Starting a Consulting Business: Common Mistakes and How to Avoid Them

Starting a consulting business and going independent is an exciting transition. It’s a chance to be your own boss, pursue projects you’re passionate about, and decide when and where you work.  

But like any new venture, it comes with a learning curve—and a few early missteps are part of the process.  

Getting ahead of common mistakes and knowing how to avoid them can help reduce early growing pains and make the shift to self-employment feel more manageable. 

What are common mistakes that independent contractors make?

Bill Rate: Charging Too Much or Too Little

When you’re an employee, the market helps determine what your time is worth. Even if you’ve negotiated, your employer ultimately sets your salary. As an independent contractor, you’re responsible for defining—and defending—your value. 

To determine your bill rate, consider several key factors: the scope of the project, competitor pricing, and the income you hope to earn. Set it too high, and you risk getting underbid. Set it too low, and sustaining your business becomes a challenge. MBO’s Bill Rate Calculator is a helpful resource for finding a rate that aligns with your goals. 

Check Out: Get Paid What You’re Worth: How Independent Contractors Should Set Their Rates 

Business Planning: Skipping the First Steps

When launching a consulting business, remember that you’re not just the talent—you’re also the owner and decision-maker. Success doesn’t happen by accident. One of the easiest mistakes to avoid is starting without a clear plan.  

Write a detailed business plan that outlines how you’ll manage operations, define success, and support long-term growth. As your business changes, review and revise your plan regularly—at least once a year, or even quarterly. 

Client Boundaries: Forgetting to Set Them Early

As an independent consultant, it’s natural to pour time and energy into your work. Still, clear boundaries matter—for you and your clients. While it can feel necessary to say “yes” to every request, it’s important to stay aligned with the original project scope. Small add-ons can quickly turn into scope creep, leading to missed deadlines, unexpected costs, and longer timelines. 

Boundaries aren’t just client-facing. You’ll also need to set personal limits with yourself, friends, and family. Establishing balance early helps you stay energized and avoid burnout down the road. 

Discover: How to Achieve Work-Life Balance When You’re Self-Employed 

Finances and Taxes: Not Understanding Your Obligations 

One of the most common mistakes new consultants make is underestimating their tax responsibilities. When you’re employed, your company handles much of the behind-the-scenes tax work. As a business owner, that responsibility shifts to you. 

Independent contractors must pay self-employment tax—which includes both the employer and employee portions of Social Security and Medicare—along with income tax, typically on a quarterly basis. The good news? There are meaningful deductions available to independent professionals. If you’re unsure where to start, the IRS Self-Employed Tax Center or a trusted accountant can help. 

Contracts and Compliance: Relying on Verbal Agreements

Early on, it’s tempting to move quickly and rely on emails or verbal understandings to get work started. Without a clear contract, even great client relationships can run into trouble. Misaligned expectations around scope, timelines, payment terms, or ownership of work can create stress and disputes later. 

Written agreements help clarify responsibilities, set expectations, and give both sides confidence. Taking the time to put contracts in place protects your business and helps projects run more smoothly from day one. 

See: Contract Guidance for Independent Professionals 

Time Management: Underestimating Non-Billable Work

When you go independent, it’s easy to assume most of your time will be spent doing client work. In reality, a significant portion of your week goes toward tasks that don’t directly generate revenue—marketing, admin, proposals, contracts, invoicing, and follow-ups. 

If you don’t plan for this time, workloads can feel overwhelming and your effective hourly rate may shrink without you realizing it. Building non-billable work into your schedule—and pricing accordingly—helps create more realistic expectations and a healthier business overall. 

Networking: Not Building Industry Relationships

Many new consultants devote serious time to networking at the outset but once they land their first client, those efforts often fade. It’s understandable to focus on delivering great work. That said, letting your outreach efforts go quiet can limit your pipeline later on down the road. 

Staying visible and connected—through industry events, referrals, or even social media—helps ensure a steady flow of projects. Networking isn’t a one-time effort; it’s a continuous part of growing your business. 

See: Networking Tips for Independent Contractors 

Where can I find more support for independent professionals?

There’s a lot to manage when starting a consulting business, but every step brings you closer to building something that’s truly yours. Stay confident in your abilities, plan ahead, and learn from early challenges. With the right mindset and a few smart strategies, you’ll be well-positioned for long-term success. 

If you’re struggling with how to find new clients, MBO’s talent marketplace can help you discover opportunities tailored to your skills and expertise. You can explore job matches that align with your experience and professional goals. For more information, check out MBO’s website for the latest opportunities.