Consultants come in many different types with specialists in hundreds of niches using thousands of varied skills and techniques.

Other businesses hire consulting experts because they want to “buy in” expert opinions, ideas and resources that don’t exist in their organization already. If you have a proven track record of transforming businesses for the better, you can turn that into paid insight, exchanging your time and skill set for well-paid consulting jobs. Consulting provides deep insight to an organization without them having to hire expert staff on a permanent or long-term basis.

Due to the expertise offered by consultants, the rates charged are normally high. So a consulting business is a great business to start if you want to make a great income with minimal hours.

Here's what we'll cover in this guide:

 

Types of consulting business

Resources for your consulting business

The best legal structure for your new organization

Information on taxes and finances for your consulting business

Questions you should ask to see if you’re ready to start a consulting business

Some rules and regulations you will need to follow

... and much more

By the time you’ve read through our complete consulting business guide, you will have all the information you need to set up and manage a thriving consulting business. Let’s get into it.

Key Consulting Business Background Data and Statistics

The consulting industry is ripe with new opportunities for focused entrepreneurs, so now might be the perfect time to dive into starting your consulting business. Incfile is here to help you form your consulting business and understand the ins and outs of owning a consulting company.

The consulting space is dominated by several major businesses including PwC, Deloitte, Ernst and Young, Boston Consulting Group, McKinsey, Accenture, IBM and KPMG. But don't be deterred — there is still room for a small boutique consulting firm to do very well.

1.4M

People are employed in the management and technical consulting services in the U.S.

$150

The typical consulting fee an hour at entry-level and over 300 an hour for experienced consultants.

The global business consulting market was worth $250 billion in 2016, up from $205 billion in 2011. This overall total breaks down into the following industries:
$31 Billion% Technology
$71 Billion% Operations
$31 Billion% HR
$70 Billion% Financial
$48 Billion% Technology

Questions to Ask Before You Start a Consulting Business

Is Consulting Entrepreneurship for You?

If you want to be a consultant, you need to demonstrate industry-leading expertise. You must bring unique insight, techniques, methods and experience to solving business issues in your niche.

As a consultant, you will be expected to get a very quick understanding of an organization's problems, spend time analyzing those issues and come up with practical examples of how to make changes.

Being a consultant is all about “demonstrating your value.” Businesses will be expecting excellent results for the fees they are paying, so it’s all about delivering in accordance with those expectations.

What Are the Main Skills, Expertise and Experience to Be a Successful Consulting Entrepreneur?

The specific skills, expertise and experience for a consultant depend on the niche you decide to go into, but here are some general guidelines:

Networking

You must be good at dealing with others and building networks and connections between people.

Measurement and Analysis

You will need to be able to measure and understand the current shape of an issue. Then you will have to carry out analysis to identify specifically where problems are so you can make recommendations for improvement.

Implementation

You must have experience at working with project managers or other people making changes in an organization as you will need buy-in to turn your ideas into practical actions that deliver a result.

Questioning

Consulting starts with asking questions, and lots of them. You must be an expert at understanding exactly what an issue is, defining it and finding out the changes that need to be made.

Techniques and Methods

You will need a large toolbox of techniques and methods for improvement. These could be proven tools, frameworks or approaches that have worked in the past. You will also need an up-to-date understanding of industry best practices and benchmarks.

Niche and Industry Expertise

Perhaps most important of all, you must have established insight, experience and authority in your chosen area. You need to demonstrate thoughtful, innovative approaches that will deliver practical, sustainable transformation for your client.

What Are the Main Challenges for a Consultant?

Consultants come across many challenges. These start with finding clients — consultant services can be expensive, so building up a network of good leads and opportunities is vital. You will want to build up a robust pipeline of work to ensure your business is profitable.

Next, you will need to establish strong methods for working with people. Key skills include gathering information, carrying out analysis and making recommendations.

As business needs change, you must be flexible and adaptable. You will have to use your experience to understand what is going on below the surface of an issue and then use tools and techniques to resolve the underlying problems.

Finally, you need to deliver sustainable results. This means getting involved with project managers, business analysts and operations experts to check that your recommendations are being implemented in the best possible way.

