Over 627,000 new businesses open each year in the US alone. Many of these businesses expand into large organizations, some with thousands of team members and millions in revenue.
How does a small business become a major success without succumbing to obstacles or efficiency problems?
One major reason why many business owners can sustain a major business in the long term is that they don’t do it alone.
Enter the business consultant: a professional expert who offers advice to business owners and solves major organizational problems.
Hiring a businesses consultant does more than helping a business stay afloat – they help them thrive by quickly and efficiently meeting the company’s goals.
The following is a guide explaining everything that business owners need to know about business consulting and why they’re necessary figures for a growing organization.
What is Business Consulting?
A business consultant is a professional who offers expert advice in a particular industry such as digital transformation, operations, human resources, or marketing. They can offer advice that covers multiple fields or serve clients in a niche or expert field.
Clients hire consultants because they save time, increase revenue, and maintain resources. Often, a business consultant can solve a problem that has gone unresolved or even unknown by business leaders for years.
The consultant adds value to the company by solving a speck problem or making processes more efficient.
Business consultants can either be internal – someone who operates within an organization – or external – someone who is hired for a temporary basis. External consultants will have multiple clients, while internal consultants will work only within their organization.
The goal of a consultant is to provide a deeper level of understanding on a topic than a business would have access to otherwise, and to only have this service provided as much as needed.
What do Business Consultants Do?
Business consultants have a wide range of services that can apply to almost any business need an executive might have. Though certain consultants might have expertise in certain areas (as explained below), most business consultants can tackle any problem.
Some of the most common services that a business leader would receive from a business consultant include:
- Identifying areas that are working well and ones that aren’t
- Finding specific obstacles that are impeding growth
- Determining which changes need to be made
- Bringing a fresh perspective
- Taking the lead on new programs
- Firing and hiring staff
- Analyzing productivity
- Looking over a company’s budget
- Suggesting changes to prices
- Finding allies or partners
- Creating an investment or financial plan
- Training staff
Regardless of whether or not a consultant takes a more specific or general approach, they can be expected to have strong analytical, social, and time-management skills.
There may be some confusion about the difference between a business consultant and a business coach. The answer lies in the types of tasks that they perform and how they perform them.
A business coach is a more broad service while consulting typically can be much more narrow.
Coaching centers itself around mindset.
For example, a coach could help a business owner identify limiting beliefs and behaviors they have and help them to overcome them for better performance. Coaches will take a more preventative approach to problems that could be affecting a business leader.
Meanwhile, a consultant focuses on finding solutions.
Consultants will analyze and modify existing business operations to make necessary changes. They won’t focus on a business leaders’ mindset as much as they’ll see if performance can become more efficient in certain areas.
Types of Business Consultants
While many business consultants have experience in a variety of areas, some specialize in certain industries. They’ll often serve specific clientele and be more selective about the problems they solve.
Businesses often don’t need to go for a select type of business consultant. Most of the time, any experienced consultant can provide valuable advice.
However, a business with repeated problems in one area or looking to expand a certain part of their business may want to look for a certain type of business consultant.
Business coaches with a specialization in operations will cater their services toward helping a business owner run the day-to-day functions of your business. They’ll analyze the current operations and figure out how to improve the business model.
For example, an operations coach might help apply the 80/20 rule to operations, which states that the top 20% of inputs are responsible for 80% of output.
They’ll help a business leader discover just what that 20% of inputs is and figure out how to center all operations on those actions.
Consultants who focus on operations will also focus on the quality of a product. How can a business produce the same item at a fraction of the cost and the time? Together the coach and business exec will tweak the process for better results.
First, the business owner has established their target market. The strategy consultant will then help them expand into that market by creating more brand awareness.
They’ll refresh the business model so that it’s ready to take on new capabilities. They’ll also help the business leader decide the best course of action for growth.
Every business needs a cost-effective strategy before expansion. The consultant will apply their expertise to creating this gameplay.
If a business is already in the process of growing or transitioning, the strategy consultant can act as a neutral middle-man to keep everyone in check.
Tempers may be running high during big changes. Having an extra set of hands could mean the difference between a calm transition and a chaotic one.
Financial consultants will do exactly what the name suggests: they’ll take a deep look into the depths of a company’s finances.
This isn’t to say that a more general consultant can’t give a business an overview of their financial health.
