What Is Consulting? Facts and Misconceptions About the Industry That’s Grown by 8%

When we hear the term “consultant,” we may think of George Clooney’s character in Up in the Air—a man who travels 322 days a year to companies in different cities as a business consultant. During his travels, he racks up air miles, stays in luxurious hotels, and wears a nice suit. His role also possesses an air of sophistication that would make consulting an attractive path to nearly any career-seeker. 

In general, consultants are usually known for rescuing struggling clients from financial ruin or for helping a company optimize its processes. For example, a technology startup trying to create new revenue streams may hire a marketing consultant to help them engage new customers. Or, a small business owner in retail might hire a consultant to help ensure that their inventory appeals to their target consumer. 

However, consulting isn’t always like how it’s depicted in the movies, and not all business consultants or firms are created equally. There are many different types of consultants, and depending on the kind you work with (or become), the career could look very different. 

Therefore, whether you’re considering hiring a consultant from one of the 901,751 U.S. consulting firms or becoming a consultant yourself, it’s important to first understand what consulting is (and what it isn’t). 

Strengthen your knowledge of consulting by learning what consultants do, the different types of consultants, and how to hire or become one.  

What Is Consulting?

Consulting is the practice of providing expert advice and solutions to organizations or individuals facing specific challenges. Consulting entails specialized knowledge, skills, and experience in specific industries or domains that serve to help businesses solve specific problems.

The purpose of consulting is to offer objective insights, strategic recommendations, and practical assistance to help clients overcome obstacles, capitalize on opportunities, and enhance their overall performance. Consultants bring a fresh perspective and often employ a systematic and analytical approach to assess the client’s situation, identify areas for improvement, and develop tailored strategies and action plans.

Consulting services generally include:

• Marketing and sales
• Financial advisory services
• IT and technology consulting
• Business strategy and management
• Operations and supply chain management

Management consulting specifically has increased by 2%, with the greatest number of consultants in California, Florida, and Texas, according to Ibis World.

The Different Types of Consulting

The term “consultant” can sound wide-reaching, but the services provided by a consultant are generally specific to their area of expertise. If you’re a company looking to grow revenue, for example, you would want to work with a financial consultant. If you were an entrepreneur looking to drive more social media presence, you would seek a social media consultant.

Here are the most common types of consulting:

• Marketing consulting: This form of consulting provides expertise to businesses in developing and implementing effective marketing strategies. This may include market research, brand development, advertising campaigns, digital marketing, social media strategies, content creation, and customer engagement. 
• Operations consulting: An operations consultant specializes in improving the efficiency, productivity, and effectiveness of an organization’s operational processes. They work with businesses to assess their operations, identify areas for improvement, and develop strategies to optimize performance. 
• Financial consulting: A financial consultant, also known as a financial advisor or financial planner, is a professional who offers expert guidance and advice on various financial matters. They help clients make informed decisions regarding their financial goals, investments, budgeting, and overall financial well-being. 
• Strategy consulting: A strategy consultant specializes in providing guidance and expertise to businesses in developing and implementing effective strategies to achieve their goals and maintain a competitive advantage. They work closely with clients to understand their industry, market dynamics, and business objectives. They conduct in-depth analysis, research, and market assessments to identify opportunities, challenges, and potential areas for growth. 
• IT and technology consulting: IT consultants possess a deep understanding of various technology domains and stay updated on emerging trends and advancements. They use their expertise to provide advice to businesses in leveraging technology to achieve their objectives and optimize their IT infrastructure.
• Compliance consulting: A compliance consultant specializes in ensuring adherence to applicable laws, regulations, and industry standards. They provide expert guidance and support to help organizations establish and maintain effective compliance programs.
• Social media consulting: This type of consulting specializes in providing guidance and expertise in leveraging social media platforms to help businesses achieve social media marketing goals. Social media consultants stay updated on the latest trends, best practices, and algorithms of various social media platforms. 
• Legal consulting: A legal consultant is a professional who provides expert advice and guidance on legal matters. Legal consultants have in-depth knowledge of laws, regulations, and legal procedures in specific jurisdictions or practice areas. 
• Growth consulting: Growth consultants work closely with clients to identify growth opportunities, develop strategies, and implement initiatives that drive business expansion. They analyze market trends, customer behavior, and competitive landscapes to identify areas for growth and develop tailored strategies.
• Career consulting: Career consultants specialize in providing guidance, support, and advice to individuals seeking career guidance. Career consultants help individuals assess their skills, interests, values, and goals to identify suitable career paths. 
• PR consulting: Public relations (PR) consultants help businesses manage and enhance their public image and reputation. They do this by developing strategic communication plans to promote positive relationships between their clients and the public, media outlets, stakeholders, and other relevant parties. 
• Fitness and wellness consulting: This consultant specializes in the areas of fitness, nutrition, and overall well-being. They work closely with clients to assess their current fitness levels and develop customized plans to meet specific health goals.

