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How to start an HR consulting business


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With automation, advanced artificial intelligence, and other emerging technology solutions on the rise, some may now consider human employees to be less vital for business success.

However, despite technological progress, employees will likely continue to be a business’s most valuable assets for years to come. As such, businesses of all shapes and sizes throughout Australia have an HR department. And for businesses that don’t have an in-house HR professional, it’s likely that they will engage a consultant on an as-needed basis.

Whichever the case, human resource consultants play a starring role in finding, engaging, recruiting, and engaging talented individuals.​

​What is human resource consulting?

Human resources refers to a broad spectrum of functions. In most cases, human resource is a department in an organisations that takes on the management, training, hiring and termination of staff. Anything related to employment law or employee matters is usually dealt with by HR.

When it comes to HR consultancy services, the main objective is offering guidance and expert advice to businesses owners looking to improve their HR function. They are regularly found visiting businesses to:

  • observe their HR department in action;
  • provide recommendations for HR procedure improvements; and
  • help define and deliver solutions for workplace challenges.

The 2020s have presented new challenges for sourcing top talent, especially for small business owners. As a result, the expertise of human resource consultants may now be more important than ever when it comes to supporting business owners with planning, recruiting, and training new employees.

Have you dabbled in HR in the past? You may have experience in human resource, or you may just love engaging and helping people get where they want to be in their careers. Either way, if you are prepared to provide a trusted service as an HR consultant, now may be a great time to start your own HR business.

So, let’s dig into what’s involved in starting and succeeding with your HR consulting business, while also diving into the four types of HR agency insurance that can play starring roles in reducing your exposure to HR consulting business risks.

Start a successful HR consultancy

Once you have completed a human resource qualification and have some HR experience to your name, you are ready to become an external HR consultant, there are some essentials that you will benefit from getting acquainted with. Here are the top tips for launching your HR consultancy.

1. Complete a HR qualification

When starting out in talent acquisition you will benefit from completing a relevant qualification, such as a Bachelor of Business (Human Resource Management). This course, and similar undergraduate courses, will teach you how to contribute to a diverse and impartial workplace, while building on your knowledge of general business practices and skills.

2. Get hands-on experience

You can start gaining experience in HR by looking for internships while you are completing your bachelor’s degree. This can help you apply the knowledge and skills you are learning in the classroom in a real-world environment. Your internship may include tasks such as helping with job interviews or reviewing HR policies and benefits

2. Write a business plan

Plan out all the nitty gritty details of your new consultancy. A clear plan can help you establish your consultancy business, as it ensures that all aspects of the business are considered and developed. You can include in a business plan an HR consulting company, aspects such as your specialisation, target market, and potential expenses.

Your business plan should also include an analysis of the current HR consulting market and a summary of your competitors. This will help you understand the landscape you are entering and will help you make informed decisions about how to position your business.

3. Form a legal entity and choose your business structure

Establish your HR consulting business as a legal entity by giving it a formal company name and a legal structure. Your options for structuring your HR consultancy are:

  • sole trader;
  • company;
  • partnership; and
  • trust

4. Create the three essential documents for HR consultants

Once you have registered your business, it’s time to prepare your legal documents. These critical documents help ensure that your business is protected. The three key legal are:

Consultancy agreement: A consultancy agreement defines the terms and conditions for your working relationship with each client. It covers important matters such as the scope of work, duties, responsibilities, payment, and termination.

Having a written agreement in place keeps both parties on the same page and helps reduce misunderstandings.

Employment agreement: Growing your HR consultancy services can be a great way to increase productivity, but it’s important to start these relationships on the right foot. This is where an employment agreement can make all the difference by covering all important matters, from role descriptions to annual leave terms.

Disclaimer: A watertight disclaimer can be useful in such scenarios. When you’re running a consulting business, limiting your liability is crucial. You wouldn’t want something that is out of your control coming back to hurt your business.

5: Create a website for your business

In today’s competitive business environment, almost all businesses can benefit from having a business website. This is where potential clients can learn more about your products and services and get in touch with you. Your website should include a brief introduction to your business, a list of services you offer, case studies from clients, and pricing information. You may also consider setting up a blog where you can share your thoughts and insights on the HR consulting industry.

Reduce your exposure to risk with business insurance

There are several common risks human resource consultants may face on any given day on the job. These can include:

  • legal and regulatory compliance;
  • quality and consistency of service; and
  • competition and differentiation.

While there are certainly risks, your business insurance arsenal of PI, PL, Management Liability, and Cyber Liability can shield your HR consultancy from worst-case scenarios.

Legal considerations for your HR consultancy

As a HR consultant you are in a position where you are effectively giving legal advice to clients and drafting legal documents in the form of contracts and agreements, but you are not a lawyer. You are also entering into contracts with clients yourself and may be reliant on the terms within those agreements in the event of a dispute or to protect your own position.

As a business owner you may have other legal obligations when it comes company registration, business insurance requirements, and accounts.

As such, HR consultants can benefit from keeping a keen eye out for any additional legal considerations that could impact their business. While you may have registered your business, have a business plan in place, and have completed all the required legal documents, there may be nasty surprises that may creep into your HR business.

Hiring employees

While you will likely start out small, in time you will likely hire dedicated HR consultants who have experience in various areas of HR. When focusing on talent acquisition, consider reaching out to your professional network and asking for references for HR consultants. You may also post job openings on job sites and on your own company website that candidates can apply for.

Open your doors to clients

With all the above in place, it’s time to open your HR consultancy and start advising. To get your business started on the right foot, you will likely want to invest in traditional marketing such as print media and radio advertising, as well as digital marketing, such as SEO and social media.

Make business insurance simple with BizCover

At BizCover, we know that business can be complicated, but it doesn’t have to be. We make purchasing HR agency insurance fast, easy, and cost-effective. Compare competitive quotes online, get covered in minutes, and enjoy a better business insurance experience today with BizCover.

*This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. © 2024 BizCover Pty Limited, all rights reserved. ABN 68 127 707 975; AFSL 501769

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