Do you dream of being your own boss? Whether you’re hoping to start a side hustle or break out on your own, consulting could be a profitable way to go about it.
Valued at around $354 billion, consulting is a high-value service industry with strong demand that shows no signs of stopping. In fact, Mordor Intelligence expects the industry to grow around 5% annually over the next five years.
Just about every type of business relies on consulting in some form or another, so if you’ve cultivated expertise in your field, chances are someone will pay for your advice.
This article will teach you how to start a business in consulting, offer consulting business ideas, and provide tips for growing a business of your own.
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How to start a consulting business
Starting a business without money can be a lot of work—especially when you’re building your own brand in the consulting industry. But it can be easier if you break down the initial process into stages. Here are six steps to become a consultant:
1. Identify your strengths
Evaluate your professional expertise to determine which services your firm will offer. Look at your professional background and education, of course, but also consider unique strengths you can include as part of your services. Ask yourself:
- What unique perspective do I bring to my field?
- What’s my biggest professional accomplishment and how can I replicate that for other clients?
- In what areas of my profession do I feel most confident?
- In what circumstances have other people organically asked me for advice?
- What’s my preferred communication style and when have I been most effective as a communicator?
Answering these questions honestly will help you determine how to position yourself as a consultant.
2. Conduct market research
Market research is essential for identifying your target market, their needs, and common pain points. Depending on how large your target client base is and how much information you need to get a comprehensive picture, look into conducting:
- Surveys
- In-depth interviews with potential clients
- Informational interviews with other consultants
- A review of trade publications
Additionally, conduct a competitive analysis and research other firms working in the same field. If you understand the services that your competitors offer, you can make a case for why your firm is superior.
3. Form your business
Once you’re armed with information, create an airtight consulting business plan. This isn’t just a launch tool—it should move with you through every step of building your business. Writing one will help you clarify your vision, set measurable goals, and establish a structure for making decisions as your business grows.
Don’t forget to take care of the legal framework, which can vary by state. Select an official business name and choose the appropriate type of structure for your new business. As a self-employed consultant, you may consider setting up a limited liability company (LLC) to protect your personal assets in the event of a lawsuit. Set up your office space and purchase business insurance coverage.
4. Set your prices
Establishing your prices is arguably one of the most challenging and crucial decisions you’ll make when starting a consulting firm. Although you’ll need to start with competitive pricing when you’re establishing demand for your service, you don’t want to set your rates so low that you’re devaluing your hard work. To make things even more complicated, established clients won’t respond well to massive rate increases down the line, so you have to set them at a reasonable point from the very beginning.
Here are a few tips for setting your prices:
- Do your research. While price-matching competitors shouldn’t be the goal, you’ll at least need to establish a benchmark of the average rate and pricing structure before you set your own. This will help you position your services competitively without undercutting your worth.
- Choose a rates structure. Whereas clients often prefer project rates for their predictability, hourly rates may be more practical when you’re starting out and are unfamiliar with how much time each project will take. On the other hand, if your niche consulting opportunities typically involve longer-term engagements, retainers may be a better option for establishing income stability and setting expectations.
- Aim for financial stability. You can’t just think about how much your target customers will be willing to pay. To set yourself up for long-term success, you need to consider how much revenue you’ll need to make to cover operational costs as well as match your current salary. Consider sitting down with your accountant to determine just how much you’ll need to make before finalizing your prices.
5. Begin marketing
Like most home businesses, a successful consulting business tends to rely heavily on digital marketing to develop a client base.
Nik Sharma, who consults on marketing for massive direct-to-consumer brands like Caraway and Juneshine, recommends only doing organic marketing when you’re first starting your business.
“I think you should try to get the first thousand customers without using paid methods,” Nik says on an episode of the Shopify Masters podcast. “And the reason is that you’re really trying to understand what is the messaging or the positioning or the reasons that somebody’s coming to buy this product.”
He recommends focusing on social media platforms that provide a massive audience without requiring much fiscal investment.
6. Grow your client base
You need customers to build a profitable business. Focus on networking and word-of-mouth referrals to help find new clients.
Types of consulting
Often, consulting businesses are geared toward a specific market or interest. Focusing on a single industry allows consultants to work in areas where they can offer true expertise. Here are some examples of different types of consulting businesses:
Management consulting
Management consulting firms partner with organizations to provide strategic advice on overall performance. These firms can assist in a variety of areas, including business model selection, business plan development, and organizational restructuring. Management consultants may come from a diverse variety of career backgrounds. They often work with company leaders to make high-level decisions.
Financial consulting
These firms provide business consulting strategies on finances. This type of consultant can help offer financial advice or assist in areas such as investing, wealth management, and business risk assessment. Financial consultants often have a background in related fields such as finance or accounting. Financial accounting firms may also employ experts in fields like economics, regulatory compliance, or financial advising.
IT consulting
Information technology (IT) consulting firms focus on developing and implementing technology solutions. A technology consultant can help businesses manage their existing technology infrastructure, assist in selecting and onboarding new tech products, and analyze their computer systems and business accounts’ security levels.
For example, an IT consulting firm could help your team select and learn how to operate the best video conferencing software. IT consultants generally come from a technical background and may have experience creating software, working in cybersecurity, or developing enterprise systems.
Marketing consulting
These firms offer consulting services for businesses that need to build solid marketing strategies. Companies may hire marketing consultants to conduct research on their target audience or industry trends.
In addition to research, they can assist in areas such as marketing campaign development, product launch strategy, and brand development. Marketing consultants often have a background in various types of marketing, such as digital or print.
