I’m almost afraid to ask, but I’m going to ask you anyway:
What’s the first thing you think of when you hear the term “business consultants”?
You might think of Ryan Bingham from the movie “Up in the Air” who travels around the country to help businesses restructure & downsize by firing people.
Not a particularly good impression.
Or you might think of MBA’ers, whose #1 goal is to get hired by top management consulting firms like Bain, Boston Consulting, McKinsey, Accenture, etc.
OK, another not-so-great impression, especially if you are a creative business owner.
In a way, these are stereotypical descriptions of business/management consultants. But, in reality, they can help you find solutions to various business challenges faster.
From my own experience communicating with small business owners, they often don’t consider hiring a business consultant because of these objections:
1. It’s too expensive
2. Their business is not big enough in size to hire a consultant
3. They feel they need help in other areas in their business
It’s a shame because they may be missing out on spectacular growth opportunities by not teaming up with a business consultant. Later in this post, you will see why these are just misconceptions about what business consultants can bring to the table.
So, think again if you thought hiring a business consulting firm or a business consultant was a privilege only available to major brands and corporations. 20 years ago, maybe. But in this day & age, it isn’t.
This post is a comprehensive overview covering the basics of how to find out whether you need to hire a business/management consultant for your business.
Let’s Address the Elephant in the Room
Because I do roll my eyes when I see a blog post about why we need to hire an accountant on an accounting firm’s website and/or a guest-post about why it’s important to hire a social media strategist written by a social media strategist on an online business publication, I get why you might be rolling your eyes reading this post right now.
It’s a bit cheesy. I agree.
So, I want to tackle this first so that we can move onto the good stuff.
The main purpose of this post is simply to present “clarifications” and “educate”, rather than writing about why you need to hire a consulting firm or a business consultant just because… I am a business consultant. There is some confusion out there, and none of the posts I found online clarified it in the way I am about to do here.
Look at it this way: If you determine that your business isn’t ready for such a service, at least you understand what you need to take into consideration for the future. If you thought about seeking help in your business but never considered a business consultant, this post will guide you through your decision-making process.
Either way, this post is all about one thing – helping you make sound business decisions.
Who Does NOT Need to Hire a Business Consultant (Yet)?
Let’s start with some examples of business owners who can operate their businesses without the help of business consultants for the time being:
- Solopreneurs or solo practitioners with no team
- Solopreneurs or solo practitioners with no plan for expansion
- Those whose annual revenue is comfortably less than low multiple 6 figures & plan to keep it that way.
These businesses can utilize other means to continuously build a sustainable business. For example, mentors, masterminds, local chamber of commerce and business coaches would be the most effective to guide you through with your business journey. I have put together a comparison list to put business consultants against other business partners you work with to show the difference in each scenario.
In most cases, they offer various workshops and programs that are topic-specific, such as productivity, putting systems in place, online advertising, promotion & marketing, etc., that will help you either maintain or steadily grow your business over time.
On the flip side, if you want to own and operate a growing business generating multiple 6 figures and up, and your ultimate goal is to build an equitable business that can possibly run without you, you should, at the very least, consider hiring a consultant or a consulting firm.
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3 Indicators (3 P’s) to Assess Whether Your Business Needs a Consultant
These are what I call commonly known business scenarios, where bringing in an experienced business consultant can fast-track your business growth. They all start from letter P:
As you might have noticed, these are signs that any business that’s been running for some time (24+ months) would experience one way or another, and they are pretty self-explanatory. Just to be absolutely sure though, let’s go over each of them.
There are a few signs your business may be hitting a plateau:
1. What used to work effortlessly no longer works to generate the same amount of revenue. It may be the way you generate leads has lost its effect. Or it may be that your competitors are gaining more attention.
2. Growth has slowed down while requiring more time, money, labor and other resources just to keep up with the current growth rate. In other words, it’s noticeably harder to achieve the desired goals.
3. Unexpected external changes, both macro & micro, are impacting your business. For example, regulation changes in the industry, cheaper options became available due to new technology and/or innovations, or vendors are increasing prices, etc.
If you are detecting any of these signs, you probably know that changes have to be made, but you may not know exactly what the steps are to save yourself from wasting a lot of time and money.
Another scenario is that your business is doing well so far. But, up to this point, your focus was to keep the momentum going. Naturally, you have been implementing whatever was working at that given moment.
