A business consultant, a jack of many trades I would say is an expert who assists entrepreneurs in their respective fields. The learn from the process of education, and past experiences as a professional. Furthermore, there is management consulting that business consultants provide to aid businesses and organizations in improving their performance. These are specialists who analyze companies while they support the business improving its outcomes.
Here is more about who business consultants are and how one may be able to help.
Why would someone hire a business consultant?
Man always has it rough when running a small or midsize business due to the numerous tasks it takes to succeed. From accounting to human resources to technical support, it’s almost impossible to be accomplished by the business owner. But with how easy it is to hire consultants, they don’t have to figure out everything independently. We’ll look at what a business consultant does and help them find a way to keep their thriving business going against all odds.
Business owners should consider using business consultants in the event they need help or perspective on the path they have chosen, or as a catalyst for change inside their companies.
There are a number of reasons why business owners might want to consider hiring consultants. Consultants provide a variety of services that include the following:
- Expertise in a certain market
Identifying problems
This subsection includes organizations’ spiritual
Initiating change
Providing objectivity
Training and development
Doing the “dirty work,” like laying off staff,
Reviving an organization- Establishing a new company
- Involvement of other people, including lobbyists
What does a business consultant do?
Generally, there are three stages of a business consultant’s process: discovery, evaluation and implementation.
1. Discovery
This means that for every business consultant, part one automatically becomes the discovery phase, where the goal is making an acquaintance with your business. A good business consultant takes time to learn about a company as much as possible from the owner and the employees. They shall do the following things:
- Tour your facilities.
- Meet with the board of directors and employees.
- Analyze your company’s finances.
- Read all company materials.
During the discovery phase, the business consultant will uncover the details of your company mission and current operations.
2. Evaluation
Once the business consultant has developed an in-depth understanding of your company, they enter the evaluation phase, with the goal to identify where change is needed. This phase includes identifying your company’s strengths and weaknesses as well as current and foreseeable problems.
- Examining established problems and identifying new problems: The consultant should study problems that owners and management have already identified. Because of their objectivity, consultants can also pinpoint new or unforeseen issues.
- Finding solutions: A business consultant should strategize solutions to the problems they identify and outline ways to capitalize on opportunities to grow the business, increase profits, and boost efficiency. For example, say your company has a particularly strong sales department but a weak marketing department. This is an opportunity to increase your marketing resources and capitalize on your sales staff.
There are two crucial elements to focus on during this process: communication and feedback.
- Communication: During the evaluation phase, your entire team must maintain clear, open communication with the consultant.
- Feedback: You and your team members should take the business consultant’s advice as constructive criticism. The consultant’s feedback isn’t meant to be personal. While you and your employees are personally close to the business, this lack of wider perspective can hinder positive change and growth; the consultant brings objectivity and a fresh viewpoint. Of course, you should offer your own feedback and opinions to the business consultant, but keep your mind open to new ideas.
3. Implementation
Once your company and the consultant agree on a plan, the consultant should enter the third phase: the restructuring stage, or implementation of the plan. In this phase, the consultant builds on your assets and eliminates liabilities. They also monitor the plan’s progress and adjust it as needed.
Types of business consultants
There are many different types of business consultants working with almost every aspect of business.
Strategy and management consultants
Strategy and management business consulting firms can lend the benefit of their industry expertise so that your business scales up and acquires new opportunities and revenue optimization.
These strategy and management consulting-oriented consultants can help your business:
- Expand into new markets or increase awareness in your current market.
- Reorganize your business model to create a cost-effective strategy.
- Increase your business’s capabilities.
- Purchase a new business endeavor.
- Merge with another Business or otherwise change the structure of your Business.
- Act as Middle Management in Times of Transition.
Operations consultants
Business consultants focusing on operations will develop your day-to-day processes so that things run a lot smoother. These business consultants take stock of your existing business model; they work out how you can create the same quality results for a fraction of the cost and time. This type of consultant also offers guidance in regards to quality control as well as educating one on the way to tweak and improve the production going around so that better results may be produced.
