Start a consultancy: sharp positioning and a rate that adds up

Whoever advises on everything gets called for nothing

Priya spent twelve years in HR, the last five at a mid-sized installation company. When she decided to start a consultancy, her first website offered "HR advice, training and coaching for small and medium-sized businesses". Networking events gave her pleasant conversations and no assignments. The only concrete offer came from an agency: a full-time interim role at a hospital, far from anything she wanted to build.

Then she noticed that her strongest stories all came from one setting. Technicians calling in sick on Monday mornings, vacancies for service engineers that stayed open for months, apprentices who left the moment their training was paid for. She rewrote her offer as "HR for installation companies with 20 to 80 employees: fewer open vacancies and less absenteeism". Within two months, three owners asked for a proposal.

Three lessons sit in that story. Know which problem you are the obvious person to call for. Do not let your first assignment turn you into a temporary employee. And plan for weeks without invoices, because they will come. The amounts below are in euro; the logic works in any currency.

The consultancy market in figures

Demand for advice keeps growing, but the barrier to entry is a laptop and a business card. About half of the professional services establishments in that US cohort had closed within five years (source: US Bureau of Labor Statistics, December 2025). A low price rarely protects you; a position that a client can describe in one sentence does. Expect clients to ask what you add beyond what software and templates already produce: judgement, experience in their sector and help with implementation.

Positioning: a problem instead of a discipline

"HR consultant" describes what you know. "Fewer vacancies for installation companies" describes what the client gets. The second gets you called, because the owner recognises the problem before you explain your method. Alexander Osterwalder's value proposition canvas is a practical tool here: write down your client's jobs, pains and gains, and check that your offer answers the biggest pain.

1. 01

   Choose a client group and a problem

   Pick a group you know from the inside and a problem they pay to solve. The narrower the group, the easier it is to find them and the more your references count.

2. 02

   Test before you invest

   Talk to about ten potential clients before you build a website or a brand. Ask about the problem, not your solution, and offer a small paid assignment. A client who pays for a first step is worth more than ten who say it sounds interesting. See testing your idea.

3. 03

   Make it visible

   Short cases, an article in a trade magazine, a talk at a trade association meeting. Visibility in your niche builds slowly, so start in your first month and keep going when you are busy.

Clients and misclassification

A consultant who works for one client, at the client's office, on the client's schedule, can look like an employee to a tax authority. The principle is broadly the same across countries: the contract label does not decide; the way the work runs does. The tests differ in detail.

• United States: the IRS looks at behavioural control, financial control and the type of relationship, and the business or the worker can ask for an official determination (source: IRS, May 2026).
• United Kingdom: if you work through your own limited company, the off-payroll working rules apply, and in most cases the client decides your employment status (source: HMRC, February 2026).
• Australia: employees work in and are part of a business, while contractors provide services to a principal's business (source: Australian Taxation Office, November 2024).
• EU member states: each country applies its own test, and some have stepped up enforcement; check the tax authority of the country where you work.

Commercially, the risk is the same everywhere. A client that brings in most of your revenue can end the contract with one email, and you have no position in the market to fall back on. Aim for a largest client below a third of revenue once you are past the first year.

Your former employer as first client

Many consultants start with their former employer. That can work if you turn it into a defined project with a deliverable, an end date and your own rate, with other clients alongside it. Doing your old job for fewer days and a day rate is the fastest route back into employment, without the protection.

Rate and utilisation: not every hour is billable

Your rate has to pay for the hours you cannot bill: finding clients, writing proposals, travel, administration and keeping your knowledge up to date. Utilisation is the share of your available hours you actually invoice.

Your income need is what you want to earn before income tax, including reserves for pension, sickness and disability cover that an employer used to arrange. Then decide how to sell: an hourly rate is easy to compare and therefore easy to push down, while a fixed price for a defined result rewards your experience. More on this in setting your freelance rate and pricing.

Professional indemnity and terms

Professional indemnity insurance covers claims that your advice caused a client financial loss. For most management consultants it is not a legal requirement, but many clients ask for it in their contracts, and regulated professions such as accountancy, law and financial advice have their own rules through a regulator or professional body. Use written terms that set out the scope, a limit on liability, payment terms and what happens if either side cancels. See business insurance.

Worked example: an HR consultant for installation companies

Priya has 1,760 available hours a year: 44 weeks of 40 hours. Her business costs are €14,000 a year for insurance, laptop and software, travel, training, an accountant and her website. She needs €60,000 before income tax. At 800 billable hours her minimum rate is (€14,000 + €60,000) / 800 = €92.50. She sells an HR scan at a fixed €3,500, a monthly retainer of €1,200 for ongoing support, and extra hours at €110. Then the agency calls again with a full-time interim role.

Fictitious Firmfocus example. Amounts excluding VAT. Niche revenue: eight scans of €3,500 (240 hours), four retainers of €1,200 for an average of eight months (320 hours) and 240 extra hours at €110. Assignment: 36 hours a week for 40 weeks at €80.

On paper the assignment pays €22,400 more. But after 40 weeks Priya has no clients, no references in her niche and a status risk, because she works full time inside one organisation. The niche practice is the stronger business, and it is fragile in year one: at 600 billable hours and the same average rate, revenue is €69,600 and profit €55,600, €4,400 below her need. She therefore starts with six months of private spending in the bank, and proposes a different deal to the agency: two days a week for six months at her own rate, with her own deliverables, next to her niche clients.

Solo consultant or firm with consultants

Pitfalls

• A broad label: "strategy, coaching and interim" tells a client nothing. Name the client group and the problem.
• Stopping acquisition when you are busy: a large assignment ends, and an empty pipeline then costs months. Keep a few hours a week for visibility.
• No terms or insurance: one claim or unpaid invoice can cost more than a year's premium. Agree scope, liability and payment terms in writing.
• Only selling hours: clients compare hourly rates. Packages and fixed prices for results are harder to compare and pay for your experience.

For finding your first clients, see your first customers. Other industries are compared in Starting by industry, and the overview Start a business covers the rest of the route.