How to start a consulting business and get your first clients
How to start a consulting business and get your first clients
Consultants are a coveted asset. Businesses rely on their expertise and passion to help them map and achieve their goals.
The demand for consulting services is on the rise. In the UK, the consulting marketplace is valued at approximately £81 billion and has steadily grown in recent years between 6%-10% year over year, according to research carried out by Statista.
Starting a consulting business allows you to leverage your professional expertise and skills to help other businesses thrive—be it online, in-person (COVID-19 restrictions pending), in your own country or on a global scale.
In this article, we’ll dive into what exactly a consultant is, how they help businesses, explore six types of consulting business models and discuss what you should consider before starting your own consulting business.
Table of contents
- What is a consultant and how do they help businesses?
- Benefits of starting a consulting business
- What qualities make up a good consultant?
- 6 types of consulting business models
- Things to consider before becoming a consultant
- Expert insights: Starting a consultancy around social change
- Wrapping up
6 types of consulting business models
What is a consultant and how do they help businesses?
A consultant is someone that has developed specialised skills in a specific area and uses that knowledge and expertise to temporarily help other businesses.
For example, a consultant may have previously worked as a senior accountant at a company and has chosen to use those skills to consult other businesses regarding accountancy. Or, a consultant may be somebody who has raised money for various types of businesses over the course of their career and has chosen to use that specific expertise to consult with other businesses on best practices to raise money.
Consultants come in many forms, (as we will discuss in detail in a later section). They can be certified public accountants (CPAs), attorneys, marketers, sales leaders, coaches, a full-fledged consulting agency that caters to many areas of business, and more.
Beyond simply advising businesses on best-practices, consultants often help in a myriad of other ways. For example, consultants may help businesses by:
- Identifying problems and providing an objective opinion, free of company politics or emotion
- Offering expert advice for helpful solutions
- Acting as supplemental staff for a period of time by contributing their specialised skills
- Being a much-needed catalyst for change by providing extra horsepower
- Reenergising the business in a variety of ways, such as helping them grow rather than maintaining the status quo
- Teaching and training employees
- Helping to build a new business from scratch
From a business perspective, hiring a consultant is a great way to acquire expertise that helps to increase revenue while keeping expenses low. While consultants certainly can and should charge a premium for their expert insights, it’s often cheaper to hire a consultant over a full-time employee. That’s because hiring a consultant allows businesses to pay for the expertise they need at that moment in time and not a moment more.
If it turns out that the business realises that they need the expertise a consultant brings on a more permanent basis, that’s when they’ll most likely seek to fill a full-time position for that role. That role may be an in-house consultant or a full-time position, such as a senior CPA.
Benefits of starting a consulting business
Starting a consulting business isn’t only beneficial for your clients, but it can also jumpstart your entrepreneurial career and help you grow professionally.
Here are a few of the top benefits of starting your own consulting business:
- Low overhead: Because you’re selling your expertise rather than a product or service, it’s relatively inexpensive to start your own consulting business. You can run it remotely from your home and your biggest expense will be getting your business online, which isn’t very costly. Another expense to consider is a certification (which we will discuss later on), which is also inexpensive and often not required.
- Flexibility: Like any other business owner, working for yourself gives you an incredible amount of flexibility. You get to make your own schedule, choose your own rules, pick the types of clients you want to work with, choose how much to pay yourself vs. putting back into the business, and so on. Your time and work/life balance is truly yours and you get to decide how you want to use and structure it.
- Opportunity for professional development: Great consultants are constantly watching webinars, attending seminars and conferences and reading up on the latest trends and reports to stay up to date in their field. Because of this, you’re going to learn a lot and consistently level up your skillset. And as a side benefit, you’ll always be growing your professional network because of the events you attend. The knowledge sharing from your network will help to further develop your skills and mindset.
- Put your expertise to work for yourself rather than others: Consultants are highly skilled and experienced workers. They are often linchpins in their organisation and provide long-lasting value. Many people are happy putting their skills to use as employees, but if you love the idea of answering to yourself, being your own boss and reaping all of the benefits of your hard work, then starting your own business may be for you. Because starting a consulting business has such low overhead, it’s very easy to start your business on a budget with no money or capital.
- Get to help people: Ultimately, consultants get to help others. Their knowledge, experience and expertise are highly valued, and work that is both helpful and highly valued is often the most rewarding kind. You get to temporarily enter a workspace that’s in need of help and single-handedly improve it—whether through actual material work or through teaching invaluable insights to others.
Of course, every business has its downsides. The pressure of being the go-to person that wears all of the hats and makes difficult decisions that could harm a company if poorly executed can be overwhelming. And in general, all business owners deal with the added stress of effectively managing their own time, taxes, benefits, hiring staff and making enough money to stay afloat in their first few years and beyond.