Financial consultants
A financial consultant shows you the broader picture of the economic health of your business. They mainly help with decisions on investment and show you the best path to take in handling the assets and debts of your business. Financial consultants may have specializations such as financial planning and advising your company on taxes, daily expenses, and the best retirement plans.
Human resource’s consultant.
However, the best HR outsourcing firms or independent HR consultants will be of great help in the outsourcing of the human resources functions. Such consultants will have no option but to oversee your day-to-day HR services, such as the recruitment and retention of workers, payroll handling, administrative services, and performance management of your employees.
Marketing consultants
Marketing consultants help businesses to identify their strengths as a brand and then build on those strengths to gain brand awareness and exposure. From a logo to a social media strategy, a marketing consultant can be an absolute goldmine in growing your business.
What about consultant firms?
Although you can use an independent professional, another alternative is to use a specialized firm for your consulting needs. Names like McKinsey & Co. and BCG would be out of the question for a small business, and their fees would be well out of reach, but a small local firm may fit the bill.
First, Google your pain point and location-“Seattle brand strategy firm,” say-and observe what pops up. The search will likely bring up firms you’ve never heard of, but a closer look at their projects and client reviews will help ascertain if they would be a good fit. Also, hiring a local firm means you’ll have a greater likelihood of finding someone you either know or with whom you once crossed paths on their client list.
These are some pros of a consulting firm:
- Extensive resources
- Multiple professionals’ expertise
- A brand already created with hundreds of references
These are some pros of individual consultants:
Affordability Flexibility in scheduling, location. Ability to devote full attention to your case It all depends on your needs and work style preferences in business as to whether you would opt to go with a consulting firm or an individual.
How to choose a business consultant
Choosing a business consultant who fits your business needs can be a daunting experience. Whether you’re looking for someone to help with your high-level strategy needs or a niche, solution-oriented specialist to improve your SEO or product-sourcing processes, it’s essential to know where to begin and take it one step at a time.
1. Find the right business consultant.
The most challenging part for the owner or management is the quest for the right business consultant. The consultant ought to be passionate about doing the job, promoting perfection, and showing attention to organization and detail. It becomes essential to find a consultant with experience in having worked in your industry or sorted problems of the kind your business is experiencing.
- Leverage your existing network. Start by looking within your network to find a business consultant. More often than not, discovering about a good consultant from a colleague, partner, or fellow business owner who was in the same situation proves more worthwhile than generic reviews or general acclamation. So, ask your acquaintances if they knew someone who knew his stuff in the field and could advise you on whatever specific problem you are facing.
- Explore dedicated marketplaces. Seek out dedicated marketplaces to find consultants by topic of expertise, budget, and location. Such popular sites include: Catalant, Graphite, and Business Talent Group; do not be afraid to use social networks like LinkedIn. Many recommendations are usually a good sign of a potential consultant. Search by keywords related to the problem and look closely at the top results.
- Visit freelance sites. If you want to hire a professional in a certain niche, you could look into some of the top freelance platforms including Upwork, Dribble, Fiverr, and Freelancer. Look up past user ratings, activity, and the consultant’s ratings.
2. Vet your potential business consultant.
- Ask questions. If you’re going to have to rely on a personal recommendation, then ask for as many details as possible regarding your colleague’s experience with the consultant: about their process and-most importantly-about, the results from their consulting work. Your colleagues can give a unique insight into the long-term impact of following the consultant’s recommendations rather than their short-term gains.
- Learn about the consultant’s background and qualifications. Also, peruse the consultant’s resume, educational background, and certifications relevant to your industry. This is a good sign if they seem eager to learn new things and keep their skills updated.
- Ask the consultant about their hands-on experience. Hands-on experience is a big deal in the business world. If someone out of college came to you calling themselves a consultant, do they know anything more than you? Consider seeking out consultants that have successfully owned or run small businesses or enterprise organizations or departments.
- Ensure their experience applies to your business. You might believe a former bank CEO will be impressive, but does he understand the ins and outs of taking a cupcakery from startup to small business success? He might-but, but when you’re talking to a restaurateur who has built a life from successfully coaching small eateries on growth, this consultant is more appropriate for your business. Seek consultants with experience in your industry and with businesses like yours in terms of style, size, needs, and goals.”
