What Is Business Consulting: All You Need to Know
In this article, we’ll answer the question: what is business consulting? Get tips and tricks for hiring the right team for your business.
If you want to read about the responsibilities of business consultants or starting your own business, click here to skip ahead.
Key Takeaways
- Business consulting offers strategic, operational, and specialized support to help organizations grow and adapt
- There are multiple business models—firm-based, independent, and productized—each with different benefits and scalability options
- Industries like healthcare, finance, retail, and government hire consultants for expertise, efficiency, and digital transformation
- Using the right tools and clearly defining goals are essential for both successful consulting engagements and running consultancy
What Is Business Consulting?
Business consulting is a professional service provided by experts who offer strategic advice, guidance, and problem-solving solutions to businesses.
Businesses of various types hire a business consultant when they need external perspective into their operations, or specialized skills that they can’t fill in-house. In the case of management consulting, a business consultant can be hired to provide support to overutilized teams.
Strategic vs Management Consulting: What Is the Difference?
Strategic consulting concentrates on high-level, long-term goals. A strategic business consultant works with top executives to shape the company’s direction, identify new market opportunities, assess competitive positioning, and guide major decisions.
On the other hand, management consulting focuses on the implementation and optimization of day-to-day business operations. A management consultant helps improve internal processes, boost efficiency, manage change, and resolve organizational challenges. They often work closely with middle management and operational teams.
Different Types of Business Consulting
Here are some other frequent types of consulting apart from management and strategy, and what they focus on:
- Operations: streamlining business operations, from finances to resourcing
- Technology: software implementation, digital transformation, and cyber security
- Financial: budgeting, risk management, financial planning
- Marketing: branding and acquisition strategies
- Legal and compliance: legal risks and regulatory compliance
Traditional vs Asset-Based Consulting
There are two primary models of consulting services—traditional and asset-based.
Traditional Consulting
This model is time and labor-intensive. It includes bespoke deliverables, created based on expertise and charged by billable hours or project scope. Value is derived from human insight and experience.
| Pros | Cons |
|---|---|
| Highly customized solutions | Can be expensive |
| Deep problem analysis | Time-consuming |
| One-on-one client interaction | Dependent on business capacity |
Asset-Based Consulting
This approach involves leveraging pre-developed tools, templates, software, and methodologies. It enables consultants to deliver faster, scalable solutions. Asset-based models often use a mix of digital tools and automation.
Some popular examples of asset-based options include McKinsey Solutions, which are tools that are embedded in client organizations to help them drive continuous improvement.
| Pros | Cons |
|---|---|
| Faster delivery | Less personalized |
| More affordable | Less flexible |
| Scalable across clients | Not always suitable for complex projects |
Benefits of Using Consulting Services
Hiring a consultancy can bring a wide range of benefits for businesses. Here are the most impactful advantages:
- Consultants bring years of experience and deep industry insights that internal teams may lack
External consultants offer an unbiased view of business challenges, enabling better decision-making - Hiring a consultant for a specific project is often more cost-effective than onboarding full-time specialists
- Consultants handle complex projects, allowing internal teams to focus on day-to-day operations
- Consultants guide businesses through transitions like restructuring, new technology adoption, or market repositioning
- They introduce fresh ideas and best practices that foster innovation and growth
The 3 Business Consulting Models
We can distinguish three main models of business consultancies according to how business consultants organize, operate, and offer their services.
1. Firm Model
The firm model is the traditional and most well-known structure. Whether it’s boutique agencies or global giants, the firm model includes a team of business consultants working under a unified brand. The model allows for resource scalability and project diversity but comes with high overhead costs and a dependency on continuous client acquisition and growth.
2. Solo / Independent Model
The independent consultant model includes a single business consultant that operates independently. According to an article by Forbes, full-time independents made up 16.7% of the American workforce in 2024, indicating a growing trend.
It’s a lean and flexible structure with a personalized approach, ideal for professionals seeking autonomy, lower operational costs, and closer business relationships (for better or worse). However, scalability is limited, and income is directly tied to hours worked unless the consultant builds leverage through subcontracting.
3. Productized Model
The productized model provides fixed-scope, packaged offerings sold at a set price. This can include audits, strategy blueprints, or workshops. This model helps scale offerings, increase margins, and detach revenue from time. It blends consulting with elements of SaaS and e-commerce, making it ideal for recurring income and broader market reach.
How to Effectively Work With Consultants
If you want to know how get the most out of your cooperation with consulting business professionals, here are some tips to get your started:
1. Assessing Internal Resources
Before you’re ready to start hiring, you need to be sure that you have the right mindset and organization in place. Get the support of leadership, and ensure that you can allocate enough hours for employees to cooperate with your consultants. Clearly define your goals and what you expect from the engagement to ensure alignment from the start.
2. Evaluating Consultants
During the evaluation phase, consider the following:
- Does the proposal clearly state project objectives and scope for each phase of engagement?
- How do the consultants expect to achieve the objectives, and who needs to be involved from the organization?
- What is their planned approach or methodology?
- Who will be performing the work, and in what capacity?
- What is the expected hourly fee, which details need to be on the invoices, and what are the estimated out-of-pocket expenses?
3. Working With Consultants
Implement practices that support workflows between consultants and internal staff. For example, organize weekly status reports to review the progress that the team is making and identify any blockers that need prompt resolution.
Make sure that you have the right software and tools in place to house your data, so that project objectives, scope, and documentation can be easily monitored and managed.
Encourage open and transparent communication to build trust and ensure that all stakeholders stay informed and engaged throughout the project.
Which Businesses Hire Consulting Firms
Consulting services are widely used across industries and company sizes, but some sectors and types of businesses rely more heavily on consultants due to their complex needs, competitive dynamics, or rapid change. These include:
1. Large Corporations (Enterprises)
Why: Enterprises need the services of a business consultancy for strategic planning, digital transformation, M&A, organizational development, and cost optimization.
