Start an HR Consulting Business: Key Steps and Strategies

Human resources professionals play a significant role in overall business success by helping organizations ensure they have the right people in the right positions to achieve strategic objectives. While many opportunities are available for in-house HR roles, as an experienced professional, you may be interested in striking out on your own by starting an HR consulting business.

HR consulting can offer many benefits, including increased earning potential, autonomy, and flexibility, as well as the opportunity to focus on a specific area of expertise within HR.

Whether you’re considering HR consulting to supplement your full-time income or are interested in focusing entirely on building an HR consulting business, this guide can help you get started.

Understand HR consulting basics

HR consultants are strategic partners to businesses and help organizations align human resources strategies—including recruitment, talent development, performance management, workforce planning, and other efforts—with broader business objectives.

Businesses may partner with HR consultants when they don’t have the internal resources for a particular HR function, are scaling rapidly, or are seeking outside expertise or flexible HR talent.

HR consultants across niches often possess many of the same soft skills, such as effective communication, time management, critical thinking, and flexibility. Hard or technical skills for HR consultants will vary from one focus area to another and may include HR technology expertise, data analytics, employment law knowledge, and compensation and benefits management.  

How to start an HR consulting business

Starting an HR consulting business can enable you to leverage your HR knowledge for a well-paid and flexible career. Following a thoughtful, step-by-step process as you set up your business can help you maximize success.

Steps include:

1. Identify your niche
2. Develop a business plan
3. Understand legal and compliance requirements
4. Define your services
5. Build your brand and online presence
6. Market your business
7. Deliver exceptional service
8. Plan for growth
   

1. Identify your niche

HR consulting includes a wide range of focus areas. Identifying a niche can help you expand your expertise in one specific area of HR consulting, rather than attempting to offer services that cover all areas of HR.

To select your niche, think about your top skills and what excites you most about human resources. For example, if you excel at promoting an organization’s employer brand and are passionate about building relationships with candidates, recruitment may be the best focus area for you. Or, if you continually follow the latest HR tech trends and advancements, HR technology implementation may be the right fit.

Common HR consulting niches include:

• Recruiting and talent acquisition
• Employer branding
• Talent development and training
• Performance management
• Employee engagement and retention
• Compensation and benefits
• Strategic workforce planning
• HR technology and systems implementation

2. Develop a business plan

Once you identify your niche, the next critical step is creating a business plan. An effective business plan includes an overview of where your HR consulting business stands today, a breakdown of your short- and long-term business objectives, and steps needed to drive success. The plan can establish a roadmap to stay on track with your growth goals.

By centralizing all critical company information in a concise document, you can also easily share your business plan with potential external partners, such as investors, customers, and other HR professionals you may engage to support your business.

Here are some key components to include in your business plan:

• Executive summary. This section includes a high-level overview of your HR business and services and business structure, as well as your vision, mission statement and values, and how they tie to your service offerings. The executive summary may also include high-level industry research and trends to highlight the market size and need for your HR consulting services.
• Summary of your target audience. Outline the target audience, buyer persona, business size, and industry you’re targeting. For example, based on your past experience, you may target small businesses in the financial services industry or large businesses in the technology sector. Also highlight your target market’s challenges or pain points and how you’ll address them with your HR consulting perspective.
• Competitive analysis. Understanding the competitive landscape is essential to growth as an HR consultant. An effective competitive analysis should include a list of competitors, your key differentiators, and an overview of each competitor’s strengths, weaknesses, opportunities, and threats, also known as a SWOT analysis.
• Service offerings. Highlight the HR consulting services you plan to offer immediately, as well as any plans to expand your offerings in the future. Include a concise menu of services, share how your services directly address customer challenges, and include an overview of your pricing model.
• Business objectives and projected revenue. Outline your one-, three-, and five-year business objectives, along with projected revenue and potential business expenses. When defining goals, use the SMART methodology to identify goals that are specific, measurable, attainable, relevant, and time-bound. An example of a SMART goal for an HR consultant in the talent development and training niche may be to secure five new clients and implement refreshed talent development programs for each new client in the first year.  

