Do you have specialized expertise in your industry? Do your colleagues turn to you for guidance and decision-making advice? If so, you might consider starting a consulting business.
To start, you'll need to create a business plan, then make a business website that promotes your services. While this may sound like a lot, the freedom, independence and opportunities for exploration and growth that come with consulting can be quite rewarding. For first-hand advice on starting a consulting business, we consulted Ken Goldstein, Wix user and managing director of The Goldstein Group. Here’s what you need to know before becoming a consultant, including a breakdown of the types of consulting businesses ideas and how to start your own.
What is consulting?
Consulting is a career that centers around giving expert advice to other professionals. This type of service business can take a variety of forms depending on your background and experience; for example, you could be a brand consultant who guides company messaging or an IT consultant who works to improve companies’ technical systems.
According to Goldstein, the best consultants are disciplined, humble, patient, self-assured and self-aware. They have excellent time management and listening skills, thrive working on their own and can admit when they make mistakes.
While consultants get to be in charge and manage the clients and projects they take on, many early career consultants struggle with the work-life balance and isolation. “In the early days, I never took time off for fear of not being available to clients," said Goldstein. "I thought that I could lose them as a client. Over time, I’ve learned to set boundaries, as taking care of myself helps me better serve the clients.”
Types of consulting businesses
All consultants partner with companies to share expert advice, identify problems and offer new solutions. However, consulting businesses differ by expertise. The following are the most common types of businesses for consultants:
Strategy consultants assist with high-level business decisions, such as advising executives on business strategy.
Marketing consultants advise companies on marketing strategies like content, social media or paid acquisition.
Operations consultants use data and research to help companies reduce costs, streamline their operations, improve productivity or increase business efficiency.
Financial consultants help companies improve their profits or reduce spending.
Human resources consultants offer companies advice for recruiting, onboarding, training, development, retention and resolving conflict.
Compliance consultants ensure that companies comply with all federal and local laws and regulations.
IT or technology consultants recommend improvements to company software and technological systems.
Legal consultants ensure that companies can properly navigate the legal system.
Sales consultants advise on matters such as incentivizing sales teams and improving the sales process for customers.
Sustainability consultants help businesses meet environmental regulations, adopt sustainable practices and reduce their carbon footprints.
How to start a consulting business
Now that you have brainstormed a few service business ideas, follow these steps to start your own consulting business:
01. Define your niche
Every consultant has a focus or niche. In fact, the best consultants stand out because of their specialty. Ken Goldstein unexpectedly found his niche in the field of people management after helping a dental practice create a safe and positive work culture. After the dentist hired him, his business flourished through word-of-mouth networking.
Today, he helps businesses who need help recruiting and retaining employees. “Once I help clients make sure they have the right people in place, I’ll work with them on strategic planning,” said Goldstein. He also hosts workshops and performs as a keynote speaker.
If you’re still not sure what type of consultant you want to be, think about your skills and experience, as well as the advice you’d offer businesses. What do you consider yourself an expert in? What do you enjoy talking about and teaching to others?
Use these questions to pinpoint your skill set before launching your business. Based on your niche, you should also consider researching consultant certifications. This will show clients you meet global standards for performance in competency, project management, ethics and personal conduct. For example, Goldstein is both CPBA- and DiSC-certified—two important certifications in his field.
02. Evaluate your target market
Once you know your specialty, you can target a set of potential clients. Are they primarily in one industry? Are they large enterprises, startups, or something in between? Complete market research to learn about your audience’s pain points and needs.
On top of that, knowing about your clients’ challenges helps you define your services. Use that knowledge to make a business plan, come up with a marketing strategy and set your rates. “Take the time to be very clear of what your deliverables are,” said Goldstein. “Decide if you’re a commodity or a service provider, because you can’t be everything to everybody.”
03. Create a website
Today, every business needs a website to build a brand, promote services and act as a booking site. A service website provides more information about your background and experience, and through proper search engine optimization, also helps prospective clients discover your services. These healthcare websites serve as one example of how service websites can help boost business. With this in mind make sure to think carefully about the business goals for your website.
A clear brand identity, including your logo and color scheme. This logo maker can help you get started.
Your business’s name. Don’t have one? Use this business name generator.
An overview of your business and your mission statement.
An About page that communicates your background and experience. Be sure to follow best business website design practices.
A Services page that explains your offerings.
An appointment scheduler that lets clients book and pay online.
Tip: Check out this blog post on how to make a business website for more detailed information to make yours shine (and how to create a hotel website for inspiration). You should also consider setting up your Google Business Profile, once your site is live.
