How to Run a Consulting Business Health Check (Free Tool)

May 14, 2024

Table of contents



What is a consulting business health check?

A consulting business health check is an assessment tool used to evaluate the overall health and performance of an independent or boutique consulting business. It involves examining various aspects of your consulting business, such as financial performance, capacity management, utilization, business development processes, and your systems and processes. 


The ideal consulting business health check is a business diagnostic that evaluates your business against key performance indicators (KPIs) and consulting industry benchmarks, giving you a baseline of your business to leverage as you build out your business plans and priorities.


The goal is to identify strengths, weaknesses, opportunities, and potential threats, a SWOT analysis, for you to leverage as a consulting business owner. This comprehensive review can help you as a business owner to make informed decisions, prioritize improvements, and strategize for better business outcomes. 


Ideally, you’ll conduct a consulting business health check quarterly or biannually to ensure your business remains aligned and adaptive to reach your goals.


In this blog article, we’ll walk through the consulting business health check so you have this tool in place to make your consulting business more effective.


What makes a healthy consulting business?

There are six components of a healthy consulting business. They include:


1. Clear Strategy & Positioning

For independent consultants, having a clear strategy, including a defined target market, compelling service offerings, and a sustainable business model is critical for maintaining a healthy consulting business. This involves articulating a unique value proposition that sets your services apart from the competition and targeting the right clients with specialized solutions. 


Your strategy should encompass clear goals and a compelling vision that sustains you through the ups and downs of being a business owner. When you know what your targets are and you reverse engineer a plan to achieve them, you’ll be able to drive your business forward and become a successful business owner.


The strategy should also incorporate a deep understanding of your niche, ensuring you leverage your strengths effectively. Including market competitiveness in your strategic planning allows you to adapt to changes and pressures in the marketplace, ensuring your consultancy remains relevant and preferred by clients. 


2. Effective Demand Generation

Effective demand generation is a crucial component of a healthy consulting business, focusing on creating and nurturing interest in your services among potential clients. This involves a multifaceted approach that includes targeted go-to-market strategies, compelling content creation, and strategic outreach efforts. 


The goal is to build awareness and establish credibility in your niche, drawing clients toward your consulting offerings. Key tactics might include networking events, partnerships, and speaking engagements that position you as a thought leader in your field. 


Additionally, leveraging analytics to track the effectiveness of your campaigns ensures that you can refine your strategies for maximum impact. Effective demand generation not only increases the visibility of your consulting business but also helps in building a steady pipeline of prospective clients, essential for sustained business growth and success.


3. Profitable and Timely Sales Engine

A profitable and timely sales engine is a vital component of a healthy consulting business, ensuring that you consistently convert prospects into paying clients efficiently. This requires an effective, consultative sales process that adds value from initial contact to deal closure.


Key elements include effective qualification of leads to focus efforts on high-potential clients and a structured process that moves prospects through the sales funnel. 


4. Operational Efficiency

Operational efficiency is a fundamental component of a healthy consulting business, focusing on maximizing productivity and reducing costs in your consulting business's internal operations. This involves streamlining administrative processes, optimizing resource allocation, and leveraging technology to automate routine tasks. 


Effective operational management means ensuring that all business functions, from finance and HR to marketing and IT, are running smoothly and cohesively. For instance, leveraging a bookkeeper to manage your invoicing and accounting can free you up for revenue-producing activities, while project management tools can help you track deadlines and status across multiple projects. 


Regular review of these processes allows for the identification and elimination of bottlenecks or redundant practices that waste time and money.


5. Robust Financial Health

Robust financial health involves the ability to set financial goals and consistently achieve them through effective pricing strategies, a healthy business development engine, and strong financial management practices. 


This model should incorporate establishing revenue and expense budgets, conducting regular financial reviews, consistently evaluating and iterating pricing, executing profit margin analysis, and managing forecasts that help the business adapt to changing client needs. 


In parallel, the key to healthy financials is adopting an effective and aligned money mindset. 