That said if you’ve got the urge to work for yourself and a strong desire to help others, the benefits of starting your own consulting business far outweigh the drawbacks.
What qualities make up a good consultant?
Consultants can be an invaluable addition to an organisation. They can help develop strategies for growth, offer priceless insights to help streamline existing processes, provide objective opinions on how to scale efficiently, help to brainstorm out of the box solutions to drive more revenue, and much more.
So, what qualities do you need to have in order to get your business off the ground and help your clients reach and surpass their goals? Here are a few key benchmarks.
- Good networking skills: Great consultants know how to build important relationships. You’ll rely on these relationships to help you get your consulting business off the ground, gain an advantage over your competitors, boost your brand’s reputation and increase your chances of landing new clients. Plus, you’ll be able to learn from these relationships and perhaps even find a mentor to provide expert guidance on how to build a successful consulting business.
- Passion: The best consultants are passionate about what they do. If you enjoy the work you’re tasked with and are passionate about helping others reach their goals, you’ll produce better work for your client’s and be more fulfilled with the outcome. Plus, if you’re passionate you’re also often more resourceful, committed and tenacious especially if you hit a speedbump in the road. Your clients will want to know that you care enough to see a project through even if it’s particularly challenging.
- Drive for excellence: Passion will serve to supplement your drive for excellence. A great business consultant will care deeply about getting the job done well. They will go above and beyond expectations to produce measurable results. If you care about building excellent systems that are better than anything else out there, then you’ll be ahead of the curve.
- Attention to detail: Business consultants must have keen attention to detail. You’ll be responsible for reviewing processes and systems to find potential flaws and areas of opportunity. To achieve this, you’ll need to be able to catch inconsistencies quickly. Moreover, you’ll be expected to create error-free deliverables consistently without oversight. Great consultants make few errors, and this helps to build trust and loyalty with your clients.
- Ability to multitask: As a consultant, you’ll have to wear many hats at once. From reviewing policy and processes to creating PowerPoint presentations to interviewing staff to leading meetings and so on. You must have an innate ability to juggle all of these responsibilities at once without feeling overwhelmed. Rather, you’ll be able to easily switch between tasks while still producing impressive results.
While having these high-quality traits will help you be a great consultant in general, without a good business model, you may struggle to get your business off the ground. Let’s explore several types of consulting business models and how to launch them the right way.
6 types of consulting business models
There are dozens of successful consulting business models, but we’ve chosen six of the most popular types to explore in detail.
Let’s dive in.
Financial consultants help businesses manage and grow their wealth. You will be responsible for improving financial strategies, creating more efficient procedures and ultimately maximising revenue.
Clients will look to you for expertise and guidance on forecasting, investment opportunities, financial planning best practices, portfolio review, providing crucial insights on the best avenue towards growth, tax preparation, risk management, business acquisitions, and so on.
To be a successful financial consultant, you must be first and foremost be trustworthy. Something that will help you gain that trust is obtaining the Certified Financial Planner (CFP) certification, which is recognised globally as the gold standard for financial planning professionals.
This certification will immediately help to garner trust and confidence amongst your clients. It will also help to reduce your compliance risk, something crucial for a business owner that is helping others manage their money. Further, it will prove that you’ve been tested and thus meet rigorous international competency, ethical and professional practice standards.
That said, this certification is not required. If you have plenty of on the job experience and testimonials to vouch for your expertise, you can leverage your network to land your first client.
It’s best to choose a financial niche where you can truly deliver unique value. Not every financial consultant is expected to be a wizard at both financial forecasting and business acquisition. The former is better suited for accountants and the latter is catered towards investors. Hone in on your biggest strengths and proceed from there.
A branding consultant helps businesses by helping to conceptualise a brand. This involves creating consistent brand messaging, building brand guidelines, choosing colour pallets, creating voice and tone guidelines and much more.
Building a brand that customers love is tricky, but done right, can significantly increase revenue and reach. That’s what clients rely on branding consultants for—to get the brand right the first time around.
Branding consultants must be constantly on the ball when it comes to industry updates. As digital branding trends often change each year, it’s key that you are up to date with the latest best-practices.
At the same time, the market is flooded with experienced branders offering up their expertise for a price. A great way to attract your first clients is to build a comprehensive portfolio that showcases how you’ve contributed to projects that have driven amazing results. Webinars, videos and a stand-out website are all great ways to showcase your work and talents and personalise your own brand.
Marketing consultants help their clients develop strategies to better reach their target audience and drive them to convert into customers.
