Wondering how to start an HR consulting business?

Yes, there’s a lot to consider but there’s a lot to be optimistic about too.

Even with the rise of HR Tech, artificial intelligence, and machine learning, there is still a huge market for new start-up HR consultancies to help employers get the best out of their workforce.

There is plenty of potential business out there in all aspects of HR consulting, including generalist HR consulting, recruitment & selection, employee engagement, training, learning & development, employment law, and so on.

Below are 5 steps to guide you as you think about how to start your own Human Resources consulting business.


Before we start examining the steps involved in opening an HR company, be sure to join my private HR marketing newsletter for consultants in the Human Resources industry – perfect for anyone thinking about how to start an HR consulting company.

If you work as a Human Resources consultant in recruitment, training & development, employee engagement, HR consulting, employment law, employee outplacement – my HR marketing update will help.


Note that these steps on how to open a Human Resources company are for an independent HR consultant or small new HR consultancy to follow, not for large corporations or well-funded HR Tech startups.

A solo Human Resources consultant or small HR consulting company needs a lean and agile approach and these five steps reflect this need.

How Do You Set Up An HR Consulting Business?

Here are the five steps to follow when starting your own HR business or when considering how to become a Human Resources consultant:

  1. Find Your ‘Why’ – Determine your preferred style of business
  2. Create a lean startup HR consultancy business plan
  3. Plan your cashflow (there will be an initial dip)
  4. Start building an audience and a network now
  5. Develop a lean startup sales & marketing plan for your HR consulting business
How To Start An HR Consulting Business (Slideshare summary)

Let’s now look at each step in detail.

1. Find Your ‘Why’ – Determine Your Preferred Style of Business

By now, you and all your living relatives will have seen Simon Sinek’s epic speech which seemingly coined the phrase: ‘Find your Why.’

Before you embark on your entrepreneurial journey, it’s important to pause and reflect on what you want and how you want to achieve it as you ponder how to start an hr consulting company.

Are you looking to build an asset that you can one day sell or are you aiming for more of a freelance lifestyle to create a new career path from your corporate life?

Will you be working towards a highly systemised, highly leveraged business that will expand rapidly and lead to a franchised business model?

Instead, are you looking to pay the bills and keep the lights on while you work on an exciting new HR Tech product or information product on the side?

Will you be a generalist consultant or do you plan to narrow your focus on a particular skill set or industry such as this HR consultancy for the mining industry or this HR firm for fintech & financial services?

Also, note that different industries and business types have different types of budgets and projects.

It is imperative to understand that starting your own business will be one of the most challenging experiences which will surely push you to your limits in every way, one would need to focus, persevere and be very patient.

With that being said, your personal development and growth will be exponential, and the rewards of all the extra hours and hard work is extremely fulfilling and satisfying, especially when your clients are happy.

You need to be sure of your service offering from the start and ensure that it is streamlined as far as possible and lastly, choose your partner in business (if you have one) very carefully.

Nooraan Shaik – Virtue HR Solutions

A quick meandering side note:

I recently discovered a wonderful new podcast series (thanks to Kanav Abrol of AttendanceBot) called Business Wars.

Business Wars podcast

In the episode on McDonalds vs Burger King, McDonald’s founder Ray Kroc has a hard time convincing the original owners to expand with a national franchise – they preferred a more simple life based around one restaurant in one location.

They knew their preferred work style. They knew their Why.

Take time to think about what you really want.

It’s ok to change your plans as you progress but at least reflect on all the options before you start.

Sometimes people go into HR for all the wrong reasons. The best HR professionals truly care about others, are committed to resolving issues in a way that preserves relationships, and quite simply, exemplify the characteristics of good human beings.

Many people want to start an HR consulting firm, but to have long-term success, it is essential that you focus on and care about the following:

1. Always put people over policies.

2. Focus on reality, not theory.

3. Understand the businesses you support and focus on adding real value to the business.

4. Be a problem solver and be sure to have answers for clients and their employees.

5. Simplify everything.

6. Focus on what really matters to drive the business forward and don’t get hung up on trivial details.

To have true success as an HR leader, focus your energy and abilities on informing, guiding, and caring for the wellness of others. Be supporting, understanding, and be ready to take up the reins and simplify and keep the human in HR.

