According to Statista, the consulting market size in the United States reached a value of $64.4 billion in 2020 — a figure that isn't covered exclusively by massive firms catering to corporations. The market for small business consulting is also incredibly lucrative, and the practice itself can involve rewarding, engaging work.
If you're an expert in your field, whether it's sales, marketing, IT, or finances, you can make good money as a small business consultant. Below, we'll review what small business consulting entails, what services are offered, how to start a small business consulting firm, how to become an independent small business consultant, and take a look at pricing and compensation in the practice.
Small Business Consulting
Small business consultants give business owners advice on strategy, problem solving, and developing skills. They also come up with resources and lay out a plan to improve an organization's performance. Overall, small business consultants are contract workers that will spot problems, implement solutions, and achieve goals.
Consultants can be an important tool for small businesses that can't afford full-time employees year-round, need a third party to solve a company issue, or want an expert to give advice and strategize.
What does a small business consultant do?
Small business consultants can carry out a variety of responsibilities. They might design something like a business plan, sales strategy, marketing plan, or public relations campaign.
They can specialize in certain areas such as accounting, operations, human resources, management, marketing, or public relations. It would be difficult to rattle off every possible kind of small business consultant in a single article. They can help address virtually every base a small business needs to cover.
Ultimately, every small business consultant is similar in the fact that they're independent entities contracted by small businesses for their expertise and help with certain activities that those companies don't feel fit to handle themselves.
Below, let's review some services a small business consultant might perform.
Small Business Consulting Services
- Sales and marketing consulting.
- Project management consulting.
- IT consulting.
- Accounting consulting.
- Strategic planning.
1. Sales and marketing consulting.
If you're an expert or have worked in sales and marketing, you can easily transfer that knowledge as a small business consultant.
A small business consultant can work with sales and marketing teams in a number of ways. For example, they can come up with a digital strategy, a marketing campaign, or work on the web development or training side of things.
To illustrate, let's say that a company contacts a consultant because their sales team hasn't been performing well. A small business consultant will come in, observe, identify the problems (whether they're operational or training-based), work on strategizing a solution, and then implement it. For instance, a consultant might recommend using the HubSpot Sales Hub or Active Campaign.
2. Project management consulting.
One of the main reasons that companies hire small business consultants is for project management.
Let's say a company has a new product or launch coming up, but they aren't sure how to strategize for it because there are only five employees and none of them work in project management.
That's when a consultant could come in and either train your employees on how to handle the project or work as a contract project manager.
Additionally, if a company has operational inefficiencies long-term, they might consider hiring a consultant to spot the inefficiencies and come up with a plan to improve the organization's project management.
A consultant can help a company with reporting in two ways: they can gather analytics and reports and they can analyze the reports that come in.
This is a service that a company might want to hire a consultant for on a longer-term basis. With reporting, a small business consultant will help a company collect and understand the analytics or reports so they can make smart business decisions based on data.
If a company or owner tries to do this on their own, they could misinterpret the data or not understand what the numbers mean contextually.
When a small business is just starting out, it needs to have projections and forecasts for how things will go in the near and distant future.
However, forecasting is hard when you don't have ample resources, time, or personnel to gather the data and analyze it. That's when a small business consultant can come in. They'll work with the company to understand and put together proper projections.
5. IT consulting.
With a small business, choosing the right technology and getting the system set up efficiently isn't easy.
That's why companies hire consultants for IT services. A consultant can help choose the proper technology and ensure the technological systems are set up correctly and efficiently.
If a company has been up and running for some time, a small business consultant can help identify technological inefficiencies and then figure out a solution to improve a company's system and processes.
6. Accounting consulting.
Accounting is another service that a small business might hire for the long term. With a small team, having an accounting department might not be financially worth it. However, every company needs an expert managing and looking at the finances.
A small business consultant who specializes in financial management can come on and adjust budgets, set up payroll, or help with taxes. Finances and accounting are one of the hardest things to manage for a small company, but it's one of the most important areas to set up accurately.
7. Strategic planning.
At its core, small business consulting is about strategic planning. A small business consultant might help plan strategic messaging or launches.
The role of a small business consultant is to identify issues and strategically plan solutions. Essentially, they are creative problem solvers that can specialize in any area of business and help small business work more efficiently.
How to Start a Small Business Consulting Firm
1. Find a niche, and specify your services.
What is your small business consulting firm going to do? What's your identity? Who are you going to be? When it comes to starting your own small business consulting firm, you have to have more specific goals than, "We're going to consult for small businesses."
Your average small business is both specialized and multifaceted, and you're most likely not going to be equipped to handle every element of every business across every industry. You'll need a specialty — and that has to be clearly defined before you start putting your firm together.
Your firm will be much better off specializing in something like "communications for pre-seed funding B2B SaaS startups" than it will be if you market yourself as a "small business consulting firm for small businesses."
2. Get a strong feel for your market and its typical pain points.
Once you have your niche pinned down, you need to understand how to best tackle your target market. If you're starting your own small business consulting firm, odds are you're not going in totally blind. You probably have some degree of experience in your field — at least you should.