It’s merely that ones with specific financial expertise may be more useful to a business if it’s experiencing repeated problems with its finances.
Financial consultants help with decisions ranging from day-to-day financial choices to long-term investments. They can also help a business owner determine how to handle their assets and debts.
Some financial consultants offer even more specific services. This includes going through daily expenses or advising a business leader on their taxes.
HR consultant firms exist to make a team a more cohesive unit. Businesses often hire HR consultants to assist their HR departments or to fill in tasks of an HR department instead of hiring a team.
These consultants are responsible for many tasks that HR managers would take care of, such as recruiting and communicating with new employees, managing payroll, keeping track of performance, and running administrative functions.
A marketing consultant will help a business find its branding strengths. Together, the consultant and business leader will expand on these advantages. This will boost brand awareness and exposure.
Marketing consultants often offer similar services to public relations consultants. This could include a social media overhaul to a complete digital marketing strategy.
Integrated Consulting Services
Many consultants offer the specific services above. Many other consultants like myself offer services that combine elements from them.
For example, we offer business consulting and management consulting. Both of these combine elements from all of the consultant niches listed above.
As a management consultant, I offer expert services to help management teams improve their performance within their organization.
Regardless of the problem, I analyze the company and solve problems with recommended strategies.
- Our management consulting services include:
- Business strategy research and evaluation
- Strategy decision-making support
- Scaling and growth research and implementation
- Scoping potential bottlenecks and theoretical solutions
- Providing workshops and training to implement solutions
Instead of hiring a financial consultant or an operations consultant, hiring a more general management consultant will look at both of those areas.
What to Look for in a Business Consultant
The relationship between a consultant and their client is the key to making successful changes in a business.
If they can work well together and listen to each other’s opinions, they will be able to build off one another’s ideas to achieve unprecedented business transformations.
To find this relationship, there are several factors that a business owner should look for in a consultant, from their knowledge and training to how their personalities fit.
Knowledge, Training, and Experience
A great business consultant doesn’t need to have extensive academic training. Practical experience is much more important – and they need to have this in spades.
Some academic knowledge is helpful, though. A degree or other qualification in a business-related field shows that the consultant has a foundation of knowledge that guides their decision-making.
It’s also a good sign if they’ve taken the time to complete continued learning courses or other self-improvement initiatives.
When it comes to experience, the more a consultant has, the better they’ll be able to help a business. If they’ve worked with many other firms that are similar to a business owner’s, they’ll already know how to create solutions that work for those problems.
Business owners can determine how knowledgeable a consultant is by looking at a CV, browsing the consultant’s website, or even asking the consultant a few direct questions about past work experience.
Assessing a consultant’s experience can be done by looking at testimonials and references. Prior clients will be honest about their experience with the client and will be an accurate source of information.
The consultant will not be offended that you want to know more about their experience and knowledge – a great consultant will be happy to discuss their background.
Trust is a crucial factor in any relationship. It’s especially important for a business relationship when a business owner’s livelihood is at stake. Business owners need to have complete trust in their consultant and feel as though the consultant cares about their business.
People at high trust companies reported 50% higher productivity and 76% more engagement. The same logic goes for the relationship between a business owner and a consultant.
The more trust between the two, the more open each will be to one another’s ideas and the more motivated they will be to better the company.
Business owners will be sharing private details about a business. As such, they need to be certain that the consultant will give advice that stems from a place of caring.
A great consultant will always be honest, even if it’s what the business owner doesn’t want to hear. They’ll give recommendations based on what will be best for the business, even if it costs the consultant business down the road.
The best way to determine someone’s trustworthiness is to speak with them multiple times before deciding on a relationship.
Before agreeing to anything, a business leader should have no doubts that the consultant has integrity. When in doubt, take time to consider the decision and even interview other candidates to compare.
Niche or Industry Focus
Many consultants have expertise in numerous fields They’ll be open to a broad range of clients. Many, however, will only work with firms of a certain size or specialize in a particular field.
Business owners should research a consultant before working with them. This will ensure the consultant has had experience with businesses like theirs. The consultant also needs to be open to working with that business.
In some cases, a consultant may turn down a certain business. They may not wish to work with that kind of organization anymore.
Furthermore, business owners should know that it’s not really necessary for a consultant to have specific experience in their field to be helpful. Many consultants still provide invaluable advice.