Carrie Luxem. CEO at Restaurant HR Group & CarrieLuxem.com

2. Create A Lean Startup HR Consultancy Business Plan

You need a plan that will actually help you, not some lengthy tome that quickly gathers dust in the corner of your office.

With the tech world in ascendancy, why not take a leaf out of their book and use the Lean Canvas model to plan out your HR consultancy startup?

Start with the target HR client segments and the problems they face and then work through the boxes.

Believe me, I’ve written the 30 page business plans, a one-page lean canvas is a lot more useful.

Most startups fail, not because they fail to build what they set out to build, but because they waste time, money, and effort building the wrong product.

I attribute a significant contributor to this failure to a lack of proper “problem understanding” from the start. Once you understand the problem, you are then in the best position to define a possible solution.

Ash Maurya. Author of ‘Running Lean’, and Creator of Lean Canvas

Working through this exercise will bring you back to your Find Your Why thinking as you start to consider all the options such as:

  • Generalist Human Resources consulting business or niche/specialist?
  • Various industries or a small market segment?
  • Large employers, small employers, government, or other?
  • Small projects vs large projects or retainer work?
  • Embedded roles, part-time, or other?

And so on.

Before starting your HR business, pick a target audience first!

Most come up with an idea, a solution first, then hunt for an audience to sell it to afterward. And they make it tough on themselves.

I believe an HR business should always start with the audience (e.g. small businesses, HR leaders, non-profit associations, etc.) for your HR business or consulting in mind first…and then come up with a solution to a problem they’re looking to solve.

It’s 1000% easier to sell a solution to a specific audience, than to come up with a solution then try to search the right audience.

Alan Collins. Founder, Success in HR

Decide on the right legal structure for your new HR consulting business

By working through the lean canvas model and understanding who you’ll be serving and how you’ll serve that target audience, you’ll then be in a good position to choose the right legal structure for a new Human Resources consulting business.

Depending on where you are in the world, you’ll have various options to choose from:

  • Form a limited company.
  • Operate as a sole trader.
  • Contract via freelance sites.
  • Run a side hustle after-hours through the options listed above.

Whatever you do, get advice from a qualified professional.

If you choose to form a company, talk to your local accountant.

You can also check out the new company formation companies and online accounting firms such as Crunch in the UK, Accountant Online in Ireland, LeapIn for Europe, Bench or MyCompanyWorks in the US, JustDone (for sole traders and partnerships) in Australia, and similar companies in other countries.

3. Plan Your Cashflow (there will be an initial dip)

This section might normally go into the business planning stage but it’s so important that it deserves its own step.

Consulting, in general, can be very lucrative and the HR consulting business model is no exception.

However . . .

When you’re an employee you receive a payslip every month like clockwork.

As an employee, there are no expenses to pay.

That all changes the day you become a new, independent HR consultant.

Suddenly, you have a wide range of set up costs and recurring expenses.


While you’re here, be sure to join my private HR marketing newsletter for consultants in the Human Resources industry.

If you work as a Human Resources consultant in recruitment, training & development, employee engagement, HR consulting, employment law, employee outplacement – my HR marketing update will help.


From the day you start your new Human Resources consultancy, you begin you prospecting for potential clients, pitching your services, and trying to win the project.

You then have to actually do the work.

Only after you’ve done the work (or at some agree milestone) do you send in your invoice.

Then you wait.

And wait some more.

You will hear all sorts of reasons why the money has not yet arrived. You missed the cut-off for Accounts Payable. They forgot to lodge your invoice or it was incorrectly entered into the system. Mary in Accounts is still on holidays.

And so it goes.

You need a plan. This may include:

  • Saving money before you start the new HR business.
  • Lining-up 3 – 6 months of work before you even hand in your resignation letter to your employer.
  • Consider starting part-time or as a side hustle.
  • Have entry-level services for quick turnaround and faster invoicing (such as quick audits, small training sessions, single documents draft, etc) as well as larger project work offerings.
  • Productising your knowledge. For example, you could write ebooks or product HR-related templates for employers to use with their staff. You could sell seats on paid webinars like this enterprising HR business in New Zealand.
  • Convincing your current employer to take you on for a specific project as an external Human Resources consultant.
  • And so on.

I think it is important to start in a recruiting firm and be a sponge. I was with two firms for 5 yrs. I started my business at 27 years old. I learned professional, clerical and temp. ALL are very different.