By focusing on these areas, independent consultants can secure their financial stability and build a foundation for ongoing success.


6. Strong Customer Relationships and Reputation

Strong customer relationships and a solid reputation are indispensable components of a healthy consulting business. Building and maintaining trust with clients through transparency, consistent delivery of value, and exceptional service are paramount. 


This involves not only meeting but exceeding client expectations on every project, which fosters loyalty and encourages repeat business


Additionally, nurturing a positive reputation extends beyond individual client interactions; it encompasses thought leadership, community engagement, and active participation in industry events, which enhance your visibility and credibility. 


By prioritizing strong customer relationships and a reputable standing in the market, consulting businesses can establish a durable competitive edge, attract more clients, sustain client retention rates, and achieve sustainable growth.


When is the right time for a consulting business health check?

Conducting regular consulting business health checks is crucial for achieving your business goals and for driving toward your overall business vision. Deciding on the right timing for these assessments can ensure they are both proactive and productive for your consulting business’s needs. 


Here are optimal times for you to conduct a consulting business health check:

1. Pre and Post-Consulting Engagement:

   Before initiating a major project, a health check can help you establish a baseline and ensure that your consulting business has the necessary resources and processes in place to deliver effectively while also juggling your business owner responsibilities. Following the completion of a major project, another health check should evaluate outcomes versus expectations, providing insights into what adjustments may be needed for future projects and the running of your business.


2. Financial Quarters

   Conducting health checks at the end of each quarter helps in reviewing financial goals, profit margins, and overall financial strategy. This timing ensures that you’re on track with your financial, capacity, utilization, and other goals and have the opportunity to make adjustments as necessary. 


3. Annual Review Cycle:

   An annual consulting business health check provides a systematic evaluation of your consulting business's performance across all key aspects, from financial health to client referenceability and operational efficiency. This regular scrutiny aligns with strategic goals and identifies areas needing attention before they become problematic.


4. Before Strategic Planning Sessions:

   Incorporating your consulting business health check as part of your strategic planning sessions, such as your consulting business corporate retreat, provides critical data and insights that inform your decision-making process. Understanding the current state of the business allows you to set realistic goals and formulate strategies to reach your shorter-term goals and big vision.


5. After Significant Market Changes:

   Changes in the market, such as shifts in client demands, economic downturns, or emerging industry trends, necessitate a health check to reassess your consulting business’s strategies and ensure they align with the new market realities.

Scheduling these consulting business health checks in your 12-month rolling, consulting business calendar and embedding them into your business processes will enable you to stay aligned with your goals, adapt to changes, and continuously optimize your performance. By doing so, you can safeguard your consulting business and expand your capacity for growth and success.

What does a consulting business health check cover?

A valuable consulting business health check involves several components, ranging from predefined best practices to uncovering blindspots, building a prioritized action plan based on the results, and tracking trends over time.


What’s covered in a consulting business health check

A consulting business health check is a strategic tool designed to evaluate the essential aspects of your consulting business to ensure it operates at peak efficiency and effectiveness. 


Here’s a breakdown of what the health check typically covers:


1. Evaluation of Best Practices:

The consulting business health check enables you to assess whether your business adheres to the industry best practices that successful consulting firms typically follow. This includes examining your business processes, systems, and the people you have in place. It checks for alignment with standards that enhance productivity, client satisfaction, and profitability.


2. Identification of Ineffective Areas:

One of the primary objectives of the health check is to identify areas within your business that are not performing optimally. This could involve outdated processes, underutilized technology, or inefficiencies in how your time, expertise, and financial resources are allocated and used. Pinpointing these areas helps in streamlining operations and boosting overall efficiency.


3. Spotting Blindspots:

Usually, as an independent consultant, you’re too close to daily operations to spot underlying issues. A consulting business health check helps uncover these blindspots—areas that might have been overlooked or underestimated in terms of risk or inefficiency. This could include unexplored market opportunities, adjustments to your lead generation and sales processes, pricing adjustments, or areas taking up too much of your emotional capacity.