Types of Consulting Business

Consulting is the practice of giving expert advice to others, normally in business, financial or technical areas. Clearly that’s a broad definition, so let’s narrow it down a little. Common types of consulting include:

1

Business Process Improvement

Examining how a business currently operates and making recommendations to improve efficiency and effectiveness

2

HR and Culture

Working with HR and leadership to deliver changes in attitude, morale and culture throughout a business

3

Organization Change

Examining the operational and staffing structure of a business and optimizing it for size and business functions

4

Leadership Coaching

Working with C-suite and other senior managers to enhance leadership skills and approaches

5

Strategy Planning

Helping to develop strategies for businesses to grow or react to changing environments, regulations and compliance

6

Technology, Hardware and Software

Providing insight into the technologies and approaches best suited to delivering business outcomes

7

Branding and Public Relations

Managing how a brand or individuals are perceived by customers and in the wider marketplace

8

Financial Management

Helping a business optimize its cash flow, costs, profit margins and operations to maximize revenue and minimize expenses

9

Legal Consulting

Giving insight into likely legal issues, challenges and strategy for new initiatives or business changes

Choose the Right Business Structure and Register Your T-Shirt Business

Choose the Right Business Structure and Register Your Consulting Business

Now that you have all the background information for your consulting business, it’s time to make it into a reality. That starts by choosing the right structure or “legal entity” for your business. In the U.S., there are five main business structures. They are:

Sole Proprietorship

This is the "default" business structure and is what your business will be if you decide not to create a more formal structure. We don't recommend this type of business as it doesn't give you the legal protections you need.

Limited Liability Company or LLC

The most common type of business entity. An LLC is fast, simple and inexpensive to setup and maintain. It protects your personal finances and assets and is a great way to start your consulting business.

Series LLC

This is a special type of LLC entity that's only available in certain states. It allows you to create "mini" LLCs, each with their own limited liability and separate assets, under the umbrella of a master LLC.

S Corporation

This is a more complex type of business and isn't generally recommended for smaller organization.

C Corporation

These are the largest and most complex types of businesses and are far more than the average entrepreneur or business owner will need.

For most smaller consultant businesses, an LLC is the ideal business setup. It provides you with liability protection, is simple to administer and has some tax advantages over other business types. Additionally, if another consulting firm ever subcontracts to you (which does happen), they will definitely expect you to have a formal legal structure in place.

For more information on the advantages and disadvantages of different types of businesses, please see our in-depth guide.

We’ve got a complete guide to everything you need to do to set up an LLC, and we can start one for your consulting business today. LLC formation does vary from state to state, but we’ve got you covered, wherever you are.

Set Up and Maintain Your Consulting Business

Once you've legally created your consulting business, you’ll need to get some other things in place.

The Complete "Start Your Business" Checklist

A Clear and Comprehensive Guide to Starting Your Business the Right Way

The Complete

Social Media Groups for Your Consulting Business

Connecting with other business owners in your industry can be incredibly helpful. Here are some of the best social media groups:

Consultants Network

The largest and most active LinkedIn group for business consultants with over 500,000 members. It also has several location-based and industry-specific subgroups.

Strategy Consulting Network

This is another large network of consultants on LinkedIn with over 200,000 members. The group is for everyone who is currently working as a Strategy Consultant or who aspires to become one.

Proactive Business Consultants

This group brings together consultants from different niches into one community.

Consulting, Contract and Freelance Jobs

With over 48,000 members, this group can provide you with consulting leads.

Discussion Groups and Forums for Your Consulting Business

There are plenty of forums and online discussion groups for consulting businesses. Start with these:

Wall Street Oasis

Wall Street Oasis is one of the largest finance communities online. It has a consulting forum where you can ask questions and talk to other like-minded consultants.

Project Management Central

This forum is for consultants involved in project and portfolio management.

Useful Online Tools for Your Consulting Business

Here are some really great online tools for managing your consulting business. They will reduce the time you spend on administration, help you to collaborate with others and free up your time to grow and manage your new venture.

Conclusion

If you have experience and insight into a particular industry, sector or niche, then consulting could be a viable business option for you. Combine your experience with an innovative approach, strong skills and proven results, and you will be off to a great start in your new career as a consultant.