What Do Consultants Do?

“Only three things happen naturally in organizations: friction, confusion, and underperformance. Everything else requires leadership.”

Peter Drucker

The role of a consultant can be complex and varied depending on their area of expertise. However, in general, they work closely with company stakeholders, conduct research and analysis, provide recommendations, and assist with the implementation of solutions. They do this by bringing an external perspective, industry knowledge, and best practices to help organizations achieve their goals and improve overall performance.

The key responsibilities of a consultant typically include:

• Analysis and assessment: Consultants thoroughly analyze the client’s business operations, processes, strategies, and challenges. They gather data, conduct research, and perform diagnostic assessments to gain a deep understanding of the client’s current situation.
• Problem-solving and strategy development: Based on their analysis, consultants identify problems, bottlenecks, and areas for improvement within the client’s organization.
• Process improvement and optimization: Consultants work with the client’s team to optimize business processes, streamline operations, and enhance efficiency. 
• Change management: Consultants help clients navigate transitions, restructures, mergers, or acquisitions. They do this by providing guidance on communication, stakeholder engagement, and managing resistance to change.
• Organizational design and restructuring: Consultants assist in designing or restructuring organizational structures, roles, and responsibilities. They evaluate the client’s current organizational design, propose changes, and provide guidance on implementing new structures.
• Strategic planning and execution: Consultants help define strategic priorities, identify growth opportunities, and conduct market analysis. They also create implementation roadmaps to ensure successful execution.
• Financial analysis and planning: Consultants assess the client’s financial health and identify areas of improvement. Then, they provide recommendations for maximizing profitability and managing financial risks.
• Training and skill development: Consultants may deliver training programs in areas such as leadership development, project management, sales, or process improvement.
• Performance measurement and evaluation: Consultants establish performance metrics and evaluate outcomes and identify any gaps. They also provide feedback to help the client continuously improve and achieve sustainable results.
• Knowledge transfer and client empowerment: A fundamental responsibility of consultants is to share expertise, best practices, and insights gained. This is so the client can sustain improvements independently and build internal capabilities.

Common Misconceptions of Consulting

“Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall.”

Stephen Covey

Consulting covers a wide array of actual and potential services that can help an individual or company thrive. However, misconceptions about what consultants can and can’t do often deter clients from seeking them out. 

When hiring or becoming a business consultant, it’s important to be aware of certain misconceptions that can influence expectations. 

Common misconceptions to keep in mind:

1. Consultants have all the answers: Contrary to popular belief, consultants are not expected to have all the answers to a client’s problems. Their role is to provide expertise, insights, and recommendations based on their knowledge and experience. 
2. Consultants are only needed for big companies: While large corporations may frequently engage consultants, small and medium-sized businesses can also benefit from consulting services. Consultants can assist with strategic planning, process improvements, marketing strategies, organizational development, and other areas that impact performance, regardless of the company’s size.
3. Consultants are expensive and only for high-budget projects: While some consulting services can be costly, it’s not always the case. The cost of consulting services varies depending on the scope, duration, and expertise required. Many consultants offer flexible options tailored to different budgets, including short-term engagements or specific project-based assistance.
4. Consultants provide a one-size-fits-all solution: Effective consultants understand that each client is unique and requires tailored solutions. They work closely with clients to understand their specific challenges, goals, and organizational culture. Consultants then develop customized approaches that address the client’s specific needs rather than applying a generic solution.
5. Becoming a consultant guarantees success and high income: Transitioning into a consulting career does not guarantee instant success or a high income. Building a consulting practice takes time, effort, and a solid reputation. Success often depends on expertise, business development skills, networking, marketing, and providing valuable services that meet client needs.
6. Consultants primarily focus on giving advice: While advice and recommendations are part of a consultant’s role, they also engage in various other activities. These can include data analysis, conducting research, facilitating workshops, implementing strategies, training staff, and providing ongoing support to ensure successful outcomes.
7. Consultants are detached from the organization: Effective consultants work closely with their clients as partners rather than remaining detached observers. They aim to understand the client’s internal dynamics, collaborate with stakeholders, and build relationships with key individuals.
8. Consultants create problems to prolong engagements: This myth suggests that consultants intentionally create or prolong problems to extend their contracts. In reality, reputable consultants prioritize their client’s best interests. They aim to solve problems efficiently and effectively, building trust and long-term relationships based on successful outcomes.

Top Consulting Firms

For companies looking to hire a consulting firm with global impact, prestige, and undeniable track records for success, there are a few companies leading the charge. The top consulting firms generate billions in yearly revenue, employ thousands of people worldwide, and offer unrivaled expertise in various areas of business.

The top consulting firms, according to Management Consulted:

• Boston Consulting Group (BCG)
• Bain & Co.
• McKinsey & Company
• Advancy
• EY-Parthenon
• Deloitte

“The undisputed tier one is called MBB, which stands for McKinsey, Boston Consulting Group, and Bain, and these companies are the holy grail in consulting,” shares Ben Chon of rareliquidcareers, a former Deloitte consultant. 