What they hire for: Strategy, operations, IT/digital transformation, managing change
Examples: Large corporations such as Fortune 500 companies often go for the Big 3 for their business consulting firm.
2. Startups and Scale-ups
Why: Startups and scale-ups often seek market entry strategies, product positioning, and support for their operational setup.
What they hire for: Business planning, branding, marketing strategy, business growth
Examples: Startups usually hire smaller boutique companies or independent consultants for a more personalized experience.
3. Government and Public Sector Agencies
Why: Governments outsource project management, technology implementation, and policy advisory.
What they hire for: Infrastructure projects, e-governance, economic policy advisory, IT systems.
Examples: Federal and local agencies often work with firms like Deloitte, Accenture, or PwC.
4. Nonprofits and NGOs
Why: Nonprofits often need help with fundraising strategy, impact measurement, operational efficiency.
What They Hire For: Grant writing, program evaluation, digital transformation, HR planning.
Examples: NGOs like Red Cross, Oxfam, UN agencies often work with sector-specific consultants.
5. Industry-Specific Businesses
- Healthcare: for regulatory compliance, digital health transformation
- Finance: for managing risk, compliance, fintech innovation
- Energy: for sustainability, ESG, operations optimization
- Retail: for customer experience, supply chain logistics, e-commerce strategy
- Professional services: for process improvement, client relationship management, digital transformation
How to Start a Consulting Business
If you’re here to learn about getting started in business consulting, here are some essentials to consider:
1. Identify Your Niche
Consulting is a competitive field, and there are a lot of mistakes that startups and independent business professionals can make. For example, choosing niches that:
- Are growing too fast (AI)
- Have a very broad field of specialty (such as marketing)
- That is too saturated (such as management consulting)
So what should you choose? Ideally, consider a niche where you already have industry connections, and you’re sure that you can reach potential clients.
If you have a broad field of specialty, such as marketing, try to narrow it down to a specific industry, if you’re sure that you have the right expertise to cover it.
2. Build a Brand
Your brand is more than just a logo—it’s how you’ll be perceived by potential clients. Don’t sleep on thought leadership content, SEO strategies, or curating a newsletter. It will help get your name out there and establish you as an authority figure in your niche.
3. Don’t Be Picky
While it’s tempting to pick and choose which projects you’ll be working on, any work you can get at the start is good work. You’ll need it to build a quality portfolio and establish connections in your industry.
4. Network, Network, Network
Leverage LinkedIn, attend industry events, and join professional groups to connect with potential clients, collaborators, and mentors. It’s a relationships-driven business, and referrals often become your most powerful lead generation tool.
5. Make Sure You’re Using the Right Tools
Invest in tools that streamline your workflow—CRM systems, project management software, invoicing platforms, and data analytics tools. As your consultancy grows (hopefully), so will your need for better resources and financial management.
Check out our article on the best consultancy tools.
Try Productive’s all-in-one consulting software
The State of the Consulting Industry
Like many industries in 2024, the consulting industry has faced some setbacks. According to a Business Insider article, Accenture has cut revenue forecast from the expected range of 2% – 5%, to 1% – 3%.
Big companies have responded to this situation by reorganizing their business processes. For example, Deloitte has restructured from five business units to four, which helped them cut on on non-billable work such as managing staff.
There have also been reports of delayed start dates for new staff in McKinsey and Bain & Company; some are paid thousands of dollars to put off starting their jobs.
Additionally, AI is increasingly used to improve efficiency and reduce time spent on manual work:
Let AI handle the 80% of tasks we’re mediocre at, so we can excel at the exciting 20%, as one of my colleagues likes to say.
Smaller, boutique consultancies have weathered these changes better, especially those that target niches.
Overview of Disruptions in Business Consulting Services
According to an article by HBR, here are some of the main disruptions that consultancies have been facing in the past 10 or so years:
- Rise of non-traditional competitors with freelance teams and flexible offerings with leaner cost structures
- A shift from integrated business consultancies to highly specialized and modular providers
- Classic strategy consulting is falling in significance, and now accounts for only ~20% of work in business strategy consultancies, down from 60–70% three decades ago
- Democratization of knowledge with research firms and software tools make accessing market data and conducting research easier than ever
- The rise of value-based pricing instead of the traditional hourly billing
Day-to-Day Responsibilities of Consultants
Business consultants wear many hats. Their daily work includes:
- Conducting research and analysis
- Meeting with clients to assess needs
- Developing proposals and strategies
- Creating presentations and reports
- Delivering workshops or training sessions
- Monitoring KPIs and project performance
- Staying current with industry trends
- Managing client expectations and communication
Consider that if you’re a business owner, your responsibilities will include a lot of administrative and operational work at first, such as hiring, sales, social media management, payroll management, etc.
Software for Consulting Businesses
Here’s an overview of tools that are very useful for business consultants:
- Project management: for organizing workflows and tracking progress on tasks
- CRM: for managing client data and sales pipelines
- Time tracking and billing: for tracking time and creating invoices
- Collaboration tools: for coordinating and communicating with clients
- Knowledge management tools: for brainstorming and creating documentation
The most basic tool stack includes Slack, Teams, Outlook, and Google Sheets. However, established businesses might want to consider a more fully featured consulting software solution for managing their profitability across clients.
Find out how Productive helps business consulting firms manage their operations.
Takeaway on Business Consulting
Business consulting continues to evolve, offering valuable support to organizations of all sizes. Whether you’re hiring consultants or starting your own firm, understanding basic models, tools, and trends is key to success.
Ready to optimize your business operations? Book a demo with Productive and streamline your workflows today.
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