Legal consulting
Legal strategy consultants typically have a background in law, often as a lawyer or legal professional. Individuals, companies, and government agencies may hire a legal consulting company for help in areas such as litigation, intellectual property (IP) development, and contracts. These businesses sometimes work in partnership with law firms to meet a business’s needs.
Sales consulting
These consulting practices aim to help businesses succeed in sales and achieve their overall business goals. They can assist in market research or sales coaching in addition to sales team performance evaluation, process optimization, and sales forecasting. Sales consultants may have a professional background in business or sales.
Education consulting
Education consulting firms may work with educational institutions, lawmakers, or other organizations in the field. They can support curriculum development, offer teacher training, and help with educational planning. These consultants often have a background in education or administration.
Health care consulting
These firms can provide advice related to multiple aspects of the healthcare industry. Hospitals, technology companies, or policymakers may choose to work with healthcare consulting firms to optimize their business operations. Consultants may advise in areas including regulatory compliance, patient safety, and clinical performance. They often have a background in medicine, hospital administration, or public health.
Human resources consulting
Human resources (HR) consultants advise on employee compensation and benefits such as payroll, hiring and retention, and other HR management functions. They may also help implement a new employee communication strategy. These firms may also offer training services for HR professionals. Consultants often have a background in HR.
Environmental consulting
Individuals, businesses, or government agencies may work with environmental consultants to help navigate regulations or create more sustainable development strategies. Since these firms have expertise in environmental issues, they can assist with work like impact assessment, site assessment, and sustainable business strategies. Consultants may have a background in science or engineering.
Public relations consulting
PR consulting companies can provide public relations services and offer strategic advice to help you keep a positive public image. Individuals or organizations may hire a consulting firm in place of, or in addition to, an internal PR team. Consultants often have a background in PR, and they can assist in media relations, crisis management, or high-level strategy development.
Brand consulting
Brand consultants are focused on brand management and helping organizations develop their overall brand image. They can assist with market research, provide advice on brand positioning, and help craft strategic messaging. Consultants can come from fields including design, communications, and advertising.
Ecommerce consulting
An ecommerce consultant provides guidance to companies looking to improve the performance of their online stories. They can help with things like optimizing conversion rates, validating and pricing new product offerings, increasing profitability, and developing marketing strategies.
Tips for growing a consulting business
According to marketing consultant Nik Sharma, there are a few tips that can help your consulting business thrive. Whether you’re just starting your consulting career or you’re branching out from a big agency, these tips can help with growing and marketing your consulting business once you’ve got it up and running:
Experiment with content marketing
Unlike an ecommerce business in which customers come to you because they like your product, a consulting business is all about you, your skills, and your expertise. For that reason, content marketing can be crucial for establishing yourself as a thought leader with valuable advice to bring to the table.
You can share your thought leadership content with email marketing, social media, or distribution platforms like Medium.
Use a CRM
Relationships are central to a sustainable consulting business, so you’ll need to have a way to keep track of your clients so you can cultivate those relationships over time.
Customer relationship management (CRM) software enables you to stay in touch with leads and established clients. They centralize client data and come with features for automating communications, tracking client interactions, managing pipelines, and generating insights about the effectiveness of your strategies.
Build a network
Word-of-mouth marketing is particularly powerful in the consulting world, especially when you’re starting out. Reach out to people who know you are trustworthy and credible, and introduce them to your new business. Encourage them to keep it in mind as they engage with other people in the industry.
If you don’t already have a strong network, look for opportunities to build new connections. Attending industry meetups, cold-calling local businesses, and initiating connections on LinkedIn are all strategies that can help you build relationships and earn referrals.
Share testimonials on your website
People are going to be wary of hiring a business without much of a digital footprint, so it’s vital that you establish your legitimacy with social proof (or evidence that others have had a positive experience) as early as possible. “You basically just need content to show up and validate someone’s belief that this is a real brand,” Nick says.
Displaying testimonials from happy customers on your website is a low-effort strategy for assuring new leads that you are trustworthy and reliable. They reinforce the quality of your work and reassure prospects that you deliver real results.
How to start a consulting business FAQ
What is the difference between a consultant and a contractor?
Contractors are hired to work with your team in a hands-on capacity—delivering work that contributes to execution. By contrast, companies hire consultants to offer strategic big-picture advice.
How much does it cost to start a consulting business?
The cost of starting your own consulting business can vary widely depending on the size, location, and market of your company. Startup costs may include business registration and license fees, office expenses, and insurance.
Can anybody start a consulting business?
Yes, anyone can start a consulting business, but building a profitable one requires industry expertise, problem-solving skills, and the ability to attract—and retain—clients.
Do you need a consulting license?
Many states require a license for a consulting business to operate, but the exact type of license may vary depending on your industry and location. Local government websites, small business development centers, and industry-specific chambers of commerce can help you determine which license your business requires.
How profitable is a consulting firm?
Thanks to its low overhead and the fact that companies will pay big money for good advice, consulting can be a highly profitable industry. According to CSIMarket, the consulting industry had a net margin of 9.06% in Q3 2024, which is strong for service businesses.
Is consulting a good side hustle?
Because of the flexibility of consulting, freelance consulting makes for a great lifestyle business, meaning that you can design it to fit the life you want rather than the other way around.
How do I start a consulting business with no experience?
Although it’s much easier to start your own consulting business when you’ve worked for larger firms, you can make it work if you’ve got a background in the industry and a creative approach to problem-solving.
