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How to start a consulting business in 8 steps

Even after the COVID-19 pandemic made the business world hold its breath, the consulting industry is pulsing back to life. Forbes expects it to rebound with a 2.3% growth to $241.6 billion in 2021 alone. After all the changes, many professionals are considering a leap into consulting.

Maybe after yet another Zoom with a dress shirt and shorts, you're thinking, "Why not make this work-from-home thing permanent?"

But before you put in your two weeks' notice with the hopes to be your own boss. In reality, the boss's name is Client. Losing focus on the client's results will only have you join the 50% of small businesses that fail within the first five years. Read on to find a step-by-step guide to turning your expert advice into a career that gives you flexibility, freedom, and fulfillment.

1) Create a consulting business plan

"Plans are only good intentions unless they immediately degenerate into hard work."

It's nice to get words of wisdom from arguably the most remarkable consultant of the 20th century, Peter Drucker, and he didn't even bill you for an hour. And when you're ready to do the hard work of planning, here are some questions to ask yourself when starting a business:

  • Executive Summary: How would you describe the business and your potential success?
  • Overview: What's the business's background, legal structure, and other key attributes?
  • Industry Analysis: What does market research reveal about the consulting industry in your area, including size, opportunity, and current trends?
  • Competitive Analysis: Who are your competitors, and what are their strengths and weaknesses?
  • Marketing Plan: What is your marketing strategy to reach potential customers?
  • Management: What unique business and consulting skills do you possess?
  • Operations Plan: How will you manage the day-to-day tasks of the business?
  • Financials: What are your estimated revenues, expenses, and profits for your first five years and cash flow for every month of your first year?

2) Find your consulting niche

Your niche is the specific sector of the broader consulting industry that differentiates your services from your competitors. A niche is like a loudspeaker that helps you get over the noise of a crowded market right into the ears of your ideal clients.

You can choose your niche based on a specific industry, a particular type of project, or any other unique characteristics that set prospects apart. It's okay to extend what you used to do professionally to your consulting practice or start with a more general approach before finding your spot. To get the gears moving in your head, check out these types of consultants:

Business to Consumer (B2C) consultants

  • Career counselors
  • Financial advisors
  • Interior design consultants
  • Landscaping consultants
  • Life coaches
  • Marriage and relationship counselors
  • Personal image consultants
  • Pet trainers and behaviorists
  • Tax advisors
  • Wedding planners or consultants

Business to Business (B2B) Consultants

  • Branding and marketing consultants
  • Business management consultants
  • Corporate communications consultants
  • Financial advisors and consultants (accounting, taxes, and money management)
  • Human resources consultants
  • Interior design consultants
  • IT consultants
  • Landscaping consultants
  • Leadership coaches
  • Nonprofit grant writers
  • Process improvement consultants
  • Project management professionals
  • Public relations
  • Writers, editors, and copywriters

3) Uncover your consulting value proposition

Your value proposition is simply the value your consulting firm promises to deliver to clients once they buy your services. Before you can create yours, just why do people hire consultants? According to, a consultant may be hired:

  • because of their expertise
  • to identify problems
  • to supplement the staff (rather than hiring your full-time)
  • to act as a catalyst
  • to provide much-needed objectivity
  • to teach to do the "dirty work" (such as downsizing)
  • to bring new life to an organization
  • to create a new business
  • to influence other people

One or two of these should be the primary reason people would consider your services. Then, coupled with your niche, consider the problems, issues, and pain points that prospects face. It's not enough to have a robust skill set and area of expertise if you can't somehow turn that knowledge into a result for your target market.

Speaking of results, check out this template from to help you with your value proposition:

"I help Niche to Get Result by Offer."

Below are three quick examples:

  • "I help Fortune 1,000 CFOs reduce their capital expenditures by 3% or more with my corporate financial and accounting consulting services."
  • "I help landscapers get more million-dollar home clients with my social media marketing consultation."
  • "I help men who suffer from obesity get back to high-school-athlete fit by the end of my twelve-week life coaching program."

4) Price your consulting work

Most independent consultants bill their clients in one of three following ways:

Hourly rate

Your hourly rate is a flat fee that is paid for each hour worked. It is based on your skill level, and clients only pay for the time (total number of hours) you work for them. Using this method, you must watch your hours, and customers will most certainly have concerns if the job you perform takes considerably longer than you expected.  

It's common practice to double what you got paid in your last. So, for example, if you earned $50 an hour at your professional job, you'd charge clients $100 per hour.

Project rate

A project rate provides customers with all-inclusive pricing on a project-by-project basis, depending on the scope of work. You accept the risk that the project might take longer than expected. Project rates may work well if it takes less time to finish the project, but they can cause friction if the work scope changes and the project rate is not adjusted to reflect the updates (known as scope creep).  


A retainer is a set amount of money that a customer will pay you each month, week, or day. This kind of pricing is proper when you're supplying a customer with an ongoing service that can't be precisely defined by time or fluctuates from month to month or week to week but is within an acceptable range.