4. Identifying Areas of Opportunity:

Beyond addressing your business weaknesses, the consulting business health check also focuses on uncovering areas where the business has potential to grow or innovate. This might include new market trends that can be capitalized on, emerging technologies that could be adopted, or new service lines that align with your core competencies and client needs.


5. Prioritized Action Plan:

Based on the findings from the consulting business health check, a prioritized action plan is developed. This plan details the steps needed to rectify inefficiencies, leverage opportunities, and mitigate risks identified during the assessment. The prioritization ensures that resources are allocated effectively, focusing first on actions that will deliver the most significant impact on the business’s performance and strategic goals.


6. Repeatable and Measurable Analysis:

An effective consulting business health check is repeatable and provides measurable analysis, allowing for tracking of trends and patterns over time. This historical perspective will aid you in understanding the impact of changes and supports data-driven decision-making.


7. Assessment of Well-functioning Areas:

Equally important, the consulting business health check identifies what’s operating well within the business. Recognizing these strengths enables you to understand key success factors and to replicate these effective practices in areas that may not be performing as well. This not only celebrates successes but also helps in reinforcing what works well to boost your confidence as a business owner.


Overall, a consulting business health check is a comprehensive evaluation that not only checks for alignment with best practices but also provides a clear roadmap for improvement, tailored to the specific needs and objectives of the business. It's an invaluable process for maintaining a competitive edge and ensuring long-term progress toward your big vision.

Areas of evaluation

When conducting a health check for a consulting business, it's essential to evaluate a comprehensive set of areas that impact your firm's overall performance and sustainability. 


Here are the key areas to assess:


1. Three-Year Vision and Goals: 

Review the clarity and alignment of your long-term vision and objectives and the progress toward your more immediate goals.


2. Assessment System: 

Evaluate the effectiveness of the tools and methods you use to measure your business metrics and performance indicators, such as your business development routines and KPIs.


3. Consulting Services Portfolio: 

Analyze the range and relevance of the services you offer, ensuring they meet the current and future needs of your ideal clients and are aligned with your own goals and what you want to be known for.


4. Pricing Framework: 

Examine the pricing strategies to determine if they are profitable, aligned with your financial goals, and also aligned with the value delivered to your clients.


5. Business Model: 

Assess the overall business structure and model to ensure it supports efficient operations and sustainable growth.


6. Lead Generation System: 

Review the strategies and processes in place for attracting and acquiring new clients in a predictable, repeatable way.


7. Sales & Proposal Process: 

Evaluate the efficiency and effectiveness of the sales and proposal systems so you’re able to make the most of your business development time and resources.


8. Audience-Building System: 

Look at how you engage with your broader audience, including content marketing and thought leadership.


9. Top-of-Mind System: 

Assess strategies for staying in front of clients and potential clients, ensuring you’re known for and sought after for what you do.


10. Client Delivery System: 

Evaluate the efficiency and quality of your client project delivery processes and procedures.


11. Financial System:

Review the financial management practices, including budgeting, forecasting, financial reporting, and profitability analysis.


12. Time Management System: 

Assess how your time is managed between working on your business (WOB) and working in your business (WIB) to maximize productivity and impact.


13. Business Owner Mindset: 

Evaluate your mindset and business owner self-identity, focusing on your confidence, clarity, certainty, and money mindset, to identify areas of limiting belief and sabotage.


14. Keep-It-Going System: 

Review the sustainability of your business, including plans for maintaining your work-life balance, protecting your emotional energy and mental health, making the level of impact you want to make, strengthening your reputation, and predictably achieving your financial goals.


These areas of evaluation provide a structured approach to diagnosing the health of your independent consulting business, identifying strengths to build on, and areas for improvement to ensure your continued success and growth.


Benefits of conducting a consulting business health check

Conducting a consulting business health check for a consulting business is essential for enhancing operational efficiency, market positioning, and financial performance. 


