Startup cost
$5k
TRUiC Business Ideas
How to Start a Business Consulting Firm
Decision Snapshot
Business Consulting
Idea Score
55
Profit margin
11%
Break-even
4 mo–12 mo
Time to launch
12 wk–36 wk
Demand trend
Stable
5-yr failure rate
—
Capital intensity
Low
Time commitment
Flexible
Part 1 - How to start a Business Consulting Firm business - Background
Business consultants provide a necessary service to startup businesses and entrepreneurs. They help the business get off to a good start by providing the know-how and resources necessary for success. A business consultant usually retains a book of clients and may limit his or her business to just several hundred (or fewer) businesses or entrepreneurs.
Our guide is in 3 parts:
- Part 1 - How to start a Business Consulting business - Background
- Part 2 - Our planner tool to see if this idea is the right fit for you
- Part 3 - Action plan to get started
What are the costs involved in opening a business consulting firm?
Costs for starting a consulting firm are minimal. This is a business that can be started out of your home or a small office. Office rent and utilities in your local area would be the major costs. Aside from those costs, a computer and scheduling software, as well as collaboration software may be necessary.
Total startup costs should not exceed $5,000. In many cases, you can start with just a few hundred dollars.
What are the ongoing expenses for a business consulting firm?
Ongoing expenses for the firm include rent, client management software, scheduling software, office supplies, utilities, travel expenses, advertising, insurance, contract labor fees, and ongoing legal services for client contracts.
Who is the target market?
A business consultant firm makes money by charging a fee for advice or for business plan construction. This fee can be either a flat fee, hourly fee, or a revenue-share fee.
How does a business consulting firm make money?
Preferred customers and clients are large corporate clients who can serve as “anchor clients.” These clients have deep pockets and a need for ongoing consulting. The hardest type of clients to keep are those that have little to no resources.
How much can you charge customers?
What you charge clients depends on who you have working for your firm and your experience in the industries you serve. In general, you can charge between $800 and $1,200 per hour for partner-level access. Managers in the firm typically charge clients between $600 and $900 per hour. Post-MBA consultants charge $400 to $600 per hour. Pre-MBA consultants charge $250 to $400.
Some business consulting firms charge clients a percentage of revenue or sales. For example, an anchor client might pay 10% to 20% or more of revenue for a consultant.
Clients usually pay for any additional expenses out of pocket (they are not included in the consulting fees).
How much profit can a business consulting firm make?
Some types of consulting pay more than others. A baseline profit margin should be no less than 10% to 12%.
Beyond that, it depends on the type of consulting your firm does.
For strategy work, aim for between 35% and 60% margins. Systems integration and process work should yield between 25% and 35% profits, up to 40%. Staff augmentation and outsourcing may only bring 10% to 30% profit margins to the firm.
How can you make your business more profitable?
Making your business more profitable is a simple matter of specialization and differentiation. Make your firm stand out. Never charge the lowest fees. In this industry, the higher the fee, the more competent you appear to be to prospects. At the same time, your advice and work must be worth the price.
Day-to-Day and Growth
What happens during a typical day at a business consulting firm?
The day-to-day activities of a business consultant include meeting with clients in person, via video conferencing applications or services, and making recommendations to their clients. Most business consultants spend the majority of their day building business plans for clients and giving advice.
Scheduling and project management is a major part of the job also. Companies that provide business consulting need to be able to coordinate multiple schedules since even small businesses can have several officers who need to be present for all meetings.
What are some skills and experiences that will help you build a successful business consulting firm?
A business consultant should have prior experience owning a business. It takes a lot of trust for a business owner to take guidance on how to run and manage their business. While not necessary, a Bachelor’s degree is standard in the industry. Some companies will not hire consultants who do not have at least a Bachelor’s or Master’s in business administration.
Aside from degrees, various certifications help prove your legitimacy. For example, the Certified Healthcare Business Consultant helps establish a firm as a specialist in the healthcare industry.
What is the growth potential for a business consulting firm?
Consulting firms are usually small, due to the nature of the business. This is not an industry that scales very well since the business owner is usually the one with the expertise required to make the business run. With that said, some consulting firms expand by hiring additional talent — managers or business owners who want to join the firm and take on clients.