5) Draft your consulting proposal template

Good consultants use templates and systems to help them onboard new clients efficiently. You may benefit from developing a template to update and change for each potential customer as you grow your consulting business. You may want to run the document by an attorney so you're protected. Your consulting proposal should include:

  • Cover page. A cover page shows your company's logo, the client's name, project name, and date for reference.
  • Executive summary. The executive summary should emphasize the client's problems and challenges and how you intend to solve them.
  • Project outline/scope of work. The project outline explains what you will (and will not) perform in exchange for the suggested fee. Clearly define the scope of work, including the number and breadth of deliverables, time frames, and expectations.
  • Deliverables. Deliverables are the final tangible items that you will "deliver" to the customer.
  • Timeline. Should highlight beginning and end dates as well as milestones.
  • Fees and payment terms. Should include due dates, acceptable payment methods, and payment conditions.
  • Client requirements. When consulting projects are delayed, the bottleneck is often the client. If any aspect of your work may be jeopardized to client delays, state it in this section.
  • Expiration date. Should prevent prospective clients from waiting too long to book your services and protect you if you're booked solid or on vacation.

6) Get your paperwork in order

Just a few quick tasks and this consulting daydream will become a reality.

a) Register your consulting business with the state

Before you sign your first client, you must choose a business entity to file with the state. Start by selecting the type of business structure for your consultancy startup, such as sole proprietorship, limited liability company (LLC), or corporation.

b) Apply for your EIN

Your Employer Identification Number (EIN) identifies your business for taxes. Fortunately, it's free and easy to get your EIN from the IRS.

c) Open a business bank account

Once you have your EIN, you can open a business checking account, apply for a business loan, and separate your personal and business finances.

d) Obtain a business license and permit

Depending on what state you live in, you may need a business license to work legally, even as a self-employed person. You may also need a sales tax permit, so you can collect taxes when you sell your services.

e) Get consulting business insurance

As a consultant, the unexpected is part of the job because interacting with other humans is part of the job. You may perform your consulting service flawlessly, but what happens if a business or person tries to sue you because they don't like their results? Yes, people are often erratic and unpredictable. That's why you need solid small business insurance for your consulting services.

Here are the key coverages to insure your consulting business:

  • Workers' compensation: This coverage protects your employees if they get sick or injured while working in your consulting business. Every state requires workers' comp, and the consequences of skipping this coverage could cause the state to close your business. (You can get a quick estimate on what you'd pay for workers' comp with our 60-second workers' compensation calculator.)
  • General liability insurance: This policy protects your consulting business if you're sued for a property damage or injury claim. (Expensive lawsuits can quickly put a consulting service out of business.)
  • Property insurance: This policy protects your consulting equipment such as your laptop or other devices you use in your business or home office from perils like fire or theft.
  • Business interruption: This coverage, also called business income insurance, provides financial support to your consulting business if you must close because of a covered reason.
  • Business Owner's Policy: This policy bundles general liability, business property, and business interruption insurance for your consulting business in one convenient package.

7) Hire your first employees

Many consultants fly solo when they launch, but they soon add in a personal assistant. Or perhaps you've chosen to build a consulting firm with multiple consultants. When you add the first member to your team, you'll need workers' compensation insurance to operate legally. After finishing your paperwork and legal requirements, head over to the Small Business Administration for a helpful checklist.

8) Spread the word about your new consulting business

As part of your marketing plan, you should:

  • Build a consulting website. Get the domain name for your business. A service with templates like Weebly or Squarespace can make the process painless.
  • Use search engine optimization (SEO). After launching the website, you can get clients to visit it with great content that answers their inquiries in a way that makes Google and other search engines happy. Hire a digital marketer for help.
  • Launch your social media accounts. Get your unique Facebook, Twitter, LinkedIn, Instagram, Pinterest, TikTok, and other handles relevant to your niche.
  • Create word-of-mouth. Small business owners understand word-of-mouth advertising is king, and if you want to grow your business, give your client's results that they can't help but share. In addition, ask for video testimonials to post to your website and social media.
  • Distribute brochures, business cards, and flyers. It's kicking it old school, but these marketing materials generate new clients even in the digital age, as long as you don't forget your contact information.
  • Ask for referrals. Your clients often have contacts who could also receive help from your services.
  • Partner with related businesses. Is there another type of consultant that you can join to give your potential clients a more robust solution?
  • Network. Go to industry events in your niche and join the Chamber of Commerce or Business Network International (BNI) because you never know what relationship will lead to growing your client base.
  • Speak. Can you share your knowledge with your target audience at a seminar, conference, or other events? If so, your perceived value goes up because you're the one on stage in front of the crowd.

Bonus: Check out these tips for running a successful consulting business

To build your own consulting business from scratch, it'll take more than expertise and years of professional experience. You'll also need an insatiable appetite to learn. Here are some resources to chew on:

  • Consulting Success Site and Podcast: Michael and Sam Zipursky’s leading coaching and training platform will walk you through how to launch your business and grow it to six or seven figures.
  • The Craft of Consulting Site and Podcast: Deb Zahn, a successful consultant with more than a decade worth of experience, gives her take on starting a firm with information designed to hold your hand through every step of your transition into full-time consulting.
  • Consulting Magazine: "Consulting magazine is the flagship publication of the consulting profession featuring the latest information on consulting careers, thought leadership, and corporate strategies."

This article was a lot to digest, but here's one way to stay sane as an entrepreneur.

If you're still crazy about this consulting thing, then you can get business insurance from Huckleberry almost as fast as you smirk when you see a proposal with a client's signature. (Getting a quote is free, easy, and 100% online.)

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