Here are several specific benefits:

1. Set yourself up to make more money

Health checks facilitate detailed analysis of pricing strategies and cost management, leading to pricing optimization and margin enhancement. Addressing inefficiencies in service delivery or resource utilization directly boosts profitability.


2. Reduce the risk of having all your eggs in one basket

By exploring emerging industries and expanding the client base, independent consultant health checks help uncover ways you can land more consulting clients, diversify your revenue, and set yourself up to achieve your financial goals.

3. Figure out how to make business development easier for yourself

Leverage the consulting business health check to identify ways to make your lead generation and sales process easier and more effective. For example, by identifying and forging strategic partnerships through insights gained from health checks, you can leverage synergies and enhance market reach. These regular health checks keep the business attuned to market trends and emerging industries, ensuring that the business model remains relevant and proactive in capturing new opportunities.

4. Proactively identify pivots so you’re more fulfilled and maximize your impact

The consulting business health check process involves examining market needs, refining your ideal client profile, and getting more clear about your service offerings. And, in turn, you’re able to proactively consider potential business model pivots.

5. Proactively grow your reputation so you’re known-for and sought-after as an expert

Refining your USP and enhancing your brand positioning during the consulting business health check are critical for differentiating yourself as an expert. These elements help articulate what makes your services unique and why clients should choose you.

6. Strengthen your identity as a business owner

By regularly conducting a business health check, you’ll continue to develop and strengthen your consulting business owner identity and consistently replace your employee mindset. As your business owner identity grows and matures, you’ll build your confidence, increase your fees, evolve your pricing strategy, attract strategic-type work, and have more work-life balance.


How to perform a business health check: Full checklist

So now you’re clear on the benefits of having a repeatable consulting business health check process in your business. Now, let’s talk about the nuts and bolts of how to implement a consulting health check in your business.


1. How to Run a Health Check on Your Business Operations


Let’s cut to the chase. The easiest way to run a consulting business health check is to take the online version I created for you. 


Click here to launch it.


It takes about 5-10 minutes to complete.

2. Analyze and Assess the Results

After you complete the Assessment, be sure to check your email. I’ve included a step-by-step guide that walks you through the process of analyzing your results.


When you’ve completed the analysis, you’ll be able to develop a prioritized action plan that aligns your highest priorities to your business goals.


This will enable you to focus on what matters most and set the other “busy-work” aside.

Take the assessment and download the consulting business health check guide

After you take the assessment, download the assessment analysis guide, and complete the review of your results, you’ll be ready to make your action plan.

How can I use the results of the online health assessment to improve my consulting business?

Here’s how to effectively use the results to enhance your business operations and outcomes:


1. Actionable Insights: 

Begin by thoroughly reviewing the data and insights provided by the consulting business health assessment. Identify key areas where your business excels and pinpoint where improvements are necessary. Actionable insights can guide decision-making processes and help prioritize initiatives that have the most impact on performance and client satisfaction.


2. Performance Improvement Plans: 

Use the results to develop detailed performance improvement plans. For each identified area of weakness or inefficiency, set clear, achievable goals for enhancement. These plans should include specific actions, designated responsibilities, timelines, and metrics for measuring progress. For instance, if the assessment highlights issues in client retention, your improvement plan might involve tightening your initial qualification process, enhancing client communication, and fine tuning the timing of when you begin discussions about follow-on engagements.


3. Gap Analysis: 

Conduct a gap analysis based on the assessment results. Compare your current performance against your goals and benchmarks to identify gaps in service delivery, operational efficiency, or market positioning. This analysis will help you understand the critical areas that need immediate attention and resources, allowing you to allocate your time and attention more effectively.


4. Strategy Refinement: 

Leverage the insights gained from the consulting business health assessment to refine your business strategy. This might involve redefining your target market, adjusting your service offerings, or revising your marketing approach to better meet client needs and industry demands. Strategy refinement should focus on leveraging your strengths and addressing the vulnerabilities exposed by the assessment.


