How to start a consulting business

Consultants usually specialise in one particular field, and they provide businesses and entrepreneurs with expert advice — and sometimes, hands-on assistance as they expand into new territory. Wondering how to start a consulting business? We’ve got you covered.

If you’re an expert in a specific area, you can turn your know-how into a consulting career. In this guide, we’ll show you how to set up a brand new consulting business. We’ll cover the following topics:

• How to start a consulting business
• How to package your consulting services
• How to find consulting clients

Before starting work as a freelance consultant, you’ll need to register as a sole trader with HMRC. To attract consulting clients, you’ll also need to prove you’re an expert in your field. Finally, it’s a good idea to write a business plan before launching your venture.

Registering as a sole trader with HMRC isn’t as complicated as it sounds: all you do is sign up for Self Assessment online. You’ll need to confirm your identity using either Government Gateway or GOV.UK Verify during the registration process. You’ll also need to provide your business name, your business address and other details. 

After you get set up, you can use the portal to file self-assessment tax returns every year. You can also use your registered status to prove self-employment if you need to claim Tax-Free Childcare or other benefits. If you think you’ll make more than £85,000 in any 12-month period, you’ll need to register for VAT as well.

You don’t need a license to be a consultant in the UK, but you will need to prove that you’re an expert so that clients will hire you. If you have a degree in your field, great; if you have employment-related experience, that’s perfect as well. In fact, some companies prefer consultants with real-world experience over on-paper qualifications.

Gather all the professional ‘evidence’ you have, and use it to create a written statement you can give to potential customers. Make a list of all your qualifications and certifications, and then briefly describe your employment history. Highlight any professional awards you’ve received, and consider finishing off with a client testimonial or two.

Business plans don’t have to be long or involved to be effective. Writing a business plan can help you think about your current position, where you want to take your business next, and where you see your company heading in the future. If you need funding, a business plan can help you get it. If you don’t, you can use your business plan to stay on track for growth.

Try to answer the following questions as you write your plan:

• What is your consulting niche?
• Who do you believe will benefit from your consulting services?
• What makes your consulting business different from the competition?
• How do you plan to scale your business?

Your business plan will probably change over time — and that’s okay. It’s important to be flexible, and to evolve in response to client needs and marketplace trends.

Next, you’ll need to package your consulting services. This is where you tell people what you can offer them, and how much you’ll charge. Some consultants stick with hourly contracts, while others wrap services into bundles and charge a flat fee. Answering these five questions can help you package your consulting services, organise your time and make a decent living.

First, think about everything you can offer as a consultant. Which consulting services generate the most profit for you? Which ones pull in the least amount of money? How much time do services take, and which ones do you like performing the most?

Focus on job satisfaction first: reduce low-profit consulting services that you don’t like doing and replace them with tasks that you enjoy. Balance low-profit services with high-profit consulting projects to make sure you bring in a living wage. You can use a mind mapping tool like Mindly or Ayoa to help you brainstorm ideas.

Next, consider your niche, and think about where you plan to hunt for clients. To find new customers, you need to put your marketing message in front of the right people. If you’re a tech expert, you might want to reach out to existing contacts in the tech industry. If you’re a fundraising maven, you could decide to concentrate on charities. 

The companies you target have to be able to afford your services, so do a little financial research at this stage. If you want to work with cash-strapped entrepreneurs or self-funded startups, be realistic about the fees you charge.

Some consultants package several business services together, while others concentrate on one high-profit service at a time. As a newcomer, you might decide to begin with a lucrative service like business strategy or compliance and go from there. Choose services you feel confident about, and then define them, like this:

• Pricing strategy development services
• Social media consulting services
• Startup support services
• HR auditing services
• Digital transformation consulting services

Make it clear what your services include, and what they don’t include. Clearly defined services are easier to understand, so they’re easier to sell. 

Clients almost always want to know when they’ll see results, so it’s important to tell them exactly what to expect when they work with you. What do they get when they hire you? When will you check in? How will you help them achieve their goals?  

It can be smart to map out the consulting process in advance. Clients who know when to expect results — also known as “deliverables” — are more likely to hire you, and less likely to worry if you don’t touch base for a few days. With a clear action plan in place, collaboration is easier, too.

Next, pull your consulting services apart to figure out how much they cost you to provide. Take subscription services, administration fees and your own time into account. Most successful consultants pay themselves 50 percent of the project fee they charge clients. 

