Startup cost
$500–$10k
TRUiC Business Ideas
How to Start a Management Consulting Company
Decision Snapshot
Management Consulting
Idea Score
69
Profit margin
41%
Break-even
4 mo–12 mo
Time to launch
12 wk–36 wk
Demand trend
Stable
5-yr failure rate
—
Capital intensity
Medium
Time commitment
Flexible
Part 1 - How to start a Management Consulting Company business - Background
A management consulting business provides expertise, guidance, and objective insight for businesses. As of 2020, management consulting was a $250 billion industry. There are many niches in management consulting, including strategy, human resources, operations, and more. Management consulting companies are usually comprised of experts in business-related fields who specialize in helping businesses improve in various areas related to leadership and management.
Our guide is in 3 parts:
- Part 1 - How to start a Management 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 management consulting company?
One of the nice things about starting a management consulting business is that your startup costs are not very high. As long as you are doing the work yourself and not hiring someone else to help, you will only need your phone, computer, and expertise. Marketing your services might require some initial investment, but even those costs can be kept down if you take advantage of free marketing opportunities like social media and blogging.
What are the ongoing expenses for a management consulting company?
The ongoing costs for a management consulting business vary depending on the structure of the business. If you are doing everything on your own, your costs may be limited to maintaining your technology (computer, smartphone), utility bills for your home office, and travel costs when you meet with clients. If you have employees, they will make up a large portion of your ongoing expenses. But while employees can be costly, they may save you money over hiring freelancers to take care of specific tasks like data analysis.
Who is the target market?
Your target market is businesses that need help with their management. You may prefer to be more general and serve all types of businesses, or you may want to narrow down to a specific niche industry. Remember, just because a business appears successful doesn’t mean they don’t need help. Don’t be afraid to target all types of businesses that you think you could help.
How does a management consulting company make money?
Management consulting businesses tend to use four different pricing models:
-
Hourly
-
Project-based
-
Return of investment (ROI)-based
-
Monthly retainer
You might use one pricing model with one client and a different model with another client. There are positives and negatives to each model. Some clients have strong opinions about one model over another as well. For example, a client might balk at paying you an hourly rate while being happy to pay by project or based on ROI.
It is usually easier to determine which pricing model will work best after knowing what kinds of problems you will be solving.
How much can you charge customers?
There are multiple ways to choose how much you charge clients. You need to charge enough to make your business appear professional and valuable, but not so much that you drive away business. One pricing method consultants use is to take the salary from their last job and multiply it by three. So, if you made $50 an hour at your last job, you would charge $150 an hour for consulting. The significant increase from your previous salary is necessary because you have to pay more taxes as a freelancer. You also have to pay for your health insurance coverage and your marketing costs.
How much profit can a management consulting company make?
Management consulting businesses can generate significant profit if they are successful. Major consulting companies may charge $500,000 to $1,000,000 a month. Of course, these are the top players in the industry. At the low end, the rate for a single business consultant is $150 an hour. If we go off of the entry-level pricing model mentioned above, where you triple your last salary, you can expect to make a little more than you did at your last job after expenses. As you gain experience and build a team, your profit potential goes up considerably.
How can you make your business more profitable?
You can make your consulting business more profitable by building a team and a reputation. As your team grows and you can offer more comprehensive solutions for your clients, you can charge considerably more. And if you build a great reputation, clients will trust you to solve their problems and expect you to charge accordingly.
Day-to-Day and Growth
What happens during a typical day at a management consulting company?
An average day at a management consulting business is a busy one. Work can include examining issues your client is having with their business to find potential solutions, analyzing data to identify issues and/or solutions, conducting surveys of management and/or employees, preparing presentations for clients, presenting your findings, negotiating with clients, and much more. Depending on the complexity of client needs and the scope of your business, you may have employees handling these tasks and therefore need to manage those employees. And if you are not currently helping a client, you will spend your day marketing your business to get more clients.
What are some skills and experiences that will help you build a successful management consulting company?
Probably the most important qualification for becoming a management consultant is experience and expertise. Businesses come to consultants because they need insight and knowledge that they don’t have. You should be able to confidently market yourself as an expert in your field if you want businesses to pay you for your expertise. Organization is another major skill that can be helpful. If your business is successful, you will need to juggle numerous tasks to serve your clients best.
What is the growth potential for a management consulting company?
The growth potential for a management consulting business is significant. As you gain experience and build a reputation for quality, you can attract bigger businesses with more resources to pay you and your team. It may take time, but if you are persistent and deliver results for your clients consistently, you should be able to grow steadily, hire more employees, and offer more services.
What are some insider tips for jump starting a management consulting company?
Marketing your business may be challenging at first. It can be helpful to find what is working for others and copy it for your own business by researching how similar consulting businesses reach their clients. For example, other consulting businesses in your niche may advertise in trade journals specific to the industry. You should do the same. Others may blog regularly about management optimization strategies. You can blog, too, or at least hire someone to do it for you.
Another option you may try is reaching out to your connections in the industry. If you’ve been working in the industry for years, you probably know some people in various companies that you can tell about your new consulting business. They may be able to help you find some of your first clients.
How and when to build a team
While it often makes sense to start your consulting business on your own, if you get more than a few clients, you will need help to keep up with the work. There are several reasons to hire employees. One reason is to handle more menial tasks so you can focus on problem-solving. Your expertise is far more useful for your business if you are helping clients instead of stuffing envelopes. Another reason is to add expertise and skillsets to your business. For example, you may be able to serve your clients better if you have a data analyst handling the data while you focus on communicating with clients.
Part 2 - Is a Management Consulting Company 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 Management 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 Management 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 Management Consulting Company 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
-
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.
-
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).
-
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.
-
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
-
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.
-
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
-
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.
-
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.
-
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.