- Check out their website. You should also vet the consultant through their website and materials. Look for professional images and well-documented information about their services, and thoroughly review contracts and consultancy fees.
- Examine their consulting track record. You don’t just want a consultant with the right experience; you want a consultant who has been successful working with companies like yours. Ask for the portfolio or list of brands they have worked for, and ask for references. Identify a consultant who has grown businesses very similar to yours or helped enterprises surpass your challenges. Contact the companies to establish if they have been satisfied with the services.
3. Decide whether they are the right consultant to do the work.
If these references are outstanding and your potential consultant has proved legitimate and competent, then meet with them face-to-face to ensure they’re the right fit for what you are trying to accomplish. Detail the problems or pain points you face, as well as your expectations, and see if you’re comfortable with their style and their personality. If the consultant fits all your boxes, perhaps now’s the time to move to the next level.
Designing a Business Consultant Agreement/Contract
Once you’ve found a great consultant, done the due diligence and vetting, and obtained the proper verifiable references that answer your questions, clearly articulated the pain points and what you expect it in return, and you are satisfied with the style and personality fit, now is the time to confirm that arrangement.
The consultant agreements or contracts are usually drawn for a period of Three to six months and renewable after that. Agreements contain such details as the names of the responsible parties; consulting paras, fee structures, payment schedules, deliverables, and deadlines. This way, with a defined and confirmed deadline, your consultant has enough time to deliver the promised results while prompting progress on time.
How do you measure a business consultant’s success?
Unlike an employee performance review, there’s no generally accepted, objective methodology for measuring consulting performance, but it is reasonable to set goals and measure deliverables. To do so, you could follow a process similar to Peter Drucker’s management by objectives and SMART principles for the management of employees.
- Set measurable objectives: At the very start of your work, you should ensure that you and your consultant set clear goals that are as specific, measurable, achievable, relevant, and time-oriented as possible.
- Establish the tangible results you want: Establish your desired financial and measurable outcomes, such as increased revenue or reduced employee turnover—annual savings.
- Identify intangible results you want: Ensure the consultant is aware of intangible results, such as improved morale, robust implementation of business values, and increased customer satisfaction.
- Measure progress at each phase It means measuring your objectives’ progress at every phase of your collaboration.
- Assess KPIs: Evaluate the set key performance indicators at the end of your consultant’s work.
- Use a consultant questionnaire: Essentially, a consultant can offer a comprehensive questionnaire spanning the entire business ecosystem and desired areas for change at the project’s outset. Then, at the end, they can answer the same questions. By doing this, you can compare results easily and be more comfortable with some intangibles.
To evaluate the consultant’s performance, it can be helpful to answer the following questions:
- Were the KPIs met and delivered on time?
- Was the collaboration process smooth, and was the consultant responsive and helpful throughout?
- Did they provide you with the necessary skills and resources to improve your business?
- What are the short-term, midterm and long-term impacts of their work?
- What was your ROI on the consulting services?
Business consultant FAQS
How much do business consultants charge?
Because the median annual pay for a management consultant was $87,660, or $42.14 per hour, in 2020, according to the Bureau of Labor Statistics, consulting fees tend to be much higher than that but that is not what consulting fees are for any business.
Not all consultants charge hourly. In fact, according to a consultant fee study by Consulting Success, the following are some common fee structures and the percentage of consultants who prefer them:
- Per project – 31%
- Hourly – 24%
- Monthly retainer – 15%
- Daily rate – 13%
- Value- and ROI-based – 17%
However, according to the study, 40.5% of consultants charge up to $5,000 per project – with some charging more than 100,000. The size, scope, and length of the project will determine the cost.
Business consultants are a significant cost, but their input and planning can help you grow business and maximize profits while nipping problems in the bud and highlighting opportunities to help you succeed in the future.
How do you measure the ROI of a business consultant?
You calculate ROI by looking at specific vital metrics that will tell you whether the consultant was worth it or not. Most businesses will compare their net profits in the quarter before they hired the business consultant with their net profits in the next quarter or two after the recommendations from the consultant were implemented, You must first of all deduct the fee you paid for the consultancy before getting your ROI.
