How to Start a Consulting Business
How to Start a Consulting Business
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- How to Start a Consulting Business
- How big is the consulting business industry?
- What are the key segments of the consulting business industry?
- What external factors affect the consulting business market?
- Who are the key competitors in the consulting business market?
- What are the key customer segments in the consulting business market?
- The Economics of Becoming a Consultant
- What are the key financial metrics and costs in the consulting business market?
- What are the keys to launching a new consulting business?
- Consulting by the Numbers
- What are the typical startup costs for a new consulting business?
- How much do consulting business operators make?
- Marketing for Consultants
- Management Consulting 101
- Consulting: The Engagement Lifecycle & Core
- An Insider's Guide to Building a Successful Consulting Practice
- Helpful Videos
- Additional resources in the consulting business market
How to Start a Consulting Business
If you're looking to start a consulting business, you've come to the right place. Since we're going to show you exactly how to do it.
We'll start with key consulting business industry fundamentals like how big the market is, what the key segments are, and how revenues and profits are generated.
Then we'll discuss keys to not only starting a consulting business, but succeeding in it!
How big is the consulting business industry?
There are approximately 779,699 consulting businesses in the US, and $200.6 billion in revenue was been generated by the consulting industry last year. Over the past 5 years, its annual growth rate has reached 5.2%.
What are the key segments of the consulting business industry?
The two largest segments of the industry are Corporate strategy (38.5%) and Marketing and sales (19.3%). Organizational design makes up another 13.0% and then Process and operations management (9.4%), Human resources advisory (8.1%), Financial advisory (7.5%) and IT strategy (4.2%) make up the remaining revenue.
What external factors affect the consulting business market?
A number of factors affect the performance of the consulting business industry. These drivers include:
- Corporate profit: An increase in the corporate profit signifies that there is a high demand for consulting services among businesses. This also increases the industry revenue.
- Aggregate private investment: This refers to the value spent by business owners for equipment, properties, and software. When businesses expand their investments, they tend to need more help from consulting businesses, so an increase in aggregate private investment is good for the consulting business industry.
- Number of businesses: An increase in the number of businesses also indicates a high demand for consulting services and provides more prospect clients for consultants.
- Government consumption and investment: As the government expands its investments, the demand for consulting businesse's services also increases thus the industry revenue also rises. Government consumption and investment has increased over the last year.
Who are the key competitors in the consulting business market?
The market leaders, in terms of marketshare are Accenture PLC (3.3%), McKinsey & Company (2.6%) and Deloitte Touche Tohmatsu (2.7%).
What are the key customer segments in the consulting business market?
The key customer segments in the consulting business market are as follows (with the percentage of revenue they generate in parentheses):
- Financial services companies (23.8%)
- Consumer products companies (16.6%)
- Government organizations (14.6%)
- Manufacturing companies (11.0%)
- Technology and media companies (9.8%)
- Individuals and non-profit organizations (8.4%)
- Life science and healthcare companies (8.0%)
- Energy and utilities companies organizations (7.8%)
The Economics of Becoming a Consultant
What are the key financial metrics and costs in the consulting business market?
The key financial metrics in the consulting business market are as follows:
Profit - The profit margin of consulting businesses last year is 9.7% of the industry's revenues, and it increased from 9.1% in the past five years.
Wages - 50.7% of the consulting business industry's revenue last year is used for wages. It is expected to drop in the next five years.
Purchases and depreciation - Purchases make up 9.2% of the consulting busines's revenue, while depreciation is 0.9%.
Rent and utilities - Last year, 3.7% of the industry's revenue is comprised of rent and utilities.
Other - Marketing costs make up 1.8% of consulting business industry.
What are the keys to launching a new consulting business?
1. Know your expertise
Identify the field where you can use your skills and knowledge and study everything that you need to know about it. Maximize your strengths and work on improving your weaknesses so you'll be sure to provide excellent service to your clients.
2. Secure your certifications
Consider taking certifications that are related to your specialization. This will build your reputation and increase your client's trust and confidence in your business. This also gives you an advantage over non-certified consultants.
3. Consider hiring an employee
Have someone reliable who can work on the administrative tasks that need to get done in your business. This will save you time and effort and keep you focused on taking care of your client's specific and technical needs.
4. Set your rates right
Determine whether you are setting reasonable rates by looking up other consulting businesse's rates before giving your clients a quotation. Make sure to include in your computation all of the expenses that you would incur in a project especially your professional effort's worth.
5. Sell yourself
Bump up your marketing efforts and let yourself be known by your potential clients. Advertise the services that you offer and your edge over competitors through word of mouth, print ads, and phone, email, and social media marketing.
6. Value relationships
Remember that you are not your own boss so make your client's needs a priority. Pay attention to their demands and always be ready to offer solutions that work. Most importantly, establish personal connection with your clients by meeting with them as often as needed.
7. Be emotionally ready
Starting a consulting business also means dealing with a lot of meetings with potential clients that do not end up hiring you. Be prepared on how to deal with such failures professionally. Your target clients will remember you in the way you deal with them and a positive attitude towards an unclosed deal might redeem you the next time they need a service that you offer or meet a friend that needs your expertise.
Consulting by the Numbers
What are the typical startup costs for a new consulting business?
Startup cost for new consulting businesses range from $10,000 to $50,000.
How much do consulting business operators make?
The average salary for a consulting business operator is $107,553.
Marketing for Consultants
Management Consulting 101
Consulting: The Engagement Lifecycle & Core
An Insider's Guide to Building a Successful Consulting Practice
Best Business Model for Consultants
Consulting Firm Names: How to Choose the Best One
What the heck does a consultant DO, exactly? - Management Consulting 101
Additional resources in the consulting business market
For additional information on the consulting business market, consider these industry resources:
- Top-Consultant's Consultant-News: www.consultant-news.com
- Institute of Management Consultants USA: www.imcusa.org
- Consulting Magazine: www.consultingmag.com
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