A consulting firm or simply consultancy is a business of one or more experts (consultants) that provides professional advice to an individual or an organization for a fee. Consulting services are part of the tertiary sector and account for several hundred billion dollars in annual revenues.
Business consultants provide management consulting to help organizations improve their performance and efficiency. These professionals analyze businesses and create solutions while also helping companies meet their goals.
A “consultancy” is usually an organization that provides consultation or guidance, whereas “consulting” (noun) = consultation and is the gerund of “to consult”, or “consulting” (adjective) = providing professional or expert advice. Business consultants provide management consulting to help organizations improve their performance and efficiency. These professionals analyze businesses and create solutions while also helping companies meet their goals.
Consulting is the business of providing expert advice to a specific group of people. The definition is that simple. A consultant is someone who has some level of expertise that a particular group of people find valuable, and people within that group are willing to pay the consultant to access their expertise.
Consultancy, what does that really mean?
When people hear the word “consultancy,” they often think of Harvard MBAs advising enterprise businesses on corporate strategy.
They think that being a consultant means obtaining difficult degrees and certifications from prestigious universities in order to land a competitive job at a top consulting firm.
They envision a fancy office with thousands of impeccably dressed staff members, each with a packed suitcase ready for yet another international flight.
But in reality, this isn’t an accurate picture of consulting.
Not even close.
The true picture of modern consulting is a lot closer to home, and you probably know someone right now making great money as a consultant. 36% of the US workforce is currently engaged in some form of independent consulting and contract work. And out of this group, nearly 20% of those working full-time are earning north of six figures.
What Is Consulting?
Consultancy means “engaged in the business of giving expert advice to people working in a specific field.” In other words, a consultant is somebody who gives advice to a specific group of people.
So what is consulting?
Consultancy is the business of providing expert advice to a specific group of people.
The definition is that simple.
So what is a consultant? A consultant is someone who has some level of expertise that a particular group of people find valuable. And people within that group are willing to pay the consultant to access their expertise.
Notice there is nothing mentioned about big firms, degrees, or certifications. If you can provide expert advice to a specific group of people, you can be a consultant
.And there is a lot of money in consulting..
.... a LOT of money…
.PricewaterhouseCoopers’ consulting division brought in $15.9 Billion in 2016, making them the largest player in a $148 Billion consulting market.
And as we mentioned earlier, nearly 20% of full-time independent consultants and contractors earn six figures and above, an unparalleled statistic even by today’s gig economy standards
.All this begs the question, why is consulting so valuable?
The answer to that question lies in the core meaning of consulting.
The True Meaning Of Consultancy
A consultant is somebody who gives advice. So the question we have to ask is “why do people buy advice?”
Well, why do people ask for advice?
They want to change something, achieve something, attain something, or become something, and they need help.
The current state of things isn’t how they want it to be. They know what their desired state is, but they need your advice to get there.
That’s why people want advice. They want to get from point #A to point #B, but they don’t know how to get there. They are either lost or facing obstacles they don’t know how to surmount.
And that’s what consulting is.
The true meaning of consultancy is helping people solve problems and move from their current state to their desired state.
Value of Consultancy
And the more valuable that desired state is to someone, the more they are willing to pay for help getting there.
For example, if a small business owner is making $60k per year and their goal is to make $120k per year. It achieves their goal holds a value of $60k for them and they are likely willing to pay $5k, $10k, $20k, perhaps even up to $60k to arrive there.
But money isn’t the only goal people have. The desired state might be six-pack abs. How much is that worth to someone? When we talk about more subjectively measured goals, the value will vary from person to person, but how much people are willing to pay might surprise you. There are normal, middle-class people out there paying $1,000 per month for personal training because getting the body they want is THAT valuable to them.
That’s consulting in a nutshell: helping people solve problems and achieve results.
So if reaching that desired state is so valuable to people, why don’t they just figure it out by themselves?
Why People Hire Consultants
There are three main reasons people decide to bring in outside advice:
- People are simply unable to figure it out or get to their desired state on their own.
- Many have a general idea, but they want to get there faster.
- They want to save time and effort by following an efficient, proven system.
1. They can’t get there on their own.
Someone might have their current situation and they might have their desired situation, and they have already tried very hard to get there on their own, but it’s just not working out.
Let’s say they are trying to lose weight. They go to the gym. They try different diets. They buy different running shoes. They try different things. They just can't seem to get it right.