A consultant who serves a particular niche is usually the most helpful if an organization is experiencing a repeat problem in a particular area. For instance, a business with constant employee turnover may need an HR consultant.
A business consultant’s personality should also be taken into account. A consultant needs to be someone with whom the business owner is completely comfortable. Otherwise, contact throughout the relationship will be difficult.
Everyone has a different personality style. The consultant and business leader should be open about how they communicate, solve problems, and work with others. This will help form a relationship on a solid foundation.
For example, a consultant may be very blunt, but their client may prefer kinder delivery. The two need to be open about these personality traits.
The business leader should feel positive about all suggestions made by the consultant. This way, they’ll be motivated to implement them.
Personality traits to look for in a consultant will depend on the client. Some business owners may want humor, while others will look for a harsh approach.
The one personality trait that every consultant should have, though, is empathy. The best business consultant will understand that a business means far more to an owner than its financial success. They have their emotional stakes in the firm, too.
Accordingly, a consultant will look to understand the emotions that drive a business owner and build a relationship that acknowledges those feelings.
They’ll deliver positive and negative feedback with empathy, which will make the client view the feedback as more effective.
A good consultant is one who can clearly articulate ideas to their clients. They’re able to condense all of their research into an actionable game plan that business leaders can follow. They’ll make sure to deliver plans both orally during meetings and in written memos.
Consultants will deliver the best advice after they listen to and understand your needs. This may sound simple in practice, but only a great consultant will be able to absorb what you say (and what you don’t say) and transform it into a plan that will benefit the business.
To do this, the consultant will learn to ask the right questions at the right time, which will give insight into a business owner’s thinking process and decision-making style.
A great consultant will also need to recognize which response from them is necessary at each moment. Sometimes, a client will need a concrete plan delivered as soon as possible. Other times, they will just want a sounding board for a new idea.
The best consultants will recognize when they need to act as a consultant, a mentor, or even just another pair of ears.
If a consultant is speaking to a client with lots of buzzes and business-speak, this often isn’t a good sign. A talented consultant will make their language and advice accessible for the listener – one who tries to impress is likely hiding their own flaws.
Consultants should make the life of a business owner less stressful. If the cost of hiring that consultant is far out of a business’s price range, even the best consultant won’t feel like a solution.
Business leaders should consider what a consultant charges and other practicalities before hiring them. For instance, different consultants may charge in different ways. Their fees can be by the hour, by project, or on a retainer basis.
Some consultants even work on a part-fee, part-bonus basis. They’ll charge you a fee upfront but will only charge a bonus depending on the success of their efforts.
A consultant should also provide a contract that specifically outlines all cost expectations and what services will be provided based on the costs. Will the contact be open 24/7? Will they work during a time that is convenient for the business owner?
Return on Investment
The best consultants are typically the most successful in two cases: solving critical problems that are losing the company money and finding opportunities by optimizing workflow efficiency.
Say a business leader hires a consultant to resolve a small error that costs $100 a month. If they spend 5 hours fixing it at $200 an hour, it will be almost a year before the business sees any gains.
$1000 spent on a consultant, in this case, would seem almost pointless.
But say a consultant is hired to fix a process that causes 40 workers to waste 4 hours a week at $40 an hour. The consultant takes 40 hours to fix it at $200 an hour, which will cost a total of $8000. That’s $6400 a week the business owner will save or the equivalent of $332800 a year.
In this case, the $8000 spent on the consultant would be just a drop in the water compared to the total savings.
Business owners should always determine what problems they’re looking to fix and what the calculated ROI will be for solving these problems. Sometimes, a consultant may not be the right answer. In other cases, a consultant is 100% necessary.
9 Benefits of Having a Business Consultant
Business consultants do everyone from providing insight into new markets to making company operations run more smoothly.
But they also can provide numerous other benefits that many business owners may not have considered, such as stronger team culture, an additional layer of accountability for business owners, and better goal-setting mechanisms.
1. Save on Costs
Many business leaders have initial concerns about hiring a business consultant because of the cost. Consultants cost anywhere from $50 to $300 an hour, a number that may deter many executives.
But a consultant will end up saving businesses money in the long run for several reasons.
First, a consultant is an independent entity, rather than an employee. Business leaders will only be paying for the consultant when they actually receive services, rather than paying for a salary. They also won’t have to cover vacation days, retirement packages, or time off.