It can be helpful to begin with an hourly rate for yourself, and add costs to that. Don’t forget about your income tax liability, which begins at 20% on earnings over your personal allowance. You might also have to pay both Class 2 and Class 4 National Insurance. Don’t be afraid to revisit fees if services take longer than you think, and do give yourself a raise every year in line with the cost of living. 

Finally, set up a website, write landing page copy and list the fees for your consulting services online. With clear service descriptions and a transparent pricing structure in place, you can move on to the client search phase — and we’ll go into that next.

You’re registered as a sole trader and you have a service package in mind; now, you need to find consulting clients. Some of your first clients might be friends of family members — but you can’t build a robust business on social contacts. Instead, think four clients ahead to grow your customer base long term.

Some consultants worry that if they concentrate on a niche market, they’ll attract fewer clients. In fact, the opposite usually happens. Consultants who specialise in a certain industry — or who focus on a specific service — end up getting hired more often because businesses consider them experts.

You’ll almost certainly have trouble finding clients if you don’t have your own website. You’ll need to develop a brand, like other businesses, to stand out from the crowd: a logo or logotype, a range of brand colours and fonts, and a brand ‘voice’. Your portfolio site might include a landing page, a bio page, a services page and a reviews page.

For better or worse, social media messages carry well. Many consultants set up business pages on Linkedin, Facebook or Twitter, which they use to share content and look for connections. You can optimise your social media profiles using SEO keywords to make them easier to find.

Word of mouth and good recommendations bring in solid leads. Ask previous clients, professional connections, friends and family members to spread the word about your new venture. Your existing network might know about consulting opportunities you haven’t heard of yet.

Paid forms of advertising, including pay-per-click ads, social media promotions and magazine ads can help you find new leads, too. Write a list of online and offline locations your potential clients might visit, and advertise in places they’re likely to look. 

Many self-employed people find it hard to ask for payment — but it doesn’t have to be that way. If you’re clear about payment terms in advance, you’ll usually get reimbursed quickly. Let’s break invoicing down, step by step.

Do discuss payment terms before you begin working on a consulting project — preferably when you create the brief after discussing your client’s needs. Let your client know what your preferred payment methods are straight away. Bank transfer and card payments are common, but many freelance consultants also accept PayPal, Venmo and Klarna. 

Do make sure your invoices meet UK Government guidelines. You’ll need to include specific accounting data, and information about your company:

• Your business details: Your name or your business name and your business contact information — including physical address, telephone number, email address and website.
• Your client’s business details: Your client’s name or business name and their business contact information — including physical address, telephone number, email address and website.
• A unique payment reference: A number assigned to make the invoice easier for you and the client to track.
• Main work-related dates: The date of the invoice, your consulting project deadline and your payment deadline.
• An itemised breakdown: The individual services you’re charging your client for.
• VAT: If applicable, list the amount of VAT included in the service fee. 
• Payment information: Ways to pay you — bank details or a payment portal, for instance.

Including a friendly note at the end isn’t essential, but it can help you build goodwill. If you decide to include a note, make it short and sweet: ‘Thank you for your business!’ or ‘Hope to work with you again soon!’

You can create professional and compliant invoices quickly and easily with an app like Countingup. Every invoice you generate will receive a unique reference number automatically and you’ll receive a notification once you’ve been paid. Countingup also matches incoming payments with invoices, so that you don’t have to. 

Do send the invoice to your client in a timely manner. Send your invoice as soon as possible after you complete your consulting project: preferably within a couple of business days. If you’re a Countingup user, you can use the app to create invoices on the go and send them via email.

Most consultants work on a 30-day payment deadline because they know that their clients’ finances revolve around a similar monthly billing cycle. It can be helpful to discuss your billing cycle in advance, and to be flexible if need be.

If you need to follow up an unpaid invoice, always be polite and understanding. Late payments are called ‘credit notes’, and we’ve written a guide to help you chase them up. 

You’ll have plenty to deal with as a brand new freelance consultant. You can save yourself hours of time consuming admin with Countingup, the all-in-one business current account and accounting app. 

With automatic invoicing, expense categorisation, receipt capture tools and cash flow insights, you can confidently keep on top of your business finances and save yourself hours of accounting admin, so you can get back to doing what you do best. Find out more here.