- Uncovering missed opportunities for driving potential customers to their value proposition;
- Providing guidance on how to produce valuable SEO driven content;
- Creating efficient marketing budgets;
- Crafting realistic timelines;
- Building comprehensive marketing strategies and materials,
- Generating effective publishing strategies and timelines,
- Building relationships with influencers and thought-leaders, and;
- Ultimately improving revenue through marketing initiatives.
Marketing is an art form that requires deep knowledge of how to make a brand stand out from the competition. Marketing consultants are responsible for the business’s public persona and perception, which requires a keen eye for understanding what drives consumer loyalty and retention.
Similar to branding, the best way to show off your marketing expertise is by proving that what you’ve done for other brands can be replicated for your potential clients. Create a captivating website and add tons of testimonials, case studies and stats. If you can write, build a blog and produce 10x content that dives into the expert insights that you offer. If you can prove that you are an industry expert and leader, you’ll gain enough social proof to generate a buzz.
Management consultants help businesses navigate their growth. As businesses grow, they often face hurdles when it comes to introducing new technologies and processes, expanding staff, coaching managers, obtaining operational efficiency and updating internal processes.
It’s all too easy for businesses to grow too fast and get ahead of themselves, thus overpromising and under-delivering. Management consultants provide critical insight on how to grow efficiently and effectively without compromising value, culture, and target audience expectations.
As a business management consultant, you’ll evaluate the larger business strategy and compare that to the way the business is currently operating. Do they align? If not, what can you do to optimise it and set it on a smoother course? From leadership tactics to internal processes, you will enhance business operations that will ultimately help the business succeed.
Business management consultants can level up their brand by obtaining a Certified Management Consultant (CMC) certification. This international consultancy award will help you to provide evidence of your ability to provide added-value solutions, experience in delivering impartial interventions and a highly coveted endorsement that you meet the preferred standards.
Business strategy consulting is similar to business management, but with a focus on helping established businesses stay aligned with their original mission and goals, or helping growing businesses gain traction.
While business management is all about enhancing internal operations and leadership, business strategy takes a more macro approach and helps to write or update business plans, bring the right people on board, create new or enhanced products and advise on the latest target market trends and competition.
A business strategy consultant will help a business stand out from the competition in terms of large-scale business choices, such as products, pricing, staff, board members and more. All the while ensuring that the actions the business takes align with their original vision, mission and values.
If you find that the business has strayed from their initial foundational values, you can either steer them back towards them or help them generate updated values. Either way, the way that the business is operating and the work they are producing must align with these foundational pillars.
A human resource consultant will help growing companies that are navigating a transition. This transition may range from going through an acquisition, hiring rapidly to meet demand, bringing on new leadership, restructuring teams, needing to fire several employees and building out employee documentation.
A human resources consultant will be able to provide guidance and assistance regarding employee benefits, retirement funds, company culture, onboarding procedures, internal messaging best practices and requirement gathering.
Often, these companies don’t have the support or guidance they need in order to implement new procedures and policies, such as an employee benefits package or crafting a new employee handbook. Larger companies may enlist an HR consultant to gain an outside perspective on a difficult challenge without getting wrapped up in internal organisational politics or bias.
HR consultants also play a key role in creating or enhancing positive company culture. Employee well-being is not a given, and HR consultants are experts in people-problem prevention programs, such as teaching employees how to get along with each other or providing violence and/or sexual assault/harassment training in the workplace.
Businesses usually look for their HR consultant to have a degree in Human Resources and Organisational Leadership or several years of HR experience in lieu of, or in addition to, a specialised degree.
Top Tip: No matter what business model you choose, you’ll need to choose a legal business structure (Sole trader, Limited Liability Company (LTD), Partnership or Limited Liability Partnership (LLP)). To learn more about each structure in-depth, read our guide on how to register a business in the UK. If you choose the limited company type, you can register your business for free and get a free business bank account when you register your company with Tide.
Things to consider before becoming a consultant
Before launching your business, it’s important to consider some key factors that will help you to get off the ground on the right foot and set yourself up for success.
Qualifications and experiences that help to build trust
In general, in order to become a consultant in the UK, you’ll need a university degree to show that you’ve officially studied what you’re claiming to be an expert in. Further, in some cases, postgraduate qualification such as an MBA (Masters in Business Administration) will help boost your chances. Plus, tons of on the job experience.
However, if you’re planning to consult on a skill that you’ve learned on the job, such as raising money, advanced degrees in that area aren’t necessary. The past experience you need will vary on a case by case basis, as will the potential need for certifications.