3. Understand legal and compliance requirements

Understanding legal and compliance requirements before you formally launch your HR consulting services can help your business operate in compliance with applicable laws and regulations. This step can minimize legal risks and protect your business reputation. You may also want to consult with a legal or tax expert to ensure you’ve covered all your bases from a legal and compliance perspective.

Consider the following questions to determine potential legal and compliance requirements:

• What’s your business entity or structure (such as sole proprietorship, limited liability company, or partnership) and what are the associated legal or tax requirements to establish your business?  
• What necessary licenses, permits, and certifications do you need to operate an HR consulting business in your jurisdiction?
• Is your desired business name available or is the name already trademarked?
• Do you need to trademark your business name, logo, or other information to protect your intellectual property?
• How will you protect sensitive customer data from potential security breaches and other risks?
• Which federal, state, and local employment laws and regulations, such as anti-discrimination laws, wage and hour laws, and workplace safety regulations apply to your HR consulting business?
• How can you ensure compliance with employment laws and other regulations?
• What’s your process for staying updated on the latest employment laws and compliance regulations?
• Which legal considerations should be included in client contracts and service agreements, such as scope of work, payment terms, non-disclosure agreements (NDAs), and termination clauses?
• How can you protect intellectual property, such as proprietary strategies, training materials, or software tools developed by your HR consulting business?

4. Define your services

While your HR consulting business plan will include a high-level menu of services, developing a concise overview of your services can help you effectively scope your work and provide potential customers with insight into exactly what you have to offer.

Specific HR consulting services will vary depending on a consultant’s specific niche. While the following are just a few examples, services may include:

• Sourcing candidates from multiple recruitment channels
• Developing and implementing an updated hiring process
• Training hiring managers on recruitment best practices
• Writing employee handbooks, policies, and procedures
• Identifying and implementing HR technology solutions to drive business efficiencies
• Assessing training needs and creating talent development plans, strategies, and processes to address skills gaps  
• Redesigning performance review templates and processes
• Refreshing an organization’s employer branding
• Completing compensation benchmarking research to evaluate salary and benefits competitiveness and equity
• Conducting a talent review to identify skill sets across the organization, internal growth opportunities, and strategic workforce planning goals

Because HR consulting services cover a range of focus areas, pricing strategies and models will vary as well; choosing the right one is essential to business profitability. Common pricing models for consulting services include project-based pricing, monthly retainers, and hourly pricing. A workforce planning consultant may charge a fixed price to conduct a formal talent review, while a recruitment expert may charge an hourly rate for each hiring manager training session.

5. Build your brand and online presence

Creating a brand strategy and establishing an online presence for your HR consulting business can showcase your expertise, build credibility, attract prospective customers, and differentiate your business from competitive offerings.

Use the following tips to help you establish a compelling brand and online presence:

• Select a creative name for your business that isn’t used elsewhere
• Determine a color scheme or palette for your brand
• Design a visually appealing logo or consider engaging a design expert to create one for you
• Write an engaging brand narrative that highlights your expertise and passion for your specific niche
• Build a business website highlighting your services, experience, brand narrative, and customer testimonials
• Publish blog posts and other content on your website to share your perspective on relevant HR industry topics
• Include a contact form on your website so prospective customers can easily reach you  
• Create professional profiles across social media platforms including LinkedIn, X , Facebook, Instagram, and TikTok

6. Market your business

Once you establish your brand and online presence, promoting your HR consulting business through a multi-channel marketing strategy can help you reach relevant customers in your target audience. As you develop your marketing plan, determine your marketing budget and create a list of both online and offline channels.

While you’re getting started with your HR consulting business, you may have a limited budget, in which case promoting your business on free or low-cost channels is beneficial.