But now that you have a moment to breathe, you want to put strategic planning in place so that you no longer need to be reactive to things that happen in your business. Instead, you can fortify what you have built with key systems and guidelines that support your profitable business model so that it makes easier to treat your business as a real, equitable company.
When you are at this stage in your business, questions like “where to start” & “how to start” can be overwhelming. It’s mainly because your business must continuously run while you come up with a strategic plan for the future, and you feel this task will add more pressure to your already demanding work life.
This includes expansion, scaling down to start something new, creating offers in a new category or market, restructuring a business model, and selling a business.
Our business also goes through what we experience in our life: we are born, start walking, reach adolescence, then mature into adulthood. Each milestone in your business calls for an assessment. This is when the third-party perspectives can be useful to remove yourself from all biases in order to take a good look at your business.
More importantly, you can take advantage of their expertise to strategize & plan much, much faster as opposed to trying to figure it out on your own.
5 Benefits of Hiring a Business Consultant
In the opening of this post, I listed 3 common objections that business owners might have when they consider hiring a business consultant. Before diving into the benefits of bringing a business consultant on board, I am going to present counterarguments to each of these objections first.
1. It’s too expensive
Let me ask you a question:
If the whole purpose of hiring a business consultant is to help you make more money efficiently in your business, would you consider this as an expense or an investment? In the post, “Bootstrap Trap: The Hidden Cost of Being Too Thrifty in Your Business,” (link) I explain this concept in detail.
By choosing a consultant who is a good fit, it’s an investment that rewards you handsomely overtime while keeping time loss to a minimum.
2. Your business is not big enough in size to hire a consultant
Business consulting is no longer just available for big brands and corporations. There are many firms that specialize in micro, small and midsize enterprises. You may be able to find one locally through the chamber of commerce, meetup groups or online.
Most of them offer a phone consultation where you can find out how they help businesses. It wouldn’t hurt to learn about them with no obligations.
3. You feel you need help in other areas in your business
This one is not always clear cut, so I want to use some examples to show you when this statement is appropriate & when it’s just a misconception. If you don’t have the following key players in place, you do want to prioritize hiring these professionals:
- Insurance agent
On the other hand, if you have these partners in place, but you feel like you need to hire, say, a Facebook ad specialist or AdWords specialist because sales are lagging, then that may not be the most optimal decision. Instead, you may want to take a step back to truly assess what is causing slow sales before jumping in to hire such a specialist.
Now, lets go over 5 key benefits of hiring a business consultant. Let’s say that your business is going through one or more of the 3 P’s listed above, “Let me try this on my own for a bit” might end up being the costliest lesson you will learn simply because it will take longer.
Very capable business consultants will provide:
1. Unbiased views
2. Results-driven recommendations & plans
3. Built-in Accountability
4. Speed you need to fast-track the process
5. Insights & case studies from other industries and/or your industry
Most of all, your consultant will take subtle nuance of your business into consideration, such as culture, vision, and team dynamics, which outsiders might not pick up while conducting an assessment. These insights can be immensely important if you are looking to make serious changes in your business.
On the other hand, you could "explain" what you think the problem or challenge is in your business to someone like a mentor, peer or coach, but she can only make suggestions to the best of her knowledge, which may be skewed. This is not because she is not qualified. Rather, this is because she will not set a foot in your business. Consultants would.
This leads perfectly to the next section of the post.
As I mentioned earlier in this post, I want this to be comprehensive to you when you consider whether you need a consultant, right? The best way to showcase this would be to put business consultants against various business partners that you should have in place, such as business coach, accountant, and lawyer, and see how they measure up.
Business Coach vs. Business Consultant
Although there are many coaches and consultants who share the same responsibilities, creating a gray area when it comes to distinguishing the two, this description will help you clarify the fundamental difference.
"What's on your mind?"
"What's holding you back?"
"I'll show you how I did it."
"I'll guide you through so that you can find answers."
"Show me what you got."
"Let me speak to everyone involved, i.e. employees, vendors, etc."
"I've helped many businesses like yours."
"The truth is in the data.”