The Institute of Consulting is a great resource for learning more about starting your own consulting business and is considered the accrediting body for the UK professional consultancy profession. Choosing to become a member will boost your professional status and act as a public endorsement for your skills.
While meta, a great way to gain consulting experience is to work in a consulting firm before going it alone. Nothing helps to prepare you for running your own consulting business quite as much as actually doing it for somebody else first.
As a general rule of thumb, all business owners in the UK should obtain professional indemnity insurance. This provides cover for the legal costs of defending any allegation that a client may make against you in regards to providing bad advice, professional negligence, losing documents or data, defamation and libel and unintentional breach of copyright and/or confidentiality.
Choose a niche that sets you apart from the crowd
Choosing a niche helps you to focus on a very specific knowledge that clients desperately need. Often when clients are looking for consultants it’s because they have a specific problem that they need help solving. Large enterprise businesses are often the ones that hire big consulting firms to help with a myriad of problems, but that won’t be your business as you start out.
Therefore, it’s crucial that you focus on a specific area of expertise that you can do really well. This will help you to stand out from the competition, more easily explain your value proposition and provide better service.
- What niche aligns with your passions and business goals?
- What industries do you know really well?
- What does the market need?
- What are your current areas of expertise?
For example, if you want to become a branding consultant, you shouldn’t advertise your services for any and all business types. Rather, pick a niche that aligns with your values, aspirations and goals and market to that crowd. For example, if you value sustainability, help green brands. Or, if you have a passion for animals, go that route.
If you can, narrow it down even further. Going with the animal example, do you want to help animal sanctuaries, vet businesses, pet stores, or businesses that sell animal-themed products? The more specific you can get, the better.
However, if your desire is to help businesses that sell monkey themed products, make sure there’s actually a demand for it. Go online and research the target market, read blogs and online community forums and peruse social media platforms such as Linkedin, Instagram or Facebook.
If there isn’t much trending, you may have narrowed it down too much. Market research is crucial at this stage, so make sure you put the work into crafting a winning business idea that the market actually needs.
This way, you’ll be able to make a name for yourself in a thriving market where you can outpace the competition and grow your client base from there.
Pricing structure: How do you want to charge clients?
Consultants often charge in one of three ways: hourly, per project or by retainer.
Before you choose a structure and set your rates, do some research to find out what other consultants in your industry are charging. This ties into the market research step we listed in the previous section.
Hourly fees work well for projects that don’t have a clear scope or structure. For example, if you are working with a client that doesn’t really know what they need or how much of your time they can pay for, it’s a good idea to charge by the hour.
This way, you actually get paid for the specific amount of work you put in. As long as the client understands that each second of your time is being tracked, this structure can work well. However, be careful to set expectations at the beginning before you begin work. The last thing you want is to present your bill at the end of a project to a stunned client that argues your worth.
Also, be careful in how you choose to price your hourly fee. If you set a high hourly rate, you risk not attracting enough business. But if you set a low hourly rate, you risk undermining your expertise and undervaluing your services.
If a client doesn’t like to pay high hourly rates, they often will opt for a per-project fee instead. You may end up making the same amount of money, but the perceived value will be higher for the client.
When working on a project rate, the consultant will get a fixed fee based on a predetermined amount of time or effort.
This structure works well when a project has a clearly defined scope and milestones. Project rates don’t necessarily consider the amount of time that you will spend working, but rather how much value you can provide regardless of time. Whether you take 10 hours or 2 hours to complete a task doesn’t matter, as long as the task is completed efficiently and on time.
Depending on your consultancy field, you can either invoice your clients before you begin work, at the end of your project or split it up to receive installed payments.
A retainer gives you a fixed recurring fee per a period of time and is usually directly correlated with the number of hours you expect to work.
Retainers work well for long-term projects in which your scope of work will remain consistent as well as the amount of time you put into the project. It’s a compromise between the hourly rate and the project rate and it often expresses an ongoing business relationship as opposed to a per-project relationship.
As a consultant, getting a fixed income is rare, so retainers can certainly be helpful as they provide a guaranteed income each month, which can help with cash flow as you get your business off the ground.
Marketing: How will you get clients?
As mentioned at the start of this article, networking is a crucial part of the consulting arena. You must be keen to sell yourself and your solutions if you want to attract a strong customer base.
There are a variety of methods that you can use to supplement your networking activities.
- Digital marketing/content marketing: In order for clients to enlist your help, they have to know that you exist. As many people use the internet to find what they’re looking for, a digital marketing and content marketing strategy is key. You need to create content that will captivate your audience and get them interested in learning more. And to do that, you need a comprehensive digital marketing plan. To learn more, read our guide on how to create a complete digital marketing strategy for small businesses.
