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29 August 2023

Navigating the challenges: common pitfalls your HR and People business should avoid

  • HRi blog
  • , HRi highlights

Posted by: HRi

Becoming an independent HR and People consultant running your own HR business can feel overwhelming, daunting and sometimes lonely.

Many independent HR and People professionals start their HR and People consultancy business after at least 10 years of professional experience (reported in the Big HR Independents Fee Report 2022). Starting your HR and People consultancy business can be exciting and fun. There are many reasons why may you choose to go independent. It may be because it works better for you when you need to juggle work and looking after a young family. Or it could just be because you enjoy the flexibility. However, becoming an independent HR and People consultant can feel overwhelming, daunting and sometimes lonely.

It’s widely reported that 60% of new businesses go bust within three years of set up. And on average almost 20% of new businesses fail in their first year.

Independent HR and People consultants can make a significant impact on an organisation’s success. However, like any venture, running an independent HR and People business is not without its challenges. Running your own business is a big step and requires more than being an expert in HR and People profession. In this blog, we will explore some common pitfalls that independent HR and People businesses may encounter and provide practical tips on how to avoid them.


Common pitfalls and how to avoid them

Inadequate Market Research and Niche Selection

One of the first mistakes independent HR and People businesses can make is launching without conducting sufficient market research and/or selecting a clear niche. Entering the HR and People consulting market without a well-defined target audience and value proposition can lead to vague messaging and difficulties in attracting clients. To avoid this, conduct your research to understand the needs and pain points of your ideal clients. Identify a specific niche or industry where your expertise can be most impactful, and tailor your services to meet the unique challenges of that sector.


Overlooking Business Planning and Strategy

Many HR and People professionals are enthusiastic about helping organisations succeed. But you may neglect the importance of sound business planning and strategy. Lacking a solid business plan can lead to a lack of direction, inconsistent branding, and poor financial management. Create a comprehensive business plan that outlines your goals, target market, marketing strategies, and financial projections. Regularly review and update the plan to ensure your HR and People consultancy business remains on track.

Embarking on your business prematurely

Creating your business name and logo may be one of the most exciting and fun part of the process. However, it is equally important to ensure your business structure and how you run your practice is compliant, such as registering your limited company with Companies House and HMRC, processes around GDPR and data protection and how you manage cases, records and projects. More guidance on the areas you also need to consider can be found in HRi Standards.

Underestimating the Power of Networking

Networking is a powerful tool for any business, and independent HR and People businesses are no exception. Failing to build and maintain a strong professional network can limit opportunities for growth and referrals. Attend industry events, join HR associations, and engage in online networking platforms to connect with potential clients and fellow HR indies (professionals). Networking with your ideal clients can be a great way of obtaining new clients. Nurturing meaningful relationships can lead to valuable partnerships and referrals in the future.

People business networking
Image credit: FG Trade via Canva

Neglecting Marketing and Branding Efforts

Many HR and People consultants love collaborating with people and clients but may find business development and selling uncomfortable. Relying solely on word-of-mouth or personal connections may limit your reach. Having exceptional HR and People expertise is not enough, an independent HR and People business can struggle to attract clients if it lacks effective marketing and branding. Think about developing a strong brand identity, including a professional website and logo. Having consistent messaging that highlights your unique value proposition will also help. This may be a new area for you, but you don’t have to do this alone. Instead, invest in marketing support. Digital marketing strategies are also important in today’s business environment. For example, content marketing, social media, and search engine optimisation, to increase your visibility and attract potential clients.


Inadequate Contracting and Pricing Strategies

Proper contracting and pricing are essential for the success and sustainability of an independent HR business. Failing to define clear contract terms, scope of work, and payment arrangements can lead to misunderstandings and disputes with clients. If the scope of work is not well-defined or there are changes in the client’s needs that are not accounted for, you may end up investing more resources than anticipated, leading to financial losses.

Develop comprehensive and legally binding contracts that protect both your business and your clients. Additionally, establish fair and competitive pricing that reflects the value of your services while remaining attractive to potential clients. How much to charge is a common question. Setting your fees can be overwhelming to start with, it also depends on your business model. If this is an area you need to complete and are struggling in getting headway, have a look at the Big HR Independents Fee Report 2022. Additionally, consider what your plans are for the business. Are you looking to establish a sellable business? Or is it about investing a few hours here and there? What is your positioning – a consultant or an interim?


Disregarding Compliance and Legal Issues

Neglecting compliance with data protection laws or providing incorrect advice on employment regulations can lead to legal liabilities and reputational damage. Stay up to date with the latest laws and regulations that affect HR practices. If necessary, seek legal counsel to ensure your business operations and client advice are compliant with relevant legal requirements.

All HRi members have access to the AskHRi helpdesk with a set number of credits based on the membership plan. This gives you access to experienced HR professionals or an employment lawyer who can provide practical advice, a confidential second opinion and reassurance.


Neglecting to capitalise on your reputation

Your current and dormant clients are your success stories. So, don’t forget to obtain testimonials and case studies to showcase your value to potential clients. They are also key to attracting new clients. Learn to effectively communicate your accomplishments and ongoing efforts to them. They serve as invaluable ambassadors for you and your business, so don’t overlook their significance!


Success together

Running your own independent HR and People consultancy practice can be fulfilling and rewarding. But it comes with its fair share of challenges and is not solely based on HR and People expertise. Strategic business acumen and adaptability to the evolving needs of the market are important. By avoiding these pitfalls and embracing best practices, your independent HR and People business can pave the way for sustained growth and prosperity in the long run.

Finally, while being a business owner can be lonely, HRi has a community of fellow HR indies that learn, support and collaborate – success together!

HRi raise and drive the standards for the independent HR and People Professionals sector. We support the HRi community by enabling shared learning and collaboration while upholding standards for independent HR and People Professionals. Our goal is to support and develop you to achieve your professional and business goals. Keeping you up to date with the latest HR best practice, opinions and legislation. Find out more about becoming a HRi member.

Author: Mary Asante | HRi