How can you take the skills and experience you’ve gleaned working in HR (human resources) and start an HR consulting business?
Take Kristen Ireland and Erin Mies, for example. They turned their HR expertise into People Spark Consulting, a successful HR consulting firm.
They both had many years of combined HR experience helping companies hire and retain top talent.
That experience laid the groundwork for their HR consultancy, where they work with small businesses.
Now you’ve got an idea of what an entrepreneurial HR consultant looks like.
In this article, we’ll show you how to start an HR consulting business. And by the end, you will have a clear understanding of how to take the skills you’ve developed throughout your HR career and build a profitable HR consulting business.
An HR consultant is an outside expert who provides crucial advice and high-level strategic solutions for attracting, onboarding, and retaining top talent.
What Is an HR Consultant?
An HR consultant is an outside expert who provides crucial advice and high-level strategic solutions for attracting, onboarding, and retaining top talent.
An HR consultant becomes an invaluable resource for any organization in dealing with their most important asset: people.
Why do companies hire HR consultants?
- To help them develop their human resources policies and procedures;
- They need expertise in regulatory compliance or employee benefits;
- They seek help training their own internal human resources employees;
- And they may need advice for dealing with more difficult issues, such as resolving interpersonal conflicts on the team.
Here’s a specific example from one of our Clarity Coaching clients, an HR consultant.
Employee onboarding creates many challenges, especially for new companies.
Since Kristen Buchanan had years of experience developing onboarding programs that could rapidly scale, she could serve as an outside expert for these companies, helping them navigate various pain points in getting new hires up to speed quickly and efficiently.
Examples of HR Consulting Services
HR consulting services come in many forms and are as broad as the field of HR itself.
Kristen Ireland and Erin Mies of People Spark Consulting, HR consultants from our Clarity Coaching Program, use their expertise in human resources to help small- to mid-sized companies move beyond “mere compliance” to truly making a difference in retaining top talent and driving their business goals.
When they first start working with a client, they use a three-step HR consulting process:
- First, they conduct a thorough, honest assessment of the client’s current state.
- Then, they create a customized report that reveals key findings and risk areas in the client’s “people practices.”
- After walking the client through the report, they develop recommendations for addressing priority issues and implementing solutions for risk areas.
- Once clients decide to move forward on those recommendations, they work with them to implement the solutions.
In their own words, People Spark Consulting “makes human resources for small businesses simple…by helping [them] be intentional about the kind of culture [they] want to foster.” And they’ve made a big difference for their clients. As Stack Heckman of Franklin Feed and Supply put it, “After working with People Spark Consulting, our business is much more organized and consistent. We have job titles and job descriptions, a handbook, written policies and written values. There is much better flow and communication tools on our end.”
Effective HR consulting services are all about deeply understanding the problems, challenges, and opportunities that companies have surrounding their employees.
Five Steps to Become an HR Consultant
So, how do you take all of your knowledge, skills, and experience and transform them into a profitable HR consulting business?
Follow these five steps.
1) Get clear on your ideal HR client
Businesses in every industry could use help with HR. But don’t can’t cast your net too broadly.
The more specific you get about exactly who you want to reach, the more your HR consulting business will stand out.
For example, People Spark Consulting targets small – and mid-sized businesses in the agricultural and food industries —particularly younger companies that need to develop more effective HR processes for retaining talent.
By getting specific about your ideal client, you’ll have an easier time attracting clients with magnetic messaging and pricing your HR consulting services in a way that communicates the real value of what you have to offer.
2) Write messaging that attracts your ideal client
A Magnetic Message makes your ideal client feel like you are speaking directly to them, identifying their specific challenges, and offering tailor-made solutions.
A small business in the food industry might come across messaging from People Spark Consulting and think, “Wow, Kristen and Erin really understand the difficulty we have retaining talent, even the unique HR challenges of our industry, and it seems like they have solutions that are just right for us.”
The simplest way to create impactful messaging is to use the framework: Problem – Action – Results.
Your ideal clients have HR problems. Write those problems down.
- Maybe they need help with onboarding;
- Maybe they’re dealing with specific challenges in attracting top talent;
- Or maybe they need help with compliance issues because of heavy regulation in their industry.
Make it clear that you understand what your ideal client’s specific challenges are.
Then, you need to explain how you can help them solve those challenges.
Finally, share the results they can expect to achieve from your solution.
- Problem: Your ideal client has high turnover, which is a common problem in their industry.
- Solution: You offer a customized onboarding development program for businesses just like theirs.
- Result: Clients who have gone through your program have increased retention by an average of 40 percent.
To make this process even easier, you can use our “Magnetic Message Formula” to create a simple, effective message that will attract your ideal client.
