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How to Start a Consulting Business in UK

Nigel Graber
Consultant chatting with clients

So you fancy setting yourself up as a business consultant in the UK? Let’s see if we can offer a little bit of guidance.

Setting up a business in the UK

Let’s kick off with the things you’ll need to do to start any kind of UK business, never mind a consultancy. This is really a seven-step process.

Step 1: Tell HMRC

Within three months of starting your business, you need to tell HMRC you’re self-employed. You can get a starter pack online. You might also want to complete HMRC’s free online training. This will give you simple practical advice on all the basics of working for yourself, such as record-keeping and dealing with tax returns.

Step 2: Get some insurance

Even if you work from home, you might still need insurance. If you invite a client round and they go head over heels on your wet floor, you’ll be responsible for compensation. A spot of public liability insurance can work wonders here. Check out the AXA business insurance wizard for more ideas on coverage that you might need.

Step 3: Pick a name

Is your desired name available? Check Companies House. If you’re undecided, just use your name for the time being. For example, Joe Smith Motor Repairs. Invest in the website domain name once you’ve decided for good.

Step 4: Open a bank account

If you set up your own company, you’ll need a business bank account. That’s because it’s a separate legal entity from you. If you’re a sole trader, it’s not a legal requirement, but it does help. Note that a separate personal account works just as well and is considerably cheaper.

Step 5: Make sure you comply

Next up: regulatory issues have to be satisfied. That means health and safety, data protection etc. Make use of the tools on

Step 6: Get your bookkeeping sorted

Find yourself a good accountant or get your own simple bookkeeping system. The minimum you need to be doing is keeping records of sales and costs.

Step 7: Where will you work?

If you need business premises, your local council should be able to help. If you plan on working from home, bear in mind:

  • You can declare a proportion of your rent or mortgage and utility bills as business costs
  • Payment capital gains tax if you use a certain room only for business
  • You might need planning permission if you employ someone in your home
  • Renting might scupper your plans (consult your lease)
Young businesswoman and man having a conversation in modern office

What is a consultant?

Now we’ve got the business basics sorted, let’s establish exactly what a consultant is. The dictionary tells us that a consultant is ‘someone who gives professional or expert advice’.Consultancy is big news in the UK. The latest figures show that UK businesses spent £9bn on consultants in 2016. Management Consultancies Association (MCA) members, which include major firms such as PwC and KPMG, generated £4.46 billion that year.The MCA believes that its members account for around half of the UK consulting industry’s total income.

What does a consultant actually do?

Good question. If you’re a management consultant, you’re usually shipped in by companies to solve a specific business problem or to make the business more efficient. Consultants often get a bad rap as their work is frequently associated with redundancies.That’s true to a degree. However, consultants offer advice on a whole raft of issues faced by their clients. This could be to do with expansion, downsizing, changing focus, going more digital, or just reaching the next stage of growth.On a day-to-day basis, consultants are likely to find themselves doing some or all of the following:

  • Meeting clients to get a handle on their business needs
  • Researching clients’ businesses
  • Interviewing employees
  • Analysing data
  • Identifying issues
  • Modelling potential outcomes
  • Presenting recommendations
  • Offering ongoing support

Clients are going to expect big results. In return, significant earnings are possible if you work for yourself.Cut your teeth in a consultancy and you can expect a graduate salary of around £25,000 a year. Rise to the higher ranks and you could easily see your earnings touch six figures. Work for yourself and the sky’s the limit.If you fancy a slice of that rather tasty pie, here are a few pointers on getting started, in addition to the business basics already outlined.

How to become a consultant

1. Get qualified

There’s no getting around this: if you want to become a business consultant, you’re going to need to know your stuff. That means having a good grasp of how business works. You’ll need a degree in business or even a postgraduate qualification such as an MBA (Masters in Business Administration).

Your friend here is the professional body for the consulting industry. The Institute of Consulting can offer you a variety of professional qualifications and is the recognised accrediting body for UK professional consultants. On the website, you can discover more about their qualifications.But it doesn’t stop there. You’re going to want to supplement all that theoretical knowledge with some practical, demonstrable experience. You’ll probably have gained that in finance, project management, HR or IT.