Still, you can't rely solely on your prior experience with a market when trying to put a firm of your own together. You need to conduct extensive market research to understand the businesses you're trying to work with and the issues they're most likely facing.
Reach out to business owners across platforms like LinkedIn to see if you can get some insight into the struggles and setbacks they most commonly face. Try to find literature like industry-specific blog content and thought leadership pieces. See if you can attend conferences or download webinars for an in-depth perspective on how your target industry functions.
One way or another, get a solid pulse on who you're trying to appeal to — it can be instrumental to successfully guiding almost every other point on this list.
3. Document a business plan.
Putting a business plan together isn't necessarily essential to starting a successful small business consulting firm, but it can still be a big help — and it doesn't have to take too long either.
Having a thoughtfully segmented, clear-cut document that details who you are, what you do, your market position, your plans for the future, your financial situation, and other key elements that define your firm's identity and viability can be a massive asset for you — both internally and externally.
It also doesn't have to be a massive, hundred-something page diatribe that covers literally every corner of your operations. It can be as simple as the one-page template from HubSpot shown below.
Having a business plan laid out helps you better understand your strengths, weaknesses, and opportunities while simultaneously giving you a document you can show potential clients to prove that you're effective and legitimate. Again, this step isn't mandatory — but it can still help you out in both the short and long term.
4. Cover your firm's legal bases.
Hiring an Attorney
Starting any kind of business comes with its share of legal requirements and hangups — and a small business consulting firm is no exception. That's why you need to find some solid legal representation to help ensure your firm gets off the ground within the confines of the law and doesn't overstep any legal boundaries as it grows.
But hiring the right legal help is easier said than done. Connecting with a reputable, reasonably priced, reliably available attorney who's willing to represent your firm can sometimes feel like chasing a unicorn.
You're best off establishing a firm budget, setting measured expectations, and going from there. Thoroughly screen the lawyers you're looking into to ensure that they've served their clients well — particularly those whose characteristics are in line with your firm's.
Landing on a Legal Business Structure
Once you have your attorney, you need to work with them to determine what kind of entity you intend to register. What is your legal business structure going to be? Your answer to that question is going to inform several other key elements of your operations — how you pay taxes being one of the most important.
There are four main legal business structures:
- Sole proprietorship — Where one person is responsible for a business's profits and debts.
- Partnership — Where two or more people hold shared responsibility for a business.
- Limited Liability Company (LLC) — Where owners aren't personally responsible for a firm's debts or liabilities.
- Corporation — Where a business is considered legally separate from its owners.
Generally speaking, registering as an LLC makes the most sense for a small business consulting firm. But that's not necessarily a given. When you're determining how to proceed at this point, give the decision some thorough thought — and if you already have legal help on hand, ask for their opinion.
5. Research your competitive landscape.
Unless your firm's niche is as niche as a niche can be, you're bound to have competitors in your field. There are going to be other consulting firms vying for the same business as you — and it's in your best interest to have a firm grasp on how they operate.
See the services they offer and the types of businesses they generally cater to. Doing so can let you see what kinds of organizations are looking for firms with your specialty. It might also help you identify gaps in their clientele that you can make a point of appealing to.
Your competition should naturally inform several aspects of how you do business. There's a market for your services, and you need to land on an appropriate, lucrative place within it. That all starts by knowing what you're up against.
6. Understand your financial situation — including potential pricing structures.
Initial Funding and Budgeting
Here's where you get into one of the more uncomfortable but essential elements of getting your small business consulting firm off the ground. You can't start your firm without any picture of your finances — planning on spending money like you have carte blanche and hoping for the best.
You need to know the exact financial figures behind your initial efforts — as well as a picture of where the money is coming from and how reliable that source is. Are you getting funding from investors? Are you paying out of pocket? Are you relying on friends and family?
With that information in mind, you can start to budget for what it's going to take to put your firm together and how you intend to attract and retain clients.
You also need to piece together a realistic financial forecast that incorporates aspects of your business like your pricing structure. You have to ask yourself, "How and how much am I planning on charging clients?"
Are you going to charge them on retainer? Hourly? By project? This step leans heavily on the one that came before it. You should have a solid picture of your competition's going rates and pricing models. That way, you can ensure that your prices are rational and competitive enough to keep pace with others in your space.
You need to be realistic here. Try to land on a rational pricing structure that can keep your business afloat without alienating too many potential clients. This might take some trial and error, but you have to figure it out. After all, you can't sustain a successful small business consulting firm if no small businesses are interested in paying for your services.
7. Prepare to address bookkeeping and accounting.
Another key element of starting a small business consulting firm is covering the administrative aspect of your organization — namely bookkeeping and accounting.
Accounting and bookkeeping are similar to the legal side of your business — they're grating but essential. You need to have your books in order if you want to avoid trouble from the IRS. But that can be tough for anyone starting a small business consulting firm.