- Brochures: Brochures can come in digital or physical form. They serve as a short guide that clarifies exactly what your business does and how you can help your clients. Your brochure should tell customers why you’re better than the competition, a few reasons why you should be hired, a bit of information about yourself and, if you have clients already, some information about them and how you’ve helped them.
- Cold calling/cold emails: Cold outreach is a great way to reach out to people that you have never met before but fall into your target audience. Don’t spam people, but rather read up on them and personalise the messaging to capture their attention. Explain how you can help, ask for a time to talk on the phone or in person, and get the meeting booked.
- Newsletters: Another great way to build your audience is by creating a newsletter. From your website, ask people to sign up for your newsletter if they want to receive updates about your services, client’s you’ve helped, success stories, the latest trends and more. You can also create a free deliverable, such an ebook, that potential clients can get if they sign up for your newsletter. This is a great tactic to grow your newsletter and generate interest.
- Referrals: As a brilliant networker, asking for referrals should come second nature to you. If you’ve done a great job for a client, ask them to refer a friend or business partner. To sweeten the deal, perhaps offer that existing client a discount on their next project if they refer a friend. Or, offer both of them a discount if the friend completes a project valued above £X with you. This will help to keep your existing customers happy and help you earn new business in the process.
Expert insights: Starting a consultancy around social change
Insights author: Yael Nevo is the Founding Co-Director and Head of Business Partnerships at Genderscope, a consultancy that helps companies become progressive leaders of gender equality and diversity. Since being established they have worked with tons of companies around the world and are also one of our proud members.
How did you start Genderscope?
I’ve been working and studying for several years in gender-related work and felt that one of the things that is not explored enough is our work culture and how that affects our day to day experience, our career opportunities and progression, and our work-life balance. It was my personal experience that led me to identify a gap in the market and knowing that I am the one who can address this.
I was considering this idea and then was contacted by my business partner Sinem Hum. Sinem and I did our MSc together in London and have kept in touch since. She told me that she was having the same thoughts so we started talking about how it would look, and what kind of messages and processes we want to convey. We felt very much on the same page and so we decided to launch Genderscope.
How did you come across the solution you sell to businesses?
Sinem and my background are quite different from the common consultant who advises on D&I, and I think this is a huge advantage. Sinem is a Human Rights Lawyer and I have been studying and working on gender and human rights for 18 years.
For us, gender equality and diversity are not just an HR issue and are not just about the under-represented gender groups, i.e. Women and LGBTQI+. We look for the gender dynamics that drive organisations and bring a more holistic approach to our work, focusing on Leadership, HR, and Communication and also addressing Men and masculinities.
We believe that concepts of masculinity often drive businesses and the ideas and perception of what a workplace should look like. We also know that these ideas are imbalanced and do not benefit many employees, including men. By shining a light of those dynamics, we are able to bring gender equality that goes way beyond quotas and tokenism towards a truly inclusive workplace that benefits everyone.
How are you educating the market and attracting clients?
Since gender equality is a business driver with many long-term benefits, we believe that it should be treated just like any other business goal, and not just a nice to have. We believe that gender commitment should have an appropriate budget, incentives, and be regularly monitored.
Therefore, when we start working with a company, the first thing we do is sit with the Leadership, including the heads of HR and Communications, and together analyse the gender gaps that exist throughout the organisation and then discuss what they are willing and able to commit to in order to close those gaps.
We then create a Gender Responsive Code of Conduct – declaring the company’s values, its vision, legal commitments and actionable commitments. After that we support our client, with their commitments, consulting on the change of policies, and provide training to make sure that everyone is on the same page and on board with this process.
The Gender-Responsive Code of Conduct acts as a roadmap, a living-breathing document, subject to monitoring and change, so we make sure our clients stay on track and keep pushing the envelope to become a leader of gender equality in their field.
Starting a consulting business is one of the best ways to leverage your existing skills and business knowledge to help others. It’s a low cost, low-risk way to start a business and begin your entrepreneurial journey.
Consider the qualities required to be a great business consultant and make sure you truly have what it takes to enter into the arena. You must be an excellent communicator, have precise attention to detail, be able to think outside of the box, understand how to streamline operations and enhance strategies, be qualified to give crucial advice that can shape a business, be a top-notch networker and be extremely passionate about what you do.
If that sounds like you, consider what type of consulting business you’d like to start and narrow down your niche. Do your due diligence with market research and figure out exactly how to position yourself in a way that sets you apart from the crowd. Register your business and after you land your first client, ask for referrals and continue networking. If all goes well, you’ll have a lucrative consulting business in no time.
Photo by Matilda Wormwood, published on Pexels