Business Consultants Compared – What Makes Firms Different?

When inviting a business consulting firm to get to know your business and its weaknesses, it is a delicate dance to find the best corporate qualifications, experience, and ability to navigate the inevitable invisible issues that will come up. It is also important to make sure your own corporate culture and on-going business do not get lost in the process.

In the marketplace of Business Management Consulting or Management Consulting, competitors generally fall into just a few categories:

-Sole proprietor consultants, who are generally niched and geographically based

-Larger consulting firms, who have multi-niched teams and the ability to reach out to other cities or regions

-Small consulting firms, regionally based and team oriented

Sole Proprietors: Personal Touch

Smaller and sole proprietor consultant competitors, like Jannelle Buzzell, Jim Grew, Will Moore, Mannus O’Donnell and others, get to know the client and their needs very personally. They start from exceptional business acumen, and make sure to create buy-in within the company. The client company is trusted to know their core business and its people very, very well. There is often not a pre-conceived corporate formula other than profitability, efficiency, and better managerial controls through feedback. To these folks, it is common to receive a fearful call where a business owner shares that they ‘aren’t even sure what the problem is or where it started’.

Large Consulting Firms: depth and breadth

Larger competitors, like Boly Welch Consulting, CBS Consulting, Georgia S. May, Point B and PeopleFirm, all offer fresh eyes, strong business acumen, and an understanding that all business evolution comes from the people within the firm. To make any consulting project stick, it has to come from within, which starts from leadership. Once leadership has aligned the goals and strategies, the consulting firm assists in rolling out change. This change management happens from setting measurable goals, checking in with ROI, and staying in regular touch with the feedback loop.

Small Consulting Firms: Personal touch and depth

What makes the smaller consultancy different is the unique blend of these styles. With a small firm, you are likely to meet the owner, but not work with them regularly. You will have a small, personal team, but enough distance to call their supervisor if necessary. A small firm has 8-30 employees, and is generally based in a single city office. Conversely, the consulting firm is big enough to have scheduling and launching flexibility more like a larger consultancy. Small consulting firms cannot do everything involved for a larger project, so they are forced to rely on (and train) the employee team. This strategy keeps the consulting team in alignment with owners, in order to organize which work is done by which team. Smaller consulting teams do not take over a floor of your building and set up shop. It is necessary to work along side the employee team constantly in order to on board change at a pace owners and employees can handle.

How Much Do They Cost?

When we compare business to business consulting, price is an unavoidable topic. If you don’t care how much the consulting firm costs, you are not in the market. Clients care, even if they aren’t sure they can afford it (or have plenty of money to afford it). Small firm prices lie in the middle, just as you might expect. Many sole proprietors charge a lower rate, especially if they aren’t busy. However, if they are busy, they simply cannot take the work, or quickly bump up to the rates of larger firms. Larger firms have additional overhead for travel, benched employees and significant benefit packages at all levels. These higher prices are significant and consistent. With a smaller firm, you are unlikely to receive enormous perks as a part of your purchase. They focus on the work done, and building the relationship on the job.

In general terms, a client can expect:

Team Size Typical Hourly Rate

Sole Proprietor 1 $40-$150

Small Firm 2-30 $75-300

Large Firm 30+ $200-750+

These rates are a generalized survey in Portland, OR, based on surveys of a small handful of varying small and medium businesses.

Conclusion

When you are considering outside consulting for your operations, spend some time considering the depth and breadth of the project, the budget you expect, and then consider requesting proposals or conversations from varying firms. Some projects are clearly one size or another, but medium scale projects that can take some time to evolve are a likely fit for a blended small consulting firm. If you go that route, you will save significant money and train your staff along the way.

Can a Business Consultant Make a Difference in Your Company’s Success?

A business consultant has many roles and can help an old company re-new itself and find itself again; help founders start and develop a new venture or project; help to turn around a company fraught with problems; help a company identify new opportunities and markets; or help a company develop a business success plan.

A good business consultant has experience working in and with a broad range of businesses. An experienced business consultant has broad and narrow stroke experience and typically, twenty years or more of accumulated business experience. Having an MBA from a good business school isn’t enough. The consultant must have solid real world experience with many types of companies to be an effective consultant.

So what does a business consultant do? First and foremost, a consultant gets to know and understand your business. As the business owner, you know more about your business than anyone else. For this reason, a good business consultant will take the time to learn from you, your department heads and key employees the ins and outs of your business.