They tried and they failed, but they know it’s possible and they know other people have done it, and they just need to find that missing link.
2. They want to get there faster.
People want to achieve things as quickly as possible. Really smart people also understand specialization, and that if they try to learn something from scratch. They are going to learn it significantly more slowly than having an expert teach it to them.
If I'm trying to launch my first business. I’m going to make mistakes and do things inefficiently, slowing down my progress and increasing the time it takes to reach my goals. That’s an unavoidable reality as someone with no experience.
But I’m not the only person on the planet. There are other people who have built successful businesses before, made the mistakes I will likely make. And learned how to do things efficiently. With their help, I can skip a lot of the biggest potholes and get to my desired state much faster.
3. They want a proven system to reach their goal.
Some people simply don’t have time to guess or experiment. They want results and they want them now, and they know the ONLY way to achieve maximum efficiency is to follow a proven system from someone who has already accomplished exactly what they wish to accomplish.
Want to lose 50 pounds in six months? Well, I’m going to go find someone who lost 50 pounds in six months and I am going to do exactly what they did.
Want to build a 7-figure consulting business in one year? Well, I’m going to go find someone who built a 7-figure consulting business in one year and do exactly what they did.
This desire for a proven system from someone who has “been there, done that” has created thousands of highly successful businesses, and it’s the reason virtually anyone who has achieved something of note can create a business selling that expertise to those wanting to follow in their footsteps.
On that note, let’s look at the three main categories most consultants fall into.
The Three Main Types Of Consultants
When someone says, "I'm a consultant," they are typically going to fall into one of three categories.
- Management Consulting
- Corporate Consulting
- Independent Consulting
The first category is management consulting.
Management consultancy is what most people think of when someone says “consulting.” This field is dominated by large firms like McKinsey, Bain, and Boston Consulting Group, which are hired to help enterprise businesses improve strategy and operations or manage significant business events like mergers and acquisitions.
Management consultants make some of the highest salaries in the professional world, and as you would expect with such a lucrative career, getting into the field is extremely difficult and ludicrously competitive. You need top-tier grades, you need to make the right connections at networking events, and you need to absolutely nail each stage of the interview process.
And things don’t ease up once you’re in. You will need to be a top performer at each level in a promote-or-be-fired progression system.
The second category is corporate consulting.
Like the word “consultancy,” the category of corporate consulting covers a massive spectrum of job descriptions and focuses.
This is more of a catch-all category for those with a “consulting” job description in the corporate world. This can look like in-house consulting services, implementation teams, B2B consulting businesses, and a host of other things.
As a general rule, people in this category have pursued the corporate track and often have at least a decade of experience in their industry. Fields where in-house consultants are common include software, IT, and other technology fields.
The third category is independent consultancy.
Often, when someone has developed expertise in an area, they choose to build and run their own business around that expertise rather than continue as an employee.
The particular expertise being sold can be virtually anything, and thanks to the emerging gig economy, thousands of new independent consultants are creating highly lucrative businesses for themselves.
While different independent consultants build their businesses in different ways, most are using the internet as their primary avenue for generating leads and landing new clients, which is the strategy we teach here at Consulting.com.
How Much Do Consultants Make?
Due to the diversity of consultants and consultant job descriptions, pinning down how much consultants make is a bit of a challenge.
That said, we can at least provide some averages.
If we include every job with “consultant” in the title across the three major salary tracking companies, Glassdoor, Payscale, and Indeed, we find that the average consulting salary is right around $75,000 per year.
While that may not sound especially impressive, it’s actually quite high for an average. In comparison, the average white-collar professional salary is only $63,076.
When we look at the three main consulting categories from above, we can begin to get a more specific idea of consulting salaries.
The average management consulting salary is $92,867, and for people who work their way up the top firms, that’s chump change. For larger firms, salaries start around $70k, increase to around $150k after getting your MBA, hit around $500k at junior partner level and minimum $1 Million at the senior partner level.
For independent consultants, it’s impossible to know the average, but we do know that nearly 20% of full-time independent consultants and contractors are earning six figures and above. We can also provide some data from our own training, which has had more than 10,000 students. Out of that group, 25 have broken the million dollar mark, 451 have crossed six figures, and over 3,100 have quit their jobs to do consulting full-time.
Independent consultants can deliver their services in a number of different ways, but their journey tends to follow a particular evolutionary journey.