5. Prioritized Action Plan

Once you've identified areas needing improvement and refined your strategies based on the consulting business health assessment results, developing a prioritized action plan is crucial. This plan should clearly outline the steps necessary to address the key areas identified in the gap analysis and performance improvement plans. 


By systematically applying the results of your online consulting business health assessment through these steps, you can ensure that your consulting business not only meets but exceeds your goals and vision.


Frequently asked questions about the consulting business health check

What score is ideal, and what score is considered to be low?

When you take the online consulting business health assessment, it will provide you with detailed results. 

You may think the goal is to achieve a perfect, 100% score. And, if your score is in the red or yellow range, that you’ve done something wrong or that you’re failing.

Nothing could be further from the truth.

Your goal isn’t to create a “perfect” consulting business. That’s not even possible. There’s always room for improvement and evolution.

Instead, I recommend you look at this consulting business health assessment as a living process. You set goals at the beginning of the year and each quarter to improve your score in a certain aspect (or two) of your consulting business. Then, you develop the action plan that you believe will result in you achieving your desired outcomes and scores.

Then, you take the assessment again, both quantitatively and qualitatively, to evaluate how well you did against your objectives.


What is the methodology behind the consulting business health check?

Now that I’ve shared the consulting business health check with you, you might be wondering how I developed this tool. 

The answer is simple. I’ve created the consulting business health check and accompanying analysis guide after 12+ years of experience running my own consulting firm, on top of the 12 years I spent in corporate consulting at Accenture and a SaaS start-up where I was responsible for the global implementation business unit.

On top of my personal experience, I’ve worked with 100’s of independent consultants, seeing behind the scenes of their businesses and mindsets.

From all of this, I’ve been able to distill what makes some consultants successful while others, with almost identical experience, struggle. 

All of these combined experiences and insights are the basis for the consulting business health assessment I created for you.


How often should I take the business health assessment?

I recommend you take the consulting business health assessment at least twice a year, ideally every quarter.


Is the consulting business health assessment free?

The consulting business health assessment is complimentary and includes the 14-point assessment, the customized results, recommended actions to improve your business health scares, and the step-by-step analysis guide.


How much time is required to take the assessment?

It takes approximately 5-10 minutes to complete the consulting business health assessment. Then, I would recommend setting aside one to two hours to complete your in-depth analysis, using the Consulting Business Health Analysis Guide, and to build out your detailed action plan.


Recommended resources

In addition to this article, here are five resources to leverage as you’re building your own Consulting Business Health Check process:

  1. Consulting Business 14-Point Business Health Assessment
  2. The Grow Your Consulting Business: The 14-Part Roadmap to Make Your Independent Consulting Goals a Reality - downloadable book and toolkit
  3. Episode 151 – The 14 Systems To Grow A Thriving Consulting Business (part 1)
  4. Episode 152 – The 14 Systems To Grow A Thriving Consulting Business (part 2)
  5. Episode 153 – The 14 Systems To Grow A Thriving Consulting Business (part 3)
  6. Coaching for Consultants


Your next steps after taking the consulting business checkup

Investing time in a consulting business health check is not only about identifying areas for improvement but also about strategically implementing those findings to drive substantial growth. 


My Coaching for Consultants program offers a structured approach to improving your consulting business and helping you accelerate the achievement of your business goals.


My coaching clients have consistently reported significant enhancements in their business operations and profitability, as evidenced by the compelling client testimonials. These stories highlight the real-world benefits of a dedicated focus on refining business practices and strategies tailored to the unique needs of solo consulting firms.


To truly leverage the insights from your business health check, consider engaging with a coach who understands the nuances of independent consulting and is designed to support sustainable growth and efficiency. 


If you’re ready to take your consulting business to the next level, I invite you to book a consultation or learn more about my specialized coaching for consultants. 


The journey to transforming your business starts here—let's make your business healthier, more sustainable, and more predictable, together.

Take the Independent Consultant's Pricing Assessment

Most independent consultants have hidden pricing opportunities just waiting to be discovered.

Let's see where your opportunities to make more money are hiding...

Start the Assessment