Another aspect is the consideration of ROI. If you are to hire a business consultant, it is expected that when you invest in a business consultant at a cost of over $5000, by the time the project is complete, you will have an established ROI. An established consulting firm should be able to show former ROI data for interested customers to see.
According to The Predictive Index, 27% of businesses that responded to a survey did not hire a consultant because that consultant could not prove the most common reason businesses do not engage in consultancy services. It’s up to the consultant to use big data to prove past ROI.
How do you determine a budget for a business consultant?
A consultant is not cheap. Thus, with the variable in fees, it’s essential to set a realistic and reasonable budget. You could base it on a fixed percentage of your total sales. To illustrate, when your monthly sales reach $10,000, you do not want to pay the consultant $5,000 a month, equal to 50% of your income. The 5% fee of 100,000 in revenue makes more sense.
If you specify clear phases of your consulting project, you can reduce the cost and the risk by checking on how it’s going after each phase. That is, in case you’re using the consultant’s art in marketing, bringing a product line variation to market, review the consultant’s efforts after the first rollout, and then probably replicate this same approach for the remainder of your product line with services not being needed.
Many of them will even be able to help you identify your project’s scope and cost for free as a part of an exploratory consultation that you can use as a way of getting your feet wet and seeing whether a consultant is even a good fit for your business.
Should you employ a virtual consultant?
when you will define the planning of consulting project needs and KPIs, it should be clarified whether the work needs to be performed on your site or can be performed virtually. Choosing a virtual consultant will widen the talent pool because your local market wouldn’t limit you. It would reduce the cost for the consultant as well and will increase flexibility.
On the other hand, about the specific market specialists, particularly those within the digital sphere, once properly defined, can work in mutually beneficial remote arrangements. Given the type of consultancy work, which may require hands-on rummaging through your staff and, hence would be most suitable for face-to-face collaboration.
What are the common mistakes to avoid when working with a business consultant?
Several common mistakes can prevent you from achieving success in your work with a business consultant.
- Automatically hiring the most established or accoladed consultant: While a proven track record, glowing reviews, and certifications are vital when picking a consultant, it’s even more critical to ensure that experience pertains to your industry and business case. Ensure your chosen consultant is not only up to speed on – but, ideally, ahead of – relevant trends, technology, and methods.
- Vendor a jack-of-all-trades: One who Consultant or consultant firm that claims to “know it all” may lack niche experience or skills that you require. Find a consultant with focused expertise who has vast experience and by which he can help you with specific needs.
- Treatment of consultant as employee: It’s very imperative to treat your consultants like equals. You should respect the style of working and the existing workload and schedule.
- They may not be at your beck and call or dive into a task outside the scope of work. They will not know the intricacies of every working aspect of your company, and they may not decide to work extra hours. They are there to consult with you in improving your business operations and are not meant to be an additional team member. It is this outsider’s point of view that makes consultants so valuable.
- Overlooking the action plan: It is up to the consultant to map out and lay the groundwork for your success, but you and your team will be the change agents and drive the recommendations forward. If you are not prepared to “walk the walk” when the consulting project is complete, you will not realize the value of engaging a business consultant.
- Treating the consultant’s suggestions as absolute truth: While you’re paying for and relying on your consultant’s expertise, it’s essential to reflect on your own experience, apply common sense and treat their recommendations as helpful directions rather than a hard set of rules. Don’t be afraid to question their suggestions. You know the ins and outs of your business best and will be the one dealing with the long-term implications of the consultant’s recommendations.
How do you know when to hire a business consultant?
Hiring a business consultant isn’t a one-size-fits-all solution. You’ll need to evaluate your company in these key areas:
- Human resources
- Business strategy
- Operations
- Compliance and regulations
- Financial planning
If your business is struggling in any of these areas, it is a good idea to seek out a business consultant who’s a verified expert. Watching for any declines in profits, which you can’t explain, could be another sign that it’s time to hire a business consultant who will identify potential reasons for the decrease and make suggestions on ways to remedy them.