The biggest difference would be that consultants would analyze your business by doing the legwork themselves, and they will come up with their own assessment based on the system they use to make appropriate recommendations and plans. For example, I would go into a business and use the framework I designed to assess what can be done to make massive improvements. (link)
On the other hand, business coaches often take the position of being a guide to you by offering insightful questions that make you think and stories about how they built their business. For example, if you are running a therapy practice, you may seek a business coach who has built a therapy practice in multiple physical locations. You want to find out how he or she did it so that you can incorporate some of the strategies they used in your own business.
See the difference?
This is not about which one is better than the other. This is about understanding the difference so that you know what type of help you need to make the necessary changes.
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Accountant vs. Business Consultant
You might be wondering why not just ask your accountant for advisory services. You may, if your focus is only about tax planning. Now, some of you may have an accountant who has been with you every step of the way since you started your business. That would be an exception.
Normally, though, the job of accountants is to help you come up with a solid tax plan (external reporting). The job of consultants would be to conduct an assessment on the current revenue generation strategy and come up with forward-looking forecasting (internal reporting).
You can think of it as this:
External reporting (accountant) vs. Internal assessment (consultants)
Another thing to note is that accountants, by trade, will always take a conservative view when it comes to business expansion, the use of working capital, hiring, etc. While it is crucial not to take random risks, conservative views can hold back your business growth.
If you have a bookkeeper or a junior finance person, they will tell you “what happened.” Consultants will tell you “what needs to happen.” Then, the accountant would prepare external reporting (tax returns). If you have a CFO in place, consultants would work with him or her to create a plan for your business.
With this, I bet you now have a much better idea of how they can function effectively to create a good ecosystem in your business. Do you agree?
Finally, note that I am using the term “versus” in this section, but this is not to say these parties are working against each other. It’s actually the total opposite; business consultants are there to work with all of the professionals mentioned here.
Lawyer vs. Business Consultant
Lawyers who specialize in corporate & business law and are also well-versed in your industry would be tremendously helpful when you need legal advice or drafts of new agreements. That’s what lawyers are for. However, they would not replace business consultants because their roles are different.
You can look at it this way:
Legal protection (lawyer) vs. Business decision making (business consultants)
Your lawyer’s job is to protect you and your business legally.
Because of this reason, "What should I do?" really isn't the kind of question you should be asking a lawyer. Yet time and time again, I witness business owners ask this question to their lawyers.
They can present all possible scenarios, but at the end of the day, you are the one making the decision. They will actually tell you exactly this, “That’s a business decision. I’m only presenting the legal implications to say what you are allowed to do legally and what you can’t do. And I can’t tell you what you should do as a business owner.”
On the flip side, consultants will help you explore options so that you can make a sound business decision while also taking legal factors into consideration.
Specialty Consultants vs. General Management Consultants
There are various specialty consultants you can hire to help you with your business. They fall into 2 different categories: Division-Specific Consultants and Business Model Specific Consultants.
Let’s have a look, shall we?
- IT consulting
- Sales training
- Operations consulting
- R&D / Product Design & Development consulting
- Market Research consulting
- HR consulting - firing/hiring/talent acquisition & development, leadership education
Business Model Specific Consultants
- Franchise management consulting
- M&A consulting
- Family business consulting
- Dental practice consulting
- eCommerce consulting
- Agency consulting
The question here is, “Should I go directly to these specialty consultants?”
Here is what I say to this question: Just like seeing your primary care physician, management consultants will take a look at your entire business. But if you are clear on what specific needs you have, you may go straight to specialty consultants for help.
The analogy I use is, "Going to see a knee specialist without going over your vitals & basics first with your primary care." Your problem with the knee may not directly come from...the knee. This particularly applies to multiple 6-figure businesses up to mid-7 figure businesses.
Before hiring a specific consultant, have your entire business assessed by a business/management consultant first so that he or she can help you determine which specialty consultant to hire next.
Last Word – An Alternative to Full-On Consulting Engagements
Even after reading this entire post, you might still be somewhat reluctant about hiring a business consultant. That’s understandable. This is why I have created a program called Business Optimizer 360 that allows the initial assessment to be conducted together with you.
Business Optimizer 360 breaks down your entire business into 5 drivers to pinpoint the areas of stagnation & weakness quickly so that you get to dive in with effective strategies & prep your business for fast growth.
If you want to fast-track the process of turning your business around, this is the best alternative to hiring a consultant for a full-on engagement. To find out more, contact me for a free chat or @maikosakaibiz via Twitter & Instagram.