According to NMS Consulting, global management consulting is currently estimated to be worth about $330 billion. By 2025, this figure is expected to reach $343.5 billion. In the U.S., this industry has grown 7.7%, reaching $55 billion. 

How Do Individual Consultants Make Money?

Consultants that work on their own make money by charging a set rate for their services. Mario Peshev, a global business advisor, reports that 31.37% of consultants charge on a per-project basis, 23.38% charge hourly, and 15.4% institute a monthly retainer fee (a set fee paid upfront to “reserve” a consultant’s services). Consulting Success developed a Consulting Fees Calculator to help consultants determine the fees for their services. 

According to Glassdoor, the total pay for a business consultant employed with a firm in 2023 was $107,870, and the average salary was around $77,327, with about $30,555 in additional pay.

How to Hire the Right Consultant or Consulting Firm

Choosing the wrong consultant or making a decision too quickly can invite undesirable outcomes and even a net loss. For this reason, it’s important to consider a consultant carefully, know what to watch out for, and take ample time to ensure that a consultant fits your company’s specific needs.

Here are some steps to help you in the selection process:

1. Define your company’s needs and objectives.
2. Conduct thorough research on the industry.
3. Assess consultant expertise and experience.
4. Evaluate their reputation and credibility.
5. Assess their fit and cultural alignment.
6. Request proposals or pitches.
7. Conduct interviews.
8. Consider consultant fees and value.
9. Finalize the selection.

As Michael Schein of Inc.com explains, there are also five common damaging behaviors a company should be sure to watch for if you’re working with a consultant or thinking of hiring one.

A company should run far away from consultants who:

1. Package their solutions in overly complicated ways.
2. Provide impressive-sounding solutions that lack actionable steps to implement.
3. Push solutions that promote their own brand or product to impress investors.
4. Present old, recycled solutions as fresh, innovative ideas.
5. Claim wide expertise but don’t have experience with your specific pain points.

How to Become a Consultant

“As consultants, we need to be ruthless in discerning what is important and what is just noise.”

Luk Smeyers

Becoming a consultant involves a combination of education, professional experience, and developing specific skills. The most successful consultants also specialize in a specific area of business or have a unique strength that helps distinguish their services from others. 

Steps to consider for becoming a consultant:

1. Gain relevant education and knowledge: Obtain a bachelor’s degree in a relevant field such as business, management, finance, or a specialized area related to the industry you wish to consult in. 
2. Build industry expertise: Develop expertise in a specific industry or functional area to become a subject matter expert. This can be achieved through additional education, certifications, or working in roles that provide deep industry knowledge.
3. Gain professional experience: Obtain practical experience in the business world to develop a solid foundation of skills and knowledge. Work in different roles or organizations that expose you to various aspects of business operations, such as marketing, finance, operations, or human resources. 
4. Develop consulting skills: Cultivate skills that are essential for a consultant, such as critical thinking, problem-solving, communication, project management, and client relationship management. 
5. Network and build relationships: Engage in professional networking to expand your connections within the business community. Attend industry conferences, seminars, and events to meet professionals and potential clients. 
6. Consider advanced education or certifications: Consider pursuing advanced degrees, such as a Master’s in Business Administration (MBA) or certifications specific to consulting, such as Certified Management Consultant (CMC). 
7. Start with small consulting projects: Gain practical consulting experience by offering your services to small businesses or startups. This allows you to apply your knowledge, test your consulting skills, and build a portfolio of successful projects. 
8. Market yourself and establish a professional brand: Develop a strong online presence through a professional website, blog, or social media platform to showcase your expertise and thought leadership. 
9. Establish your consulting business or join a consulting firm: Decide whether you want to start your own consulting business or join an established consulting firm. Starting your own business gives you independence and control over your work. However, joining a firm provides an existing client base and resources.
10. Continuous learning and professional development: Stay updated on industry trends, emerging technologies, and best practices through ongoing learning and professional development.

There Are No Cookie-Cutter Approaches in Consulting

“In order to be irreplaceable, one must always be different.”

Coco Chanel

Regardless of the type of consultant a person hires or becomes, one thing remains true: successful consulting is all about customizing. Consulting encompasses good customer service and a superior ability to tailor one’s approach and solutions to meet clients’ specific needs and challenges. Consultants who use cookie-cutter approaches to deliver stale ideas will quickly fail.

Resources for additional learning and next steps: 

• Read The Consulting Bible by Alan Weiss.
• Read Consulting Success: The Proven Guide to Start, Run, and Grow a Successful Consulting Business by Michael Zipursky.
• Visit websites like UpWork to search for freelance business consultants.
• Visit Bark.com to find a business consultant in your area.

Learn how to optimize your business further by reading Make Better Business Decisions: Understanding Elastic Demand Maximized Profit Margins next.