04. Form your business
Now that you’ve laid the groundwork, it’s time to start a business.
First, you’ll need to determine your business’s legal structure so that you can properly register your business. Do you want it to be a sole proprietorship, limited liability company or corporation? Consult with a tax professional to make sure your chosen structure makes the most sense for your firm. You'll also need to register your business name as a part of this process.
Next, equip yourself with all the tools you’ll need to manage it smoothly. Will you need a brick-and-mortar storefront? Do you plan to work from your home office? You should also consider any software you’ll need. For example, you might want to use teleconferencing software to communicate remotely with clients.
05. Make a financial plan
As you legally register your business, you should also form a financial plan. Lay out all the costs of starting your business and determine if you’ll need to take out a loan. To accurately estimate the costs and set up a preliminary budget, use a tool like the U.S. Small Business Administration’s startup cost worksheet to account for business formation and registration expenses as well as software and marketing costs.
Make sure to open a business bank account to separate your business spendings and earnings from your personal finances. To stay organized, consider investing in an accountant or assistant. If you prefer to go the DIY route, consider using bookkeeping software.
06. Determine your rates
Goldstein implores consultants to build a pricing structure for your services. Will it be hourly? Will you offer a flat fee for each project? Or will you offer a performance-based rate dependent on your results?
Then, figure out how much to charge. Use similar businesses in the local area to get a ballpark of how to price a service. Keep in mind that location often affects pricing. For Consultants living in urban areas of the US, for instance, can typically charge higher rates than those living in rural areas. You should also factor in your level of experience and the budgets of the clients you will serve. According to Indeed, the highest-paying consultant jobs make an annual salary between $56,000 and $100,000.
If you’re still not sure what to charge, here’s a shortcut: Set an hourly rate that would enable you to achieve your goal salary. Start by dividing your former salary by 52 work weeks, then divide that number by 40. That will give you the hourly rate you were making at your former job. Then, mark that price up based on competitor prices and your own salary goals.
One final note from Goldstein on determining your rate: “Be proud of your work and don’t discount your pricing.”
07. Create a business plan
A business plan is a formal written document that contains your company’s future goals, the methods for attaining those goals and the time frame for achieving them. Think of it as a roadmap for your firm. It should discuss marketing, financial and operational details. This includes a value proposition, a target market analysis, a SWOT (strengths, weaknessess, opportunities and threats) analysis with an evaluation of competitors and opportunities, estimated costs and forecasted profit.
Business plans outline your strategic action items and keep you (and your employees) on target to meet your objectives. You can also use it as a guide to keep your short-term SMART (specific, measurable, achievable, relevant and time-bound) goals in line with your company’s long-term strategy.
Keep in mind that business plans evolve over time. If you find that your long-term goals eventually change or that new opportunities arise, you can review and update your business plan to align it with your new direction.
08. Market your services
If you don’t have clients, you won’t have a consulting business. You must consider how you’ll promote your offerings when starting a consulting business. Several common approaches to marketing a consulting business include:
Blogging, which establishes your expertise in the field and makes you discoverable online.
Webinars, or online seminars that you can offer for free to draw in clients.
Podcasts, which you can use to build your reputation as a thought leader and gain a foothold in the industry.
Social media marketing, such as sharing posts, creating ads or sending private messages over LinkedIn.
Advertising in print, on social media or on search engines.
Public speaking or coaching to expand your network and grow your reputation.
Referral marketing to incentivize clients to refer your services to other companies.
Cold calling members of your target audience with your elevator pitch.
Emailing potential clients with a branded business email.
Invest in marketing methods that will put you directly in front of prospective clients. Consultants cite referral marketing as their most successful promotional strategy, with 37% noting it’s their primary means of generating new business.
Goldstein recommends networking with other consultants and subject matter experts in various fields. That way, when a project arises, you can consult them as subject matter experts or even refer their services to a client (and vice versa).
Post-launch tips for succeeding as a consultant
Once you start your business, how will you stand out so that people hire you? Use these tips to succeed with clients:
Identify your industry’s pain points: Think about the most pressing challenges companies in your industry face, and become an expert in how to address them.
Sell your results: Keep an organized portfolio of your past successes. Attract clients by showing them tangible results to similar problems you’ve solved in the past.
Empathize with your clients: Use your soft skills to build personal connections with your clients and show them you’re deeply invested in their business.
Stay organized: Impress your clients by staying on top of deadlines, juggling different projects with ease and keeping your business running smoothly.
Keep networking: A robust cadre can not only keep you abreast of new industry and economic developments, but it can also help you keep a steady stream of work. Plus, you’ll always have someone to bounce ideas off and have conversations with.