The business owner may move into a managerial position or continue meeting with clients under this scenario.
Typically, a larger firm employs several consultants. If only one consultant exists (the founder), then the business expands by hiring support staff, including bookkeeping and accounting, HR, managers to oversee business operations, a CFO to manage the finances, and assistants to coordinate schedules.
What are some insider tips for jump starting a business consulting firm?
Get an “anchor client.” Anchor clients are loyal clients with significant financial standing that are committed to utilizing your services on a regular basis. They are also capable of providing a consulting business with up to 25% of its revenue.
It helps tremendously to first gain a lot of professional experience in the specific area in which you want to specialize as a business consultant. This will not only allow you to develop the necessary skills to offer a quality service, but it will also increase your legitimacy as a sought-after authority. For example, if you want to work as a financial consultant, you should have plenty of experience in the finance industry before reaching out to potential clients.
How and when to build a team
Building a team in this business is optional. Many consultants set up shop as one-owner firms and never grow beyond that. If you want to grow, consider hiring on additional management or experienced consultants when you exceed your maximum client load. Hire support staff at the same time to handle the additional paperwork and regulatory issues that will come with taking on employees.
Part 2 - Is a Business Consulting Firm business the right fit for you?
Business Evaluation & Strategy Tool
We'll walk you through the four pillars every business needs: Points of Leverage, Marketing Strategy, Financial Model, and Personal Compatibility. At the end you'll see a personalized report and your action plan below will be tailored to your answers.
Step 1 of 4 — Points of Leverage
Every viable business has natural advantages. Below are common leverage points across four categories. Pick the ones that apply to your Business Consulting business. We've pre-suggested a few based on your idea — review and adjust.
Step 2 of 4 — Marketing Strategy
Without a way to connect with customers, even great businesses fail. Pick the channels you plan to use to reach your customers.
Step 3 of 4 — Financial Model
Enter your monthly baseline costs — the minimum overhead to keep the business running. Then we'll calculate how many sales per month you need to break even.
Step 4 of 4 — Personal Compatibility
A business that doesn't fit your life will fail no matter how good the numbers look. Tell us how this business fits you.
Your Business Consulting Evaluation Report
Complete the four pillars and your personalized summary will appear here.
Points of Leverage
Marketing Strategy
Financial Model
Personal Compatibility
Part 3 - Action plan to launch your Business Consulting Firm business in 90 days
Nine concrete steps to take you from idea to open business, grouped into 30-day phases. Complete the planner above and we'll highlight what's most important for your situation.
First 30 days — Foundation
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Form your legal entity
An LLC keeps your personal assets separate from business debts and lawsuits — the most common reason small business owners choose this structure. Sole proprietorships and partnerships do not provide this protection.
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Get an EIN and register for taxes
Apply for your free Employer Identification Number through the IRS, then register for any state or local taxes that apply to your business (sales tax, franchise tax).
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Open a business bank account and credit card
A dedicated business account is required to maintain personal asset protection. Mixing personal and business finances ('piercing the corporate veil') can void your LLC's liability shield.
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Set up business accounting
Recording expenses and income from day one makes tax filing easier and lets you see when the business is actually profitable. Use software (QuickBooks, Wave) or a part-time bookkeeper.
Days 30–60 — Compliance & Risk
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Get permits and licenses
State and local requirements vary widely. Brick-and-mortar businesses typically need a Certificate of Occupancy; service businesses may need specific professional licensing; food businesses need health permits.
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Get business insurance
General Liability Insurance is the most common starting point. If you'll have employees, most states require Workers' Compensation. Specific industries need additional coverage (product liability, professional liability, etc.).
Days 60–90 — Launch
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Define your brand
Your brand is how customers perceive and remember you. A clear name, logo, and visual identity make every later marketing decision easier and protect you legally as you grow.
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Create your business website
Every legitimate business needs a website. Social media pages are not a substitute — you don't own the platform. Modern website builders mean you can launch a clean site in a weekend without a developer.
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Set up your business phone system
A dedicated business number keeps your personal life private, makes the business look legitimate, and lets you route calls professionally. Cloud phone services start under $20/month.