Here’s what it looks like:
I help [WHO] to [solve WHAT problem] so they can [see WHAT result].
Effective HR consulting services are all about deeply understanding the problems, challenges, and opportunities that companies have surrounding their employees.
3) Create and price your strategic offer
Your ideal client has different HR challenges, and you, the HR consultant, have the expertise and experience to help them solve those problems.
As a direct result of your services, your ideal client will achieve their desired results.
And that is why they’re going to pay your consulting fees.
However, the amount they feel comfortable paying is dictated by the value they see in your solutions.
For example, if you’re going to help them improve their processes in such a way that they boost retention by 40 percent, that’s going to make a huge positive impact on the growth of their business.
Make that crystal clear to them up front, and they’ll gladly pay you a generous consulting fee.
One note: while charging an hourly rate might be okay for your first few consulting projects, it’s not a good long-term pricing strategy.
First of all, you’re not going to be working forty hours a week with your clients, so you won’t end up earning a full-time income.
Second, as a consultant, you will spend many hours going out and winning business, and an hourly rate doesn’t take that into consideration.
For that reason, we recommend charging value-based fees that take into account all of the tangible and intangible value you create for your clients.
4) Rev up your marketing engine
Many companies that need help with Human Resources aren’t even aware that HR consultants exist.
They currently have no idea where to turn, and they wouldn’t know where to find you or how to approach you for help.
They’re not going to knock on your door and announce, “Hey, I need help with my onboarding process!”
Therefore, it’s up to you to get out there, find your ideal client, and approach them.
Effective marketing helps clients get to know you, like you, and trust you so they’ll want to talk to you about how you can help them with their HR issues: “Hey, I read your article about tips for onboarding, and I’d like to talk to you about some challenges we’re dealing with.”
To do this well, we recommend you focus on a few specific marketing habits:
- Outreach – Reach out to your ideal clients directly through LinkedIn or email, share valuable content that adds value to their lives, and generate interest in your offer.
- Follow-up – Continue to add value over time. Send them direct messages or emails on HR topics relevant to their industry, niche, and business size.
- Authority-building – Publish content on your blog, website, and social media platforms that positions you as an HR expert and supports your outreach and follow-up efforts.
Combining outreach, follow-up, and authority-building in your marketing will help you build relationships with your ideal client and create conversations with them.
5) Create meaningful conversations
Once you’ve got your marketing engine going, how can you tell if it’s working?
The clearest sign is that prospective clients are responding: they’re reaching out to you to have meaningful conversations about their HR issues and your solutions.
During those conversations, your goal is not to “close” but to help the client gain clarity about their situation, challenges, and desired outcome.
If they agree that you can help them, then you can make an offer, which might sound something like this:
“It seems like our six-week onboarding development program would help you get new hires up to speed much faster and more efficiently. Let me show you what that would look like.”
HR Consulting Business Case Study
When we work with HR consultants, there’s one question they all invariably ask: How much should an HR consultant charge?
And the corollary is this: How much will the client be willing to pay?
The HR consultants in our Clarity Coaching Program charge as much as $55,000 per project, but your fees will vary depending on the nature of the solutions and services you provide and the industry you target.
Bear in mind, if you charge an hourly rate, even if it’s $160 an hour or more, you’re probably going to make a lot less money over time.
Let’s use the example of People Spark Consulting.
They have identified a very clear problem that their ideal client deals with—retaining employees—and they can communicate the danger very clearly: “Did you know that the cost of losing one good hire is $29,600? The cost of a bad hire is $14,900. Rather than losing money and spinning your wheels, why not invest in your people strategies?”
They crafted impactful messaging that adds value to their ideal client and leads to meaningful conversations, and that is why their clients are happy to invest in their services.
People Spark Consulting credits the Clarity Coaching Program for helping them learn how to do the “business” side of HR consulting.
After going through the program, they said: “We were exposed to, and began to participate in, a community of consultants who helped us solidify our process to create a more professional approach.”
They learned how to define their ideal client clearly, communicate value to them more effectively, streamline their assessment process, and create a better and more profitable pricing structure.
Get Customized Coaching to Start Your HR Consulting Business
We have coached many HR consultants to help them to start and grow their HR consulting businesses, and we can do the same for you.
In our Clarity Coaching program, we’ve helped over 850 consultants to build a more strategic, profitable, and scalable, consulting business.
We’ve worked with HR consultants and understand the specific nuances of starting, growing, and scaling an HR consulting business specifically.
Learn More About Clarity Coaching
We’ll work hands-on with you to develop a strategic plan and then dive deep and work through your ideal client clarity, strategic messaging, consulting offers, fees and pricing, business model optimization, and help you to set up your marketing engine and lead generation system to consistently attract ideal clients.