For this reason, a great starting point for many freelance business consultants is a staff role in a consultancy. The icing on the cake would be if you’ve had a spell running your own business. Nothing helps you identify more with client issues more than having experienced them yourself.In today’s world of business, it’s going to help enormously if you’re computer literate, too. You’ll also need to be numerate and comfortable talking to all kinds of people.

young businesswoman working together with another businessman at a laptop

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2. Get legal

When setting up as a management consultant, you should make sure you’ve got all your legal loose ends tied up.

3. Get some clients

You’re all set up. Now there’s just one thing missing: some clients. Your first port of call is probably online directories. In particular, the Institute of Consulting maintains an online directory that clients can search. You’ll be one of a crowd there, so try to think about what makes you unique.

To set yourself apart from the herd, you might want to specialise. A small number of firms loom large over generalist management consultancy in the UK. However, if you’re a small player, you can sell yourself as approachable and agile.

Work out where your strengths are – maybe you’re great at handling change or you can help businesses move into the digital age – and tell the world.You can also secure clients through your existing networks, or by joining new ones. Head on down to some breakfast meetings, enjoy a full English and get talking to the huge variety of businesses you’ll meet there.

Finally, these days, you aren’t going to survive long without a website. Find yourself a decent designer, get your site optimised for the right keywords and then promote it using pay-per-click advertising.

4. Get growing

There are plenty of major consulting firms out there that all started out nearly as small as you are. So there’s plenty of scope to grow. If yours is a unique and valuable service, you’ve every reason to suppose you can expand as well.

One important detail to focus on is client relations. Consulting is choc-a-block with highly skilled practitioners in many disciplines. However, you can truly set yourself apart if you can be on hand to service clients with a smile from day to day.You’ll need to be slick, though. Your presenting and pitching will need to be on point. Naturally, your recommendations will also need to work consistently.

Find your consulting niche

Let’s get back to the niche thing. With so many players in the consultancy game, it really is key to how you’ll succeed.Imagine you want to get fit enough to run a marathon within three months. You look for help. The options are:

  • A general life coach
  • A personal trainer who specialises in running

Who you gonna call? Clearly, it’ll be the specialist. That’s the power of niche marketing. And when you start to dominate that niche is when you can start charging £200 or £300 an hour. Why? Because you have very specific knowledge that your clients desperately need. And you’ve also blown generalist consultants out of the water.Obviously, you’ll need to define your niche. To achieve that, you’ll have to ask yourself three questions:

1. Which industries do you know well?

2. What does the market need?

3. What are your current skills?

Young woman consultant and man working together on a laptop

1. What industries do you know well?

Hopefully, you’ll have had a bit of a career up to this point. In which industries? Or which industries interest you most? Have you shown interest in any sectors in your personal life? Do you have any hobbies that tie in with specific areas of industry?

All the best businesses start with the back of an envelope. So grab one and jot down four sectors or niches you’re comfortable with today. They could be electrical components, IT, photography and golf. Whatever floats your boat.

2. What does the market need?

Now consider what the market most needs. What are the problems faced by people in your niches? What questions are they always grappling with?

One great way of examining the market is to pore over a few blogs. Read the leading blogs in your niche. You can find them on sites like BuzzSumo.

Examine the most popular blog posts. What are people talking about? What questions are they asking? Check out the comments. What gets people fired up? Next, get onto Amazon and order the top six books in your niche. Ask yourself what’s made them so in-demand.

Finally, find the leading influencers in your niche. Social media is a good place to start. What are they talking about? What are the hot topics?

3. What are your current skills?

So what about your own skill set? What are you already good at and what could you pick up pretty quickly?

Can your skills, as they stand, solve anyone’s problems? Suppose you picked law as one of your niche areas. You research the needs of law firms. You find they need help with implementing new technology.If that fits with your skill set, all well and good. But you could also act as a broker. You could be the go-between who finds the IT guy who can help with the technology legal firms need. Or you could simply teach yourself. Options abound.

One thing consultancy can teach you is that you don’t need to know everything. It’s simply about finding a niche, discovering the issues that haunt that niche and finding the solutions to fix them.To adapt something that somebody quite eminent once said, ‘It’s not necessarily about what you know, but who you know’.

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