right mindset, you can learn a lot from them about how to grow and improve your consulting business. Moreover, you can identify gaps in the market and find new ways to improve upon their strategies.

If you haven't done so already, conduct a competitive analysis of any other consultants or consulting firms in your niche and area. 

How do they market their business? What consulting services do they offer, and how do they describe and bundle them? What are their prices and fees?

When you study what's working for your competitors, you learn more about your clients' customer journeys and how you can improve your chances of being hired over your competition.

2. Start a blog.

Blogging is a uniquely effective way to market your business, establish authority in your niche, and help your business organically rank online. Many people — professionals, too — hesitate to start a blog because they don't know how to manage a blog or what to write about. Well, we've compiled a helpful guide to help you past that roadblock.

Download our free guide to starting a successful blog and receive an 8-part planner to get your blog up and running.

Another source of great blog content is your client base. Pay attention to what issues or questions your clients face and gather feedback about what information would be helpful to write and share. In the same vein, blog content can also serve as sales enablement content — sharing a popular blog post or two with potential clients can help them understand why to hire you and what they may learn from working with you.

3. Share thought leadership content.

Similar to starting a blog, the process of publishing thought leadership content can help you establish your authority and attract new clientele. Consider platforms like Medium that already have an audience; publish your most authoritative, data-driven, opinion-based content on there to potentially boost your brand awareness. 

You can also use tools like HARO to connect with journalists and bloggers looking for expert quotes, anecdotes, and stories for their content. Respond to queries to get your voice featured as a thought leader in your consulting niche.

4. Explore new consulting verticals.

Take a peek at your competitive analysis (if you've run one): Did your findings yield any verticals or specializations that your competitors are offering and you aren't? Consider adding new verticals to your services to further differentiate yourself and grow your business.

For example, if you're a content marketing consultant, you could consider introducing consulting services for email marketing and social media marketing. If you expand, just be sure that you have relevant experience and expertise — don't add new services for the sake of new business.

5. Network and make new connections.

Networking in person is pretty straightforward. But networking online ... well, that's a different story. Thankfully, with today's technology, there are countless ways to network and make new connections.

Between social media, dedicated Slack channels, and online masterminds, the only thing standing in your way of making new connections and friends online is you. One of my favorite spots to network is Twitter — it's the easiest platform on which to engage with folks and start interesting conversations, and it's been a good reminder of old connections that I can revive with a short Tweet or email.

Test a few platforms and programs and see which one helps you get connected, attract clients, and build a community.

Start Consulting Today

Consulting may be a fascinating, lucrative career, but it’s also a mindset. Successful consulting businesses begin with an individual or team of knowledgeable experts who are passionate about helping others.

Regardless of how big your firm grows or how long your client list gets, keep your passion and expertise centered and you’ll always find success — for yourself and your clients.

Editor's note: This post was originally published in December 2019 and has been updated for comprehensiveness.