The consultant then goes to work identifying problems and opportunities. Those may be certain problems and opportunities you point out to the consultant, but also a good consultant will have a process to identify problems and opportunities which a business owner has not identified. A consultant brings fresh eyes, fresh experience and an open mind to your business enterprise, providing a completely different perspective than that of someone who has been running the company for some time or someone looking to start a new venture.

A business consultant will then analyze this gathered information in order to provide solid solutions and plans for the future. Often business ownership is so focused on working “in” the business that short term and long term outlooks and strategies are overlooked and neglected. The consultant re-focuses a company’s strategies in order to solve immediate problems, while taking advantage of future opportunities. Steps taken in a good consulting process include: learn about the business; identify problems; identify future opportunities; perform analysis; provide solutions through a concrete plan; listen to feedback and adjust the plan; and implement and track the plan.

The consultant considers all company input to develop a business plan that will be effective. The consultant listens to the opinions of the company’s advisors (accountants, lawyers, bankers and other advisers). The consultant can use Delphi sessions and red teams which contain industry experts and competitive viewpoints. The consultant also listens carefully to the view points of the company’s ownership, founders, board, top management and key employees. A final business plan is agreed upon and signed off on by the company with the consultant helping to implement, track and re-work the plan as necessary over time.

When an entrepreneur is thinking about starting up a new business, a business consultant can apply a start-up analysis to determine if it is a feasible opportunity, which includes: analyze and evaluate the opportunity; develop a business strategy and model; resource audit; acquiring and leveraging needed resources; venture deployment; and getting and distributing value.

When considering an existing business acquisition, a business consultant can employ an business analysis, such as: products and services analysis; management team appraisal; operational analysis; market position; competitive factors; SWOT analysis; analyze financials; valuations; and risk assessment.

A business consultant’s derived value pays for itself. What you pay in fees for a good consultant will pale in comparison to the profitability the consultant’s strategies will create. A business consultant is an investment in the future success of your company.

How to Make Small Business Consulting Profitable

For a beginning, let’s ask ourselves the question: Is small business consulting profitable? The answer would be a resounding “Yes,” from all corners of the world. So, why are you unable to make it work, and in the process help small consulting with your unique experience and approaches?

You are a business consultant, not the direct worker

The most common mix-up faced by small consultants is that rather than remaining as business advisors, they end up as direct service providers. They end up handling the major workload of the business process where they were expected only to provide advice, and the client ends up with a steep bill. In place of mutual satisfaction, you now have mutual dissatisfaction. The results are unwelcome on both sides – but they happen all too often, where in small business consulting, the consultant fails to maintain the position of a consultant.

There are three possible outcomes in such situations – the client pays up and remains upset with you, the client doesn’t pay your bills and you are upset with the client, or both parties reach an unhappy compromise.

After a few such mix-ups, you become convinced that there is no profitability in consulting. But you know, that’s not true. The reality is your approach needs to be transparent and needs to change case by case.

In certain cases, time-schedule, lack of resources on part of the client, or other exigencies may call for you to provide most of the work as a direct service provider. But in such cases, the client needs to understand from the very beginning that the instant situation needs a service provider with your experience, more than it needs power of consulting. The client needs to have a clear idea of the bills that may be chalked up if you were providing direct service, or the client is free to hire another direct service provider, to save the day. Even providing that little advice is sufficient for you to bill as a consultant, because the client was unable to recognize the situation. What you are doing is business consulting, and not creating a fallible situation.

Why small business consulting mix-ups happen with such regularity

The oldest and most traditional businesses in providing consulting have traditionally modeled themselves as consultant-cum-service providers, take for example, law firms, or Accountant firms. Each of these sectors are used to clients coming to them at the last moment or when the situation is precarious for them, and according to the laws of maximizing business opportunities, they have set up systems to provide service alternatives ready at hand. In fact, in many such traditional firms, service delivery starts first, and then it turns to consulting.

However, in the era of information technology, the number of alternatives available even to small one are hundred times more than the time when CPAs or law firms began establishing their business models. Consequently, with the availability of greater choice of service providers, and ability to compare between alternatives, the chances of client dissatisfaction multiply. This is why, in today’s consulting, it is sufficient to point out the necessity of direct service delivery to a client, without embroiling yourself, or pushing your own agenda of direct service.

In a globalized service providing market, you can never outbid the “I’m cheaper