Second, an effective consultant will give executives an ROI on their investment. Their business operations and decisions will be more effective, so their business will gain value.
2. Set Better Goals
There’s a reason why management consulting is a $250 billion industry – it works. One reason for this is that business leaders set better goals with the help of a business consultant.
Goal-setting alone can be difficult – how is it possible to determine what’s in the realm of possibility? How long of a time frame is reasonable?
Business consultants will have set goals with numerous previous clients and will have a good understanding of the time and resources it takes to accomplish specific goals.
They’ll then use this expertise to set goals with a business leader that are measurable, attainable, and relevant to their business.
3. Additional Accountability
Sharing a goal with someone higher-up or more successful than oneself will keep that person motivated.
Even more difficult than setting goals, though, is staying on track with them. The first week or two always begins smoothly, but it gets difficult to stay on task later.
Having a business coach is like having an additional layer of accountability during a time of transition or change in a business.
While it may be easy for a business leader to tell themselves that they’ll save designing that important strategy or re-working that project for later, a business consultant will ask them at their upcoming session if they’ve made any progress.
If the business leader hasn’t done what they were expected to, the consultant won’t be able to move forward.
And being accountable to a business consultant is even more effective than being acceptable to a lower-level team member or a peer.
Research shows that sharing goals with someone who is at a higher ranking or who has more expertise will keep that individual more motivated.
4. Focus on Specialization
It’s common to take on more responsibilities as a business grows so that everything can get accomplished. But it’s actually better for the company if business leaders keep their focus on their area of specialization.
Specialization has long been considered the best business tool to have.
Mastery will reduce the risk of making mistakes so businesses provide more value in both time and dollars.
A specialist will be able to complete tasks more quickly and more effectively since they won’t be switching from one to another. And they’ll likely experience less stress by getting to focus on just one area.
Having a business coach will allow a business leader to recenter their focus on the tasks that are their forte. Additional management, operational, or financial tasks can be assigned to the coach as the business exec stays on track with their tasks.
5. Fill in Knowledge Gaps
Every business owner will have their strengths and weaknesses. It’s natural to be an expert in certain areas of running a business and a novice in others.
Hiring a business consultant will let the business owner play to their strengths. They won’t make detrimental mistakes due to a lack of experience or knowledge. The business consultant will fill in these gaps.
Companies often have a variety of projects or change initiatives they wish to accomplish. Many of these will require different areas of experience and knowledge. Having an outside consultant gives them the flexibility to start these programs confidently without committing to a full-time hire.
In many cases, company leaders may take on more than they’re capable of during a business transformation.
The result is decision fatigue: difficulty in making a good decision after a long session of decision making. The more decisions that the business owner has to make the worse these decisions will become.
A business consultant will use their knowledge to make decisions that are relevant to their area of expertise. They’ll then leave the other decisions to the business owner. Decisions will therefore be made by the appropriate authoritative source.
6. Create a Stronger Team Culture
Culture is an important part of the work experience for employees and managers alike.
35% of US workers said they would turn now a perfect job match if the corporate culture wasn’t to their liking. 91% of US managers said a candidate’s fit with a company’s organizational culture is more important than their skills and experience.
But while the majority of managers say that company culture is important, businesses often fall short. Even with resources dedicated to improving company culture, business leaders difficulty relating to their employees and implementing effective changes.
Business consultants will come in as an unknown. This will give them a greater ability to connect with employees than an established leader of a business.
For example, they can create a feedback system or experiment with ways to observe employee behaviors naturally. They could also provide resources for team members to present their ideas about what would make a better team culture.
7. Objective Solutions
Business leaders and top employees may have a hard time making an objective decision about how a change should be made within the company. Independent consultants can provide a neutral perspective on these business challenges.
Since they’re not members of the company, they can see things that employees cannot.
What’s more, they’ll tell a business owner what to do without fear that their job may be affected. Whereas an employee within the company may be afraid to speak up, the consultant knows it’s their job to be as honest as possible.
A consultant’s objectivity is especially important in family-run businesses or organizations in which the relationships between team members are stronger than the typical workplace dynamics.
A neutral presence may be the catalyst for team members to open up and have a real discussion about the business.
8. Take a Fresh Look
Everyone’s brain is full of cognitive biases.
Whether it’s the conservatism bias – the tendency to revise one belief even when presented with new evidence – or salience bias – the tendency to focus on items or ideas that are more emotionally striking – every business leader is likely blind to at least a few areas of their business that need changing.
A business consultant will take a look at a business with fresh eyes, pointing out what’s running smoothly and what isn’t. A change that seems obvious to them may have gone unnoticed by the business leader for years.
A business consultant can also be blunt with a business executive as they see fit. If old ways of thinking are impeding a business, they’ll express that.
9. Better Form of Trial & Error
Business owners encountering an issue for the first time may have several options for how to solve it. But they won’t know what is effective until they’ve tried different processes.
Meanwhile, many consultants will have worked long enough to know the best practices of every industry. Their experience will help them create solutions that will actually work for the client.
They’ll save their clients time by focusing on the quality of a solution. They’ll be saved from trying different things that don’t work out. Trial and error will be reduced to just one or two different strategies rather than numerous methods that may not be effective at all.
Tips for Working With a Business Consultant
Business consultants can work wonders for businesses. But they can only be effective if the business owner does their part.
Working with a business consultant requires honesty, the ability to take feedback. It also calls for open communication and responsibility.
Be Honest About Weaknesses
Putting on a brave face in front of employees and competition does have its place in business. It ends up being a hindrance when working with a consultant.
Consultants need complete transparency to be effective. If they don’t know the extent to which a problem is going on, they won’t be able to make the right recommendations.
Business leaders need to remember that a consultant has seen everything before. They’ve worked with companies that are failing and need a major transformation. They’ve also worked with growing organizations needing to scale quickly.
Consultants will not be shocked or deterred by any situation. If anything, they’ll be more impressed with honesty.
Take Constructive Criticism Graciously
Over the course of the partnership, the consultant will likely tell a business owner numerous things that they don’t want to hear.
As a business owner or executive, they must take the business consultant’s advice positively. They shouldn’t interpret it as an insult.
The consultant is not trying to downplay anyone’s hard efforts or say anyone is failing. Rather, they are bringing their objectivity and fresh viewpoint to help a business become more successful.
Because a business executive is so close to the business, any constructive criticism may feel like a personal attack.
In these situations, they should remind themselves that both they and the consultant have the business’s best interests in mind.
Once they’re at a point where they can accept criticism without taking it personally, the business can see real changes. They’ll be ready to implement the consultant’s suggested changes swiftly and effectively.
Business consultants and business leaders often handle the same problems.
However, the purpose of hiring a business consulting is to hand off those responsibilities. Almost always, the consultant has more expertise.
To avoid stepping on each other’s toes, a business leader and consultant should set aside a time to meet. During this meeting, they should outline specific responsibilities.
The business leader needs to understand their key role in the process. Often, it’s to go about their normal responsibilities and make changes as necessary.
Business leaders don’t need to follow every recommendation made by the consultant. But they should recognize that these recommendations come from a place of greater expertise than their own. Often, they’re the best choice.
Establish The Length of the Relationship
A business leader may hire a coach for indefinite feedback. But they will likely hire a business consultant to solve a problem over a given period.
During initial meetings, they should bring up their expectations about the time frame of the relationship.
By doing this, both the business leader and the consultant understand what deadlines they have to work with. They can also determine what results are reasonable given the set amount of time.
If they have unrealistic hopes for what can be accomplished, the consultant will tell the business leader. The plan can then be adjusted.
Creating this time frame will also give an executive more peace of mind later down the road went they give the consultant more freedom.
When they know roughly what to expect at each stage, they can take a step back from the process and focus on their tasks instead.
Be Committed to Change
Even with the most intelligent solutions, a business consultant won’t be effective if the business leader doesn’t implement the recommendations.
Before starting to work with a consultant, business leaders should ask themselves if they are ready to follow the advice of the business consultant.
Are they prepared to make a company-wide transformation if necessary? What if the constant recommends letting go of a significant number of employees?
Without a commitment to change, a business leader may have difficulty benefiting from a business consulting company.
They need to mentally prepare themselves for the tough decisions and strategic overhauls that consulting often brings.
Getting Started With a Business Consultant
Hiring a business constantly is the next step for any company looking to expand.
From solving problems as they arise to finding growth opportunities, business consulting services will give business owners the insight necessary to move forward.
Learn more about solving problems within your organization by signing up for an appointment. Fill out our contact form and we’ll be in touch.