The key is to be a good listener, read body language and a detective.

Save some $ – it is expensive to start up.

Kathleen Bennett. CEO/Owner, Kathleen Ater Personnel

4. Start Building An Audience And A Network Now

Knowing that there will be an initial dip in your income and that it will take time to receive your first payments, you need to start building your referral network before you even launch (or as soon you can after launch).

In my interview with the co-founder of Clinch (a successful HR company), I learned that 90% of their clients came from referrals.

Make a list of family, friends, current and former colleagues, clients and suppliers, and people you’ve met along the way. Obviously, look at your list of LinkedIn connections too.

Get back in touch with people and re-connect. Tell them about your plans and ask for their help or just to keep you in mind.

Consider getting active on social media, particularly LinkedIn.

You may also consider setting up a website or blog to share your thoughts on the issues that concern your potential clients.

Before starting a consulting business (or any business), I recommend talking to at least ten people who have started a business in a similar space. Ask them what their biggest surprises have been and what advice they’d give to themselves before starting out. Plus, building relationships with peers in a similar space is a fantastic idea. Running a business can be very lonely, so start building genuine connections early.

Amanda Gulino. Founder, A Better Monday

5. Develop A Lean Startup Sales & Marketing Plan For Your HR Consulting Business

Networking and building an audience aside, now it’s time to write a marketing plan for your HR company.

how to start an HR consulting business

There are many channels to choose from to acquire new Human Resources consulting clients. These include:

  • Search Engine Optimization (SEO – getting found in Google’s organic search results)
  • Content Marketing
  • Email Marketing
  • Appearing on external blogs
  • Publicity/PR
  • Search Engine Marketing (SEM – such as Google Adwords)
  • Social Display Ads (such as Facebook or Quora ads)
  • Offline Ads (such as newspapers)
  • Engineering as Marketing
  • Viral Marketing
  • Business Partnerships (partnering with other companies, such as HR software companies)
  • Sales & Business Development
  • Affiliate/Referral Programs
  • Existing Platforms (unpaid activity on sites such as LinkedIn, Facebook, and Twitter)
  • Trade Shows
  • Offline Events
  • Speaking Engagements
  • Community Building

I recently wrote an article and downloadable guide for all these channels – check it out here: Best HR Marketing Plan For Human Resources Companies.

You don’t build any business or consulting firm from your couch.

You have to be out there engaging with people, listening to their concerns, understanding their business and most importantly being of service. Unless I have a strong relationship with a business and they trust me, no one is going to give me work.

I see so many coaches and consultants put a lot of effort into having an online presence and a great website and they have no clients. The quicker you can start to demonstrate value for a person or a company, in that moment, that’s how you grow.

Tarita Preston, Chief Coach – The Curated Coach

I would emphasise, though, that you should aim to choose two or three different marketing channels to try out first. Otherwise, it all gets a little too complicated and a little messy.

Also, aim for at least one Fast and one Slow marketing method.

A fast method would be running some ads on Google or picking up the phone and calling your top ten sales prosects.

A slow method would be writing blog articles or commenting on social media. Slow methods are like a snowball – very small when they start but, as they build momentum, they increase in size until they can even take over from the fast, paid marketing channel.

Partnering with an HR software company is a great way to stay on top of all the change and provide your clients with focused, effective, and useful consultation. Being able to recommend software that will free your clients from the more repetitive and tedious HR tasks will separate your consulting firm from the pack.

Dan Taylor – BambooHR

Conclusion

Hopefully the five steps will help you if you’re thinking about leaving your job to start a new career as an Human Resources consultant.

Work your way through the steps and then take action.

  1. Find Your ‘Why’ – Determine your preferred style of business
  2. Create a lean startup HR consultancy business plan
  3. Plan your cashflow (there will be an initial dip)
  4. Start building an audience and a network now
  5. Develop a lean startup sales & marketing plan for your HR consulting business

Remember to join my private HR marketing newsletter for consultants in the Human Resources industry.

If you work as a Human Resources consultant in recruitment, training & development, employee engagement, HR consulting, employment law, employee outplacement – my HR marketing update will help.


Good luck with your new venture!

Feel free to get in touch and tell me about your plans.

All the best,

how to market your hr firm