Startup cost
$1.0k–$10k
TRUiC Business Ideas
How to Start a Human Resources Consulting Firm
Decision Snapshot
Human Resources Consulting
Idea Score
73
Profit margin
41%
Break-even
4 mo–12 mo
Time to launch
2 wk–8 wk
Demand trend
Stable
5-yr failure rate
—
Capital intensity
Medium
Time commitment
Full time
Part 1 - How to start a Human Resources Consulting Firm business - Background
Businesses have certain requirements they must meet when employing workers, and many need help adhering to legal regulations and overcoming practical challenges. When they need help, businesses that don’t have in-house HR departments turn to human resources consulting firms. A human resource consulting firm business may help other businesses with employee handbooks, personnel forms, benefits programs or any other employment-related issue.
For business owners with experience in the field, starting a human resources consulting firm business can be a promising venture. IBISWorld reports that the HR consulting industry has an annual revenue of $22 billion within the United State, and it has demonstrated a slow but steady growth of 0.6 percent over the past five years.
Our guide is in 3 parts:
- Part 1 - How to start a Human Resources 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 human resources consulting firm?
The costs to open a human resource consulting firm business are fairly low, totaling between $2,00 and $10,000. These funds are needed to purchase a computer, office software, a laser printer, a fax machine, and an internet connection. An office may be necessary at times, but business owners can rent a shared coworking space or meet in a cafe when first starting out.
Before opening a consulting firm, however, business owners should either have another source of income that’s stable or a significant amount of personal saving. It can take six months to develop a client base and another six months before consulting begins to provide a paycheck.
Because earning any income from consulting can take so long, many business owners start human resources consulting firms part-time while working at another job. Working in the evenings and on weekends gives business owners an opportunity to grow their client base without giving up their primary income. Once the client base is providing a steady income, they may choose to leave their job and consult full-time.
What are the ongoing expenses for a human resources consulting firm?
The ongoing expenses for a human resources consulting firm business are minimal. They include office supplies, office equipment depreciation, utility costs, and travel expenses if a business owner meets with clients in person.
Who is the target market?
The primary target market for a human resources consulting firm business is small and medium businesses that either don’t have in-house HR departments, or want to downsize and outsource their HR department’s work. Some firms also consult for nonprofit organizations.
How does a human resources consulting firm make money?
A human resource consulting firm business makes money by selling consulting services to other companies. Most firms charge an hourly fee, and some may be on a retainer for certain clients.
How much can you charge customers?
The average cost for a human resources consultant ranges from $99.52 to $184.74 per billable hour. Specialists will tend to be toward the higher end of this range, while generalists will likely be closer to the lower end because of the increased competition they face.
How much profit can a human resources consulting firm make?
Human resources consultants can earn a substantial income. In a full day with 8 billable hours, a consultant might bring home between $800 and $1,472. Of course, not every day will have 8 billable hours in it.
How can you make your business more profitable?
Human resources consultants who write articles for magazines and newspapers might earn a little side income while pursuing these marketing efforts. Additionally, business owners can write ebooks or traditional books on their areas of expertise.
Day-to-Day and Growth
What happens during a typical day at a human resources consulting firm?
Human resources consultants spend time interacting with clients and working alone. Business owners can expect to be in regular contact with clients, connecting via email, fax, phone, and in-person meeting. When not talking to clients, business owners often work alone researching issues and assembling materials.
What are some skills and experiences that will help you build a successful human resources consulting firm?
As mentioned, business owners must be knowledgeable in current human resources issues and how they’re solved.
Prospective business owners who would like to bolster their knowledge in a specific area may want to take an online HR course. ECornell, Study.com and other organizations offer courses on particular subjects. Some other institutions, such as the University of Phoenix, have certificate programs. For the highest level of education in the field, business owners can complete a bachelor’s degree or master of business administration at an accredited university.
Classroom education alone, however, may not sufficiently qualify prospective business owners for work as an HR consultant. Most people who successfully start HR consulting firm businesses have experience working in HR, and many have worked in the industry for decades.
What is the growth potential for a human resources consulting firm?
A human resource consulting firm business can be a small business run by one person, or it can grow to be a large international company. Burr Consulting, LLC in New York is an example of a small firm that has one consultant. Mercer is a much larger consulting firm, with operations in more than 130 countries.
What are some insider tips for jump starting a human resources consulting firm?
There are many human resources consultants who provide general consulting services, which can make attracting clients difficult. To differentiate themselves, business owners should specialize in one or two areas of HR consulting that are in demand.
Colin McAndrew, an HR consultant in the United Kingdom, did just this by offering overseas consulting services. He had worked in several countries before opening his own consulting firm, and he has leveraged this experience to attract U.K.-based companies that have operations in multiple countries.
How and when to build a team
Many human resources consultants never hire an employee, while some choose to hire only support staff to help manage their office. A few eventually bring on additional consultants as their client base grows.
Part 2 - Is a Human Resources 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 Human Resources 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 Human Resources 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 Human Resources 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.