How to Start a Consulting Business

How to Start a Consulting Business
Many professionals yearn to open their own consulting practice but don’t know where to start. Learn about what consultants do and how to start a consulting business.
by Square Oct 05, 2022 — 4 min read
How to Start a Consulting Business

Due to job variability, consulting can be a confusing career to get into. First, let’s tackle the definition of a consultant and the general functions provided by a consulting firm..


Deep dive

What is consulting?

Consulting is the business of giving expert advice to other professionals. While it sounds simple enough, your success as a consultant is dependent not only on having expertise in the industry but also a natural ability to solve problems and make decisions.

Consulting can be categorised into two main sectors:

Strategy consulting

Strategy consultants focus their efforts on beating the competition and elevating business profit. When clients are struggling with a specific business direction, strategy consultants address the question of how to do it.

Management consulting

Management consultants are responsible for the process of developing or improving business strategies. Management consultants often specialise in a particular industry, some of which include:

What does a consultant do?

Consultants are hired for a variety of reasons that span from implementing simple changes to completely overhauling current business systems.

Here are five reasons you might be hired as a consultant:

Whether you are ready to open your consulting business tomorrow or you are just beginning to think about it, it’s important to understand what consultants specialise in so you can define where you fit in the market.


How to start a consulting business

Once you’ve pinpointed your consulting skillset, it’s time to take the steps to actually become a consultant. Here’s where you need to start:

1. Research certifications

Having certifications can help attract clients. The Certified Management Consultant (CMC) certification is awarded to consultants who have met global standards of performance in technical competency, ethics, consulting competency, project management and personal conduct.

2. Take care of your finances

Starting a company is a costly proposition, so it’s important to create a budget that lays out all your costs. You may decide that you need additional capital to be successful. If you do take out a business loan, make sure that you know how you will spend it. A problem many consultants face is separating personal finances from business finances when they first start. To avoid spending mishaps, implement ways to distinguish your business costs from your personal costs by opening a business bank account.


3. Set your consulting fees

What are customers willing to pay for your services? This is an important question to hash out at the beginning. There are different consulting fee models, but you ultimately want to base your rate on your clients, the services you offer and the time a proposal takes.

After you determine your fees, you need to select a payments system that allows your clients to pay for services. Many consultants use invoices to bill clients for the hours worked. With a robust invoice system, you can fill out your client’s information (which is saved in a customer directory) and send the billing statement in seconds via email.

Learn more about how to invoice clients.

4. Create a business plan

Now it’s time to write a business plan. Your value proposition and target market are the base of your plan and should be highlighted at the beginning of the document.

From there, you want to create a plan that includes a competitive analysis as well as financial considerations, which include the cost of your consulting business and your forecasted profit.

Take note that business plans change over time and that’s okay. Don’t be afraid to modify your business plan when long-term goals evolve and new opportunities arise.

5. Create a marketing plan

Because the consulting business is competitive, a marketing plan is crucial. Networking is the best method to secure consulting work. You want to become a reputable source whose opinion is valued in the industry. To do so, you have to constantly network and build loyalty among your client base

How to stand out above the rest

Anyone with knowledge in a specific industry might try their hand at consulting, but expertise alone won’t make you successful. Effective consultants have an appetite and drive for excellence, which allows them to stand out above others.

Don’t let the competition or market saturation scare you away from the profession. Here are a few ways to separate and elevate your work.

Find ways to exploit knowledge gaps

Each industry has unique challenges, which is where opportunity lies for consultants. Being able to provide answers to tough questions in the industry isn’t easy but it does guarantee success.

Focus on your clients, not the cash

Each client has a unique story, and it’s important for you to invest in the entire landscape. Let the client’s challenges motivate you rather than the money being offered to solve them.

Sell your results, not your services

The proposal you create to win a client should be based on your previous results. To win their business, show them how you have helped solve a problem similar to the one they’re facing.

Constantly question your value proposition

The value you add to your client’s business is the ultimate measure of success. Be sure to constantly check in on the work you’re doing and be sure it is unique among competing consultants in the industry.

Stay organised

Keeping your cash flow organised and orderly might sound simple enough, but a small slip up can lead to a major headache. By learning how to manage your invoices effectively, you can decrease the risk of error and improve your business cash flow.

The Bottom Line is brought to you by a global team of collaborators who believe that anyone should be able to participate and thrive in the economy.


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