How to Start a Consulting Business

How to start a consulting business: what is, types (classification), reasons for the popularity of services, the list of requirements for company, how to become a consultant

How to Start a Consulting Business

Consulting embraces rather a broad array of issues. Different companies may consult for various industries, starting with narrow-focused specializations, including one business direction only (auditing, for example), and ending with the widest one, covering the whole range of industry services. Acting the same way with industry, each specialist (or a company), related to this business, chooses his own direction of consulting, a particular field of working and adds featured notes to the service.

What is Consulting?

Let’s try to squeeze a broad meaning of consulting into a certain definition.

So, business consulting is a form of outside activity with mission statement including analyzing a customer’s issue and applying forecasting methods for area of expertise, using scientific, technological, organizational, and economical innovations.

Consulting answers the question arising during activities related to management, economics, finances, investment, strategy planning, organizational structure optimization, business running, market outlet’s research and economical forecast, price fluctuation, etc. In other words, consulting means all types of support provided by outside consultants aimed at solving different issues.

The main goal of consulting is to improve management skills, increase the whole company’s efficiency and each employee’s productivity.

Types

The possibility to provide consulting services in all fields and by all specialists caused a multitude of consulting companies establishment. Current top-rated consultancies give advice in the following industries:

  1. Analyzing activity (analyses and assurance services of the customer’s company, investment projects analyses, developing a detailed picture of competitors’ activity, market outlets and price fluctuation researches);
  2. Forecasting (conducting a forecast on the abovementioned directions on the base of research and techniques used by a consultant);
  3. Consulting a broad array of issues, related to the customer’s enterprise and a market in general;
  4. Auditing the customer’s enterprise;
  5. Taking part in the customer company’s life (strategy planning, solving a bunch of issues concerning the company management in different spheres of its activity, development and implementing informational systems, system integration, etc.).

Now let’s revise the major directions of consulting business. Things here are not as easy as they seem.

The thing is that consulting companies give different classification to consulting business on the basis of their own experience and the special nature of services rendered. Let’s call upon the Big Four, as the most reputable and highly experienced companies in the industry, in order to reveal the main direction of consulting. We will try than to give our own classification of the most popular and highly paid consulting services on the basis of these companies service lists.

The services provided by the Big Four

KMPGDeloitte Touche TohmatsuPricewaterhouseCoopersAccenture
Auditing and accounting services

Tax and legal advice

Valuation property

Property privatization

Business transformation and strategy planning

Management

Mergers, acquisitions and
joint venture establishing

Market research and new developments

Assurance services

Technology consulting

State of the market liquidity reviews

Actuarial services across all kinds of insurance

Accounting advisory

Tax and legal advice

Management

Human resource management

Healthcare and life science

Insurance

Mergers and acquisitions

SAP services

Retail and consumer

Government and public sector

Legal arguments

Business transformation

Real estate

Business strategy planning

Technology consulting

Auditing and accounting services

Financial services

Management

Tax and legal advice

Technology consulting

Business recovery services and solving problems related to insolvency

Insurance

Financial services

Strategy planning

Communications

Technology consulting

Government and public services

Energy and utilities

Healthcare

Business transformation

Services to improve business results

Technologies

Running business

So, here is our own classification of consulting business:

  1. Accounting;
  2. Advertising;
  3. Auditing;
  4.  Business;
  5. Business writing;
  6. Career counseling;
  7. Communications;
  8. Computer consulting;
  9. Editorial services;
  10. Executive search/headhunter firms;
  11. Gardening;
  12. Grantsmanship;
  13. Human resources;
  14. Insurance;
  15. Marketing;
  16. Payroll Management;
  17. Public relations;
  18. Publishing;
  19. Taxes;
  20. Writing services.

In What Cases Customers Apply to Consulting Company?

It is widely thought, that companies apply to outside consultants on the edge of bankruptcy only. However, rendering recovering services to an insolvent company is not the main function of a consulting team. So, in what cases and who applies to consulting company to get a needed support?

