How to start a human resource consulting business

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human resources consulting

According to, the global human resources industry is thought to be worth over £24 billion, making up around ten percent of the entire consultancy market. This is clearly a lucrative market for prospective businessowners, but what exactly is human resource consulting?

What is it?

Human resources refers to the improvement of anything relating to the human side of a business. Businesses rely on their employees, so identifying problem areas and implementing solutions can boost a companys efficiency significantly. describes the five principal categories of human resources: organisational change; talent management; HR function, benefits and awards; and learning development. But what do these categories actually involve?

Human resource professionals work on staff recruitment and training, engagement and development. This might involve analysing a business policies to ensure compliance, creating reports, suggesting and managing changes in a business workflow, running training sessions or redesigning a benefits and compensation scheme.

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Human resource consulting businesses can also be described as human resource management (HRM) consulting businesses or human capital advisory businesses. They offer individual human resource consultants to businesses in need of support. Many companies employ a dedicated, full-time human resources (HR) team, but those that dont may enlist the help of a human resource consultant during a particular project or period of transition, or if the company experiences lowered productivity. When this happens, they could turn to an HR consulting business to find an appropriate or specialist advisor.

The perfect human resource consultant

There are certain skills you need to be a successful human resource consultant. There are two sides to the role. Theres the side that puts human matters first, understanding what makes people tick and how small changes can impact individual workers productivity. And then the logistical side how can these changes be implemented in the real world and in compliance with workplace policies and the law?

Therefore, HR consultants must, first and foremost, have expertise in a range of core business elements, including finance, accounting, sales, marketing and IT. They should also have an awareness of the rules and regulations that will determine the decisions they make, including laws and equal opportunities policies.

However, HR consultants should be problem-solvers at heart. As well as having knowledge of business management, they should be able to explain complex concepts in a clear and concise way. Also, if an HR consultant is not part of a consultancy business, they should be prepared to promote their services in order to source business.

Finally, HR consultants should possess a genuine interest in helping people. According to HR expert, Carrie Luxem and, The best HR professionals truly care about others, are committed to resolving issues in a way that preserves relationships and, quite simply, exemplify the characteristics of good human beings.

What next?

You might think youd like to become an HR consultant or, even better, set up an HR consulting business, but there are so many decisions to make before you can get started. HR consulting businesses vary hugely, and each are suited to different purposes. Ask yourself:

  1. Do I want to be self-employed or run a consulting business? In other words, would you prefer to operate as a sole trader or create a limited company? The answer will depend on your financial aspirations and your suitability to manage a business. If you are to become a sole trader, you will need to be comfortable working alone and highly self-motivated.
  2. Will I work from home or hire office space? Your answer here will probably depend on your answer to the question above. If you hire staff as part of a limited company, you will probably need to locate suitable office space. However, you may choose to do this even as a self-employed consultant, if you wish to appear more professional or be away from distractions in the home.
  3. Will I be a generalised HR consultant or specialise in specific areas? While it might seem advantageous to offer a large number of services, your business might be more highly regarded if you offer expertise in a small number of specific areas, as clients are more likely to turn to you over a generalised firm if you appear to have more in-depth knowledge on a subject. If you choose the latter option, you should focus on developing a particular skillset, so you have the right information and tools to solve clients problems in the most effective way.

How to start a human resource consulting business in simple steps

Gain knowledge and experience

Launching an HR consulting business involves much of the same steps as launching any other kind of business, but lets start with the basics. You should first get good qualifications and experience. This means a degree in business management, administration, finance or, of course, human resources.

On top of this, youll need to spend time working as part of an HR team in some form. This will help you to identify the elements that make a successful HR enterprise and the potential pitfalls that you could come across when you start your own HR business. Not only will this step give you a great basis of knowledge that you can use to kickstart your own business, but it will also enable you to create valuable connections in the industry. Who knows, you may end up hiring or collaborating with one of your current co-workers, so it will serve you well to use this opportunity to network and make lasting connections.

Decide on your favoured model and create a business plan

Once youve got qualifications and experience, you can start planning your next career move. Think about your ambitions for your company and draft a business plan. Include information on where youll be based, who youll target and your financial forecasts.

If youre inexperienced in business ownership, or if you simply want to be able to rely on a tried and tested business model, you should consider joining a franchise. Weigh up the pros and cons of starting an independent business and starting a franchise unit to decide which is best for you. If you opt to become a franchisee, youll be able to buy the rights to use an existing companys business format, brand name, trademarks and tools. Youll also be given initial training and ongoing support to make sure your business is the best it can be. In return, youll have to pay regular management and royalty fees to the franchisor and stick to the business strategies set out in the franchise agreement.

If you opt to join a franchise, youll still need to create a business plan. The difference is, your focus will be on how to get the most out of a companys new unit in a new location. And, of course, youll get help from your franchisor.

Get capital

Unless youre in the small minority of prospective business owners who have the capital to launch their business without formally borrowing money, youll have to secure a business loan from an official lender. To do this, youll need to have a rock-solid business plan so the lender can see that youve made all the appropriate preparations to protect your business from insolvency.

At this stage, you should also consult a specialist financial advisor, who will be able to review your business plan and flag up any potential issues.

Recruit staff

Once youve secured the capital youll need to launch your business, you can start recruiting your employees. You might find it helpful to hire staff with the same specialisms or different skillsets to each other, depending on your business model. You should also think about candidates personalities during the recruitment process. If youve started your own business, think about the ethos youd like to create, and what type of character would suit it. If youve joined a franchise, consider its values and whether theyre reflected in potential employees.

Find clients

No matter whether you are part of a franchise or an independent start-up, youll need to start building a client base from scratch in your territory. The difference is that there may already be brand awareness linked to a franchise business, which will help you appeal to new clients quicker.

After time, you might be able to rely on word-of-mouth to get new clients but, until then, youll need to use self-promotion, local marketing tools or networking to get business leads. If you provide impressive services, you should have a steady stream of clients and income before too long, and your HR consulting business will be up and running.

Franchise opportunities

Unfortunately, Point Franchise doesnt currently have any HR consulting businesses in its directory, but check out its alternative franchise opportunities in a range of different sectors for budding franchisees and franchisors.

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