Marketing channels and strategies to promote your HR consulting business include:

• Researching businesses in your target audience to establish a list of contacts and potential clients
• Highlighting your services and work experience on your business website
• Promoting your business on social media networks
• Listing your consulting services on online business directories such as Google Business Profile, the Better Business Bureau (BBB), Apple Business Connect, and LinkedIn pages
• Creating a profile on a work marketplace like Upwork
• Joining online networking groups for HR professionals including HR Exchange Network and the Human Resources Professionals group on LinkedIn
• Producing a brief video promoting your HR consulting services
• Leveraging affordable email marketing tools such as Sender, Brevo (formerly Sendinblue), and Mailchimp to send outreach to your professional contacts
• Attending industry networking events and conferences like HR Transform, the SHRM Annual Conference, and the HR Technology Conference and Expo
• Advertising in local and HR-specific print publications

7. Deliver exceptional service

As an HR consultant, your client relationships can make or break the success of your business. Delivering exceptional service can lead to long-term working relationships, positive reviews and feedback, and possible referrals from clients. On the other hand, service that doesn’t meet expectations can slow down your growth because clients may seek other HR consulting options or leave negative reviews about your business.

Here are some best practices to deliver exceptional service to your human resources consulting clients:

• Be open and transparent about your skills and area of expertise
• Avoid taking on projects or contracts that don’t align with your expertise
• Understand each client’s strategic business objectives and how your services can positively impact their broader business
• Define and align on goals and key performance indicators (KPIs) before beginning each project or contract with a client
• Identify incremental project milestones to measure progress along the way
• Establish a communication process and cadence, such as emails for quick updates or questions and a weekly or biweekly meeting to discuss progress toward goals
• Answer client questions in a timely manner
• Implement project management software to track progress for each project or client contract
• Be prepared to pivot when a project falls short of expectations and identify strategies to get the project back on track
• Ask clients for direct feedback to understand your strengths and areas for improvement as an HR consultant

8. Plan for growth

After you launch a successful HR consulting firm or business and begin building positive client relationships, planning for short- and long-term growth can help you increase earnings and establish a reputation as a leading consultant in your specific HR niche.

Strategies to grow your business may include:

• Asking existing customers to write reviews or serve as references
• Requesting referrals from satisfied clients
• Identifying ways to expand relationships with your existing client base
• Testing new channels to promote your business
• Developing and promoting client success stories and case studies
• Attending networking events
• Staying updated on the latest trends and challenges in your industry
• Continually strengthening your skills through professional development and training opportunities
• Earning certifications from HR organizations like Society for Human Resources Management (SHRM) or the HR Certification Institute (HRCI)

• Implementing technology to automate or streamline manual, routine tasks, which can free up time to take on more business
• Diversifying your service offerings
• Expanding your target audience
• Engaging other HR professionals with relevant experience to support your business
• Partnering with other companies with complementary HR services

Build your business with Upwork

Starting an HR consulting business is an exciting opportunity to grow in your career and increase earning potential. Upwork simplifies the process of building an HR consulting business. By creating an Upwork profile, you can connect with clients and professionals to help grow your business.

Easily apply to available HR consulting jobs or search for jobs using keywords relevant to your HR consulting niche. Through Project Catalog™, you can offer clients the option to purchase one-on-one consultations or fixed-priced projects that align with your HR consulting service offerings. Also engage independent professionals with specialized skills to help grow your HR consulting business, including business planners, marketing specialists, web designers, and more.

Get started. Create an Upwork account today.  

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This article is intended for educational purposes and should not be viewed as legal or tax advice. Please consult a professional to find the solution that best fits your situation.

Upwork is not affiliated with and does not sponsor or endorse any of the tools or services discussed in this article. These tools and services are provided only as potential options, and each reader and company should take the time needed to adequately analyse and determine the tools or services that would best fit their specific needs and situation.