At first, reputable companies need consulting services during structure transformation concerned with expanding, business legal form amendment, fundamental changing of enterprise activity and its diversion into more perspective and/or profitable business directions.

At second, consultant (or auditor) may be hired by a prospering enterprise that needs to win additional market shares, create a reputable image for potential partners, to examine the company’s activities (to audit, for instance) and than to turn the results into public information.

And finally, the enterprise may apply to consulting company to get a support in a critical period (on the edge of bankruptcy), in case it is not able to cope the situation by its own means due to the lack of experience and inner resources that can’t react in a proper manner and on time. In such cases, the consulting services may be referred to in-crisis consulting.

The List of Requirements for Company

A professional consultant or a reputable consulting company’s activity, rendering a broad array of services, must meet the number of certain requirements. The major ones are enumerated as follows:

  1. A consultant (or a consulting company) must have a proven technique of solving issues and skills needed to formulate an accurate organizational diagnosis, to conduct effective strategy planning, to use informational systems; consultant must operate freely the methods of analyzing and forecasting an economical condition of the company, diagnose its general productive efficiency, establish contacts (communicate), and so on.
  2. A consultant (or a consulting company) must have an opinion independent from products suppliers, standard decision in featured industry, traditions, unwritten laws that live within the checked company, incumbent managers strategy. The consultant opinion must be maximally close to truth and fair.
  3. A consulting company must not be somehow related to the customer.
  4. A consultant (or a consulting company) must provide a customer with a support in using his own experience to improve his or her activity on a constant basis.
  5. A consultant (or a consulting company) must work with various customers to accumulate new experience, analyze it, understand and use in future.
  6. A consultant (or a consulting company) must know the teaching techniques that can be applied for customers.

How to Become a Consultant

  1. Identify the Niche in Which You Have Knowledge and Experience. You may have an interest in computers. However, this does not mean you can become an independent computer consultant (though it can give you a head-start in this field). Knowledge and experience coupled with interest is the only way to begin.
  2. Acquire the Certifications and Licenses. The local or state legal guidelines may require you to get a particular license to work as an independent consultant in certain specialties.
  3. Choose a name. If you want to set up a company, give it a good-sounding name, which will be easy to remember and sticky.
  4. Choose your legal structure. Do all the necessary legal and tax procedures on the initial stage of operation. You may choose between three registration options that may match your business: general or limited partnership, corporation or sole proprietorship. The majority of consultants prefer the last form most of all due to the complexity of other forms registration. Besides, you must be cautious for all liabilities involved to your business become personal liability.
  5. Make a business plan. It is very important in consulting business. No matter it won’t be shown to attract investments, it plays a great role in forming a strategy in your mind for keeping a company on track, making larger profits, marketing, gaining a reputation among customers, setting up your business structure, generating and controlling your funds. You can make your business plan on the basis of different books and software related to the consulting market.
  6. Establish an office. If you have screened all your pockets for gaining an additional cent to start your business, you can work from home. This will also suit the situation if you intend to render services on part-time basis. You can occupy a spare room, a loft, a garage or even a small corner in a hall converted into commercial location.
  7. Build a website. All up-to-date companies must have their own website! Internet is a large source of potential customers, who can land on your site via Google or any advertising system.
  8. Start marketing yourself. Free consulting on the initial stage of operation may encourage people recommending you to the friends. Some time later, you may take money for your job. This strategy perfectly matches online service rendering because there are millions of people searching for an assistance in this or that question. Use forums and groups in social nets.

Fee Rates

There are two payment options for your work:

  1. Hourly rates. In some cases per minute charging is all right. The thing is that, you can give an extremely useful information that will help to improve the business in some industries within a minute. SEO consulting can be taken as an example.
  2. Pay-per-project. In this case consultant is paid the certain amount that was discussed in advance.

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Audrey Kinley
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Audrey Kinley

Wow, I never knew that there was so much involved with consulting. It seems like it’d be a pretty tough job to have. If not, the people there are really good at their job.