In many — if not most — cases, small business consulting firm founders aren't starting their firms to spend their time and energy tied up in their numbers. That's why you're best off hiring bookkeepers to handle at least part of that process.
It could also help to outsource your accounting responsibilities to a CPA, but there's a good chance you might not have the budget for that. In that case, you might want to explore leveraging some sort of small business accounting software to get that side of your operations in line.
8. Begin to develop an online presence.
Once you have your more administrative infrastructure in place, it's time to start attracting potential clientele. That starts with establishing a solid online presence. Put together a well-constructed, easily navigable, professional website that shows visitors who you are as a firm — that'll help you come off as more trustworthy and legitimate.
Consider starting publishing industry-specific blog content and other marketing collateral to help bolster your reputation and establish yourself as a thought leader. Tactics like those can be powerful lead generation and prospect engagement resources.
You also need to continue networking proactively but not aggressively. Connect with your target audience. Start some conversations through platforms like LinkedIn, and begin to establish some relationships with prospects in your space.
Beyond that, you should start profiles on various social media platforms to meet your prospects where they are, let your satisfied clientele leave positive reviews, and promote your thought leadership through as many channels as possible.
9. Determine your value proposition.
The information and insight you've accrued up to this point should amount to a solid understanding of your target audience, competition, and broader market. Taken together, those factors should inform your value proposition.
What can you do that your competitors can't? Can you offer high-quality consulting at a lower price point than your industry peers? Can you provide a degree of individualized attention to the small businesses you serve that others can't match? Do you have more experience than the average firm in your market?
One way or another, figure out what makes you special, and mold your sales and marketing strategies around that. Piece together the personas that will be most receptive to your services, and make a point of targeting them.
In many respects, this is where every prior point on this list comes together. You've put together the bits and pieces of a successful small business consulting firm — your value proposition is what really sets things in motion.
10. Start staffing sustainably and effectively.
Here's the key difference between starting a small business consulting firm and becoming a small business consultant — a firm means you're employing other people. As your business expands and you can afford to bring on new employees, make sure you're recruiting thoughtfully and effectively.
Do your research on the candidates you want to recruit, and connect with them using personalized, non-generic outreach. If you want to use job listings to find potential employees, make sure the descriptions are thorough and provide a clear understanding of your expectations, the role's responsibilities, and your preferred qualifications.
It might go without saying, but you also need to have the resources to bring new people on as you carry out the recruitment process. You can't overstep your limits at this point in the process — be sure to staff sustainably.
How to Become a Small Business Consultant
Let's say you want to get into small business consulting but lack the interest or resources to put together a full-blown firm. In that case, you might want to become an independent small business consultant. Here's a quick look at how to make that happen.
1. Choose a specialization.
Determine what you're an expert in. Ideally, you'd have five years of full-time experience to be an expert on a certain subject.
2. Research certifications.
Some states have laws around consulting, especially in the fundraising industry. Before you get started, look up if you need to have a certification to work as a consultant in your industry in your state.
3. Take courses.
You should always be learning and active in your specialized industry. For example, if you're a marketing consultant, make sure you're an expert in the industry by taking courses and staying informed on the latest trends. Ongoing education should be a huge priority for you.
4. Begin networking.
To be a consultant, you need to build a list of contacts. Begin by attending local events and conferences for small businesses.
5. Decide on a pricing structure.
Once you're starting to drum up interest in your company, you need to consider how much you're going to charge. You can look up the competition and see their rates. Do they price per project, hourly, or on a retainer business?
6. Have a marketing plan.
Figure out how you're going to promote your services. Plus, consider your budget. How much do you want to spend on traditional or internet marketing?
Average Small Business Consulting Fee
Given the broad variety of types of small business consultants, pinning down an average figure for small business consulting fees can be tough. These rates also vary by location, pricing structure, and whether you intend to maintain ongoing relationships with clients.
If you're determining what to charge for your small business consulting services, one of the better places to start is by taking a look at what your direct competitors are charging. If you can provide comparable services, you'll likely want to keep your fees in that ballpark.
That being said, you need to make sure your going rate is worth your time. Try to find the average salary of a position that requires your expertise — think of it as an opportunity cost of sorts.
Once you have that figure, use it to calculate how much you could earn on a monthly, weekly, and hourly basis. With that information, try setting a rate that reflects what you could be making if you weren't working as a consultant.
That logic can apply to virtually every type of small business consulting pricing model — including retainers, monthly fees, charging by project, or hourly rates. As you deliver on more projects and build your reputation, you can gradually and appropriately increase your prices.
Small Business Consultant Salary
The nationwide average salary for self-proclaimed small business consultants is $63,750 with the 25th and 75th percentiles being $51,500 and $74,500 — according to ZipRecruiter. Those figures tend to vary based on specialty and location.
Overall, small business consulting can be a rewarding career. With creative problem solving, every day looks different and presents interesting challenges.
Editor's note: This post was originally published in December 2019 and has been updated for comprehensiveness.
Originally published Aug 24, 2021 4:00:00 PM, updated August 25 2021