Back in 1886, Arthur D. Little wanted to find a better way to deal with the complex problems confronted by companies. To accomplish this goal, he created a strategy consulting firm which specialized in technical research. This pioneered the concept of what we know today as a business consultant.
A business consultant is a person who provides professional advice or service for a fee. They are also known as business analysts. They work in five major areas: management, operations, HR, IT, and marketing. Consultants help companies by assessing their weaknesses and recommending solutions based on their specialized knowledge and experience. For many companies, it doesn't make sense to hire a full-time person if there's only a short-term need. Business consultants can fill that need in a more cost-effective way than a permanent hire.
Reasons for Hiring a Business Consultant
For some companies, they wonder why they would need the services of a business consultant. They already employ smart people so why can't they solve problems on their own? But there are many valid reasons why it makes sense to hire someone from the outside. Here are some common reasons for hiring a business consultant:
- Lack of expertise - There are times when the skills needed for growth are not available inside the company. Outside expert consultants provide the skills and experience needed to complete a project or solve specific problems.
- Shortage of time - Employees may lack the time needed to complete a particular project or do required research. A business consultant can be a valuable resource for quickly staffing up to get short-term tasks and projects completed.
- Inadequate experience - New technologies and trends emerge quickly and it's difficult for employees to stay current. This creates a shortage of trained employees knowledgable in the latest tools and methodologies. Business consultants can administer training or fill the demand until needed skills are acquired.
- Staffing flexibility - Companies can hire business consultants for short-term projects without the expense of salary and benefits. A consultant's contract ends once the project is completed. There's no need for a company to budget severance pay or other HR obligations.
- Unbiased opinions - When conflicts or problems arise, it's good to get an impartial opinion. Business consultants, being experts on strategies, can add perspective that might be missing with stakeholders get too close to a problem. They can help think things through, navigate internal politics, and offer sensible solutions.
- Cross-pollination of new ideas - Business consultants have experience with different companies and industries. Cross-pollination of these ideas helps businesses think "outside the box" and incorporate new concepts and methodologies.
- Speed and efficiency - Companies can hire a consultant for special projects for which they have direct experience from previous engagements. For example, maybe you need to get a new software solution running inside the company. A consultant who previously worked on the same software can help a company quickly get past the learning curve and provide a cost-effective way of implementing new tools.
- Assessment - When companies encounter a problem which impacts productivity or growth, a business consultant can help uncover data, define the problem, and recommend new approaches through an objective assessment.
- Conflict resolution - An outside consultant can serve as a mediator during situations of conflict. Business consultants are objective outsiders that can provide a neutral moderator for settling disputes in different scenarios.
- Compliance - Businesses need to follow federal, state, and local regulations. A business consultant specializing in compliance issues can help a company stay clear of violations. Regulations can be complex and difficult to implement so hiring an expert can save time, resources, and finances.
Cost of Hiring a Business Consultant
Small business consultants offer many different skillsets. They provide accountancy, bookkeeping, marketing, security, and technology expertise. Upwork's average hourly rate for business consultants ranges from about $25 to $200 an hour for staff level consultants. Management consultants who provide strategic consulting services to the executive team will cost more. These services are generally billed at a monthly rate with contracts running 6 to 12 months.
A Virtual CMO for Your Business?
Companies looking to accelerate growth can take advantage of a Virtual CMO. This executive-level consultant provides strategic marketing advice and implementation services to help companies build and execute marketing plans.
When Should a Company Hire a Consultant?
Here are some questions to ask to understand if your company needs a business consultant:
How serious are you about the business? Are you willing to keep the business going in spite of difficulties? Do you want to make a change in the companies growth? A business consultant can help fill the gaps in your business strategy and help your business grow to the next level.
Which is more precious to you: time or money? Entrepreneurs often struggle between time and money. Some may have lots of time but very little money. Other businesses may have significant funds but lack time to do business planning. Keep in mind that business consultants are in high demand and charge accordingly. If your time is more precious than your money, having them can give you time to focus on other essential aspects of your business.
Have you ever started a business before? A newly started business should consider hiring a business consultant, especially if the founder doesn't have previous experience starting a business. They can help guide setting up the company correctly with legal, compliance, market research, and financial planning.
Do you need bank financing or investment capital? You only get one shot to get financing from a bank or investors. You need to present a plan based on market research and realistic business projections. A business consultant can increase your chances of getting funded. Find consultants who are experts at making business plans.
What is the market potential for your business idea? There are many great ideas but they often fail because of poor execution. The risk of not getting things right from the beginning far outweighs the cost of hiring a consultant. Business consultants have extensive knowledge of trends and strategies. You want to start off going in the right direction.
Do you feel comfortable working with this person/group? Arrangement with a business consultant should be collaborative. It is a two-way street and requires trust. You need to have some give and take. You should feel comfortable asking questions while the consultant should be willing to answer them.
How many people will work on your business plan? If your answer is "one," you may not get the highest quality of work. No single individual excels at everything. Two heads are better than one. A consultant can help steer your business plans in the right direction.
How can you save money and still ensure high quality? Figure out what you know and what you're best at in your company, then hire a business consultant to fill the gaps. You can focus on what you do best while saving time and money. You'll end up with a stronger strategy than if you did everything yourself.
In hiring a business consultant, you need to weigh the costs and benefits. Only you know the particular needs of your company, but there's a strong chance that a business consultant can help turn those needs into profits!
Need help beyond marketing? A specialized finance business consultant can help your company craft a business plan for growth and profitability.