How to start a management consulting business
Learn about our editorial policies
By observing processes, analyzing market research, and digging into a company’s financial profile, management consultants can provide a fresh perspective, problem-solving frameworks, and expert strategies to meet their clients’ needs.
For individuals who thrive in demanding, fast-paced fields, having your own business as an independent consultant can be extremely rewarding. Some perks include:
- High earning potential, with the average salary for a management consultant reported at $147,708 per year or $71 per hour.
- Flexibility to determine your work schedule and which projects you take on.
- Variety of projects and clients across different industries.
- Low startup costs, with minimal technological needs, and the ability to work from home.
Of course, this career path comes with a few challenges, including long hours, frequent travel, and high expectations from clients.
There are also many legal risks, including client dissatisfaction over errors or missed deadlines, data breaches, property damage, and advertising injuries such as slander. Having the right insurance plan can protect your small business from lawsuits that cost a lot of time, money, and reputational damage.
Sound like the ideal career for you? Here’s how to become an independent management consultant.
- Define your niche and target market
- Build your foundation
- Create a visible brand and digital presence
- Cultivate customer relationships
- Streamline your consulting operations
- Manage risks with a safety net
- Scale your management consulting practice
- Common setbacks and how to overcome them
- Safeguard your management consulting business with Insureon
Define your niche and target market
Before you can start catching those first clients, you need a hook. Who can you help, and how can you help them? Identifying your area of expertise and target audience will help your business-building efforts by focusing on specific challenges and needs.
Pinpointing your consulting niche requires a few crucial steps:
- Identify your strengths, skills, and what interests you
- Determine which industries and areas of a business you’re drawn to
- Examine your training and professional experience
- Research the market and target audiences
- Consider career longevity, profitability, and adaptability
- Get advice from seasoned consultants
Build your foundation
In order to build a foundation for your management consulting business, here are some steps you should take:
Create a plan
Building a stellar business starts with a roadmap that clearly illustrates the strategic direction for your consulting firm. To create a successful consulting business plan, you need to include a few key details:
- Define business objectives, including what consulting services you’ll offer, how you’ll acquire new clients, and what your short- and long-term revenue goals are.
- Create a profile of your target audience, including industry insights and marketing opportunities.
- Develop a revenue model, detailing startup and operating expenses, pricing strategies, and financial projections for the first year of business.
Make it official
Determine your new business structure, whether you’ll operate as a sole proprietor or by forming a limited liability company (LLC). A few things to consider as you make this decision:
Sole proprietorship
- Offers the simplest, cheapest setup and maintenance
- Profits will be included in your income tax
- Doesn’t protect your assets if a client sues your business
- Provides less credibility than an established business
LLC
- Separates personal and business assets, so your finances are protected from lawsuits
- Offers more opportunities for tax savings
- May be seen as more established and trustworthy by potential clients
- Requires more paperwork, legal regulations, and start-up costs
Build credibility
While there’s no official management consultant license, getting certifications from respected organizations can add credibility to your business card. For example, the Certified Management Consultant (CMC) certification, offered by the Institute of Management Consultants (IMC), is a globally recognized designation of high competence and ethical practice.
Create a visible brand and digital presence
To grow your own consulting business, you need to make a strong first impression. Strategically leveraging different digital platforms can provide a cost-effective way to promote your new consulting company to a wider audience.
Launch your website
A website is the perfect place to introduce yourself to potential clients, sharing information such as:
- Your work experience, personal bio, and a professional photo
- A menu of services and packages
- Portfolio of work
- Case studies
- Client testimonials
- Contact info
Being active on social networking sites like LinkedIn, creating a blog or video content where you share success stories, and offering educational webinars are all great ways to step into the spotlight and connect with potential clients.
Network, network, network
One of the best avenues for building a client base is through referrals, which begins by having a solid network of peers, mentors, and satisfied clients.
Attending industry events, joining peer groups, going to speaking engagements, and fostering relationships with business owners are great ways to establish connections and learn about new opportunities by word of mouth.
Cultivate customer relationships
While referrals are a great way to churn up business, it’s hard to fill a bathtub drip by drip. To get a steadier stream of business, you need to establish an effective lead generation funnel, which is a structured approach to attracting, engaging, and converting possible clients into paying customers.
Here are the three key stages of a lead generation funnel:
Awareness: Now’s the time to catch the attention of your target audience. There are multiple platforms you can use to position yourself as the expert they need:
- Blog posts and videos that highlight common pain points and how you can help.
- Social media posts that share your services and positive customer reviews.
- Targeted ads on LinkedIn and Google featuring special offers for first-time clients.
- Webinars where you can share case studies and collect contact information.
Consideration: With a lead in hand, it’s time to start the conversation. Set up a free consultation call to discuss their needs and how your services can help them. Share your experience, methodologies, and case studies that show them you're a qualified pro they can trust.
Conversion: Once you’ve established a connection, it’s time to bring them on board. Present a detailed proposal that outlines your services, fees, and expected outcomes that are tailored to their needs. When speaking of fees, there are a few important things to consider:
- Determine your minimum rate, based on personal and business expenses
- Research competitive rates based on your industry and experience
- Be open to negotiating rates with clients
- Offer clients different pricing packages, such as hourly rates, retainer fees, or per-project pricing
Streamline your consulting operations
When business gets busy, you’ll want to be prepared to tackle a large workload with ease. Establishing standard processes, optimizing workflows, and getting the right technological tools will help you boost efficiency, enhance deliverables, and ultimately increase client satisfaction.
Get smarter tools
- CRM software, such as Salesforce or HubSpot, can help you manage client relationships, track leads, and streamline all communications.
- Project management tools, including Asana and Monday.com, track progress, milestones, and updates so you don’t have to.
- Invoicing and time-tracking tools make it easy to review your billable hours, provide clients with detailed invoices, and track payments.
Create a support system
If you don’t want to hire a full-time employee, you can outsource some of your important tasks, including bookkeeping, administrative, and virtual assistant services. This will ensure consistency, reduce clerical errors, and keep track of your growing to-do list.
Continuous improvement
Stay up to date on the latest technologies, industry trends, and best practices in the consulting field through a few outlets:
- Webinars and podcasts can provide advice, case studies, and allow you to network with consulting industry peers.
- Professional coaching can help you build a personalized growth plan that addresses professional challenges and business goals.
- Certifications can boost your credibility and highlight expertise, including Certified Management Consultant (CMC), Certified Professional Business Advisor (CPBA), and Six Sigma certifications.
Manage risks with a safety net
Consulting insurance is an essential part of your risk management strategy, ensuring you have the proper protection from risks and liabilities if something goes wrong. Here are some of the top policies to consider for protecting your small business:
Professional liability insurance
Also called errors and omissions (E&O) insurance, a professional liability protects your business if you’re accused of a mistake, oversight, or professional negligence.
This type of coverage is strongly recommended for those who professionally advise clients and might be required by some clients as a term of their contract. Depending on the type of consulting work you do, a policy may also be legally required in some states.
The policy covers legal fees, settlements, and judgments should you end up on the wrong side of a lawsuit, such as:
- Your client claims your advice was flawed, causing their business to suffer financially.
- You make a clerical error or miscalculation that costs your client a lot of money.
- You miss a project deadline or fail to deliver services, causing your client to face financial penalties or take a hit to their reputation.
General liability insurance
If you accidentally damage client property, a general liability insurance policy would help cover the costs required to fix or replace the damage. It also covers medical bills and expenses if a client is injured at your office. If you’re signing a commercial lease for office space, your landlord will likely require you to have this coverage.
General liability also covers personal and advertising injuries, including copyright infringement and defamation.
Cyber insurance
Data breaches and other cyberattacks are becoming increasingly common for small businesses. If a hacker steals sensitive data from your computer, you could find yourself facing an expensive lawsuit from angry clients. Cyber insurance can help protect your small business in two ways.
First-party coverage, also known as data breach insurance, handles recovery costs from a data breach at your own company, including:
- Credit monitoring services for affected individuals
- Cybersecurity specialist services to restore affected systems
- Cyber extortion ransom payments
Third-party coverage protects your business if you’re sued by a client for failing to prevent a data breach at their company. This coverage would help pay attorney fees, court costs, settlements, or judgments.
If you’re consulting in the tech industry, IT consultants can consider bundling third-party cyber insurance with professional liability insurance. This bundled coverage is commonly referred to as tech professional liability insurance or tech E&O. Both policies protect against accusations of negligence.
Workers’ compensation insurance
If you hire an employee, workers’ compensation insurance is legally required in most states. This policy covers medical bills and lost wages for employees recovering from a work-related injury or illness.
Not hiring help? You should still consider workers’ comp, as personal health insurance won’t cover your medical bills if you’re injured on the job.
Understanding which insurance policies offer the best protection for your small business’s unique needs can feel overwhelming. Insureon is here to help. Our licensed insurance agents can provide expert advice, and our online application makes it easy to compare insurance quotes from top-rated U.S. carriers.
Get peace of mind knowing you can secure coverage and get a certificate of insurance (COI) within 24 hours of picking your policies.
Scale your management consulting practice
It's important to find ways to expand your business, take on more work, and optimize offerings to increase revenue, while managing your time and expenses.
- Establish a business development routine that’s effective and easy to execute, including pre-planned weekly outreach, scheduled content posting, and automated referral incentives.
- Offer packaged services with standardized, well-documented procedures that streamline delivery and ensure consistency without sacrificing quality.
- Build a team of talented subcontractors, junior consultants, and freelance advisors to help you tackle heavy workloads without spreading yourself too thin.
Consulting insurance is an essential part of your risk management strategy, ensuring you have the proper protection from risks and liabilities if something goes wrong.
Common setbacks and how to overcome them
Marketing paralysis
Fearing failure, getting buried by data, and lacking clear goals and strategy can make it impossible to sustain impactful and effective marketing efforts. This can lead to missed opportunities, stalled business growth, and loss of your competitive edge.
Here are a few steps you can take to keep moving:
- For large marketing efforts, tackle small, achievable tasks one at a time.
- Set clear, realistic objectives for your marketing strategies.
- Reduce options and set deadlines to encourage quicker decision-making.
- Get external advice and help from experienced professionals.
Poor pricing
Undervaluing your services, lacking confidence in your rates, failing to communicate with customers, and getting outpriced by the competition can all negatively affect profitability, customer satisfaction, and your well-being.
There are a handful of things you can do to overcome pricing setbacks:
- Understand and promote your expertise, unique value proposition, and the trackable results you’ll deliver to your clients.
- Develop strong communication skills to level-set expectations and overall project scope to avoid misunderstandings or missed deadlines.
- Become a better negotiator, taking the time to understand a client’s needs and budget while feeling confident to justify your rates.
- Monitor market trends and regularly review and adjust your pricing to stay competitive and capture the full value of your services.
Process gaps
Lacking organization around projects and priorities, failing to establish processes, and not investing in early workflows can tank efficiency and productivity, hurt consistency and client satisfaction, and make growing your business difficult.
You can make a few moves to help with these issues:
- Acknowledge errors, seek feedback, refine strategies, and roll out changes to embrace and learn from project setbacks.
- Build resilient, adaptable workflows that clearly define scope, goals, and deliverables at the start of each project.
- Standardize processes with templates, checklists, and guidelines for common tasks to ensure consistency, reduce errors, and improve service quality.
- Leverage technology, including project management software and automation tools, to streamline tasks and enhance efficiency.
Safeguard your management consulting business with Insureon
Get free quotes for consulting coverage from top-rated insurance providers by filling out our easy online application. You can also speak with a licensed insurance agent, who can answer questions and help you find affordable coverage.
Once you find the right policies for your small business, you can begin coverage and get a certificate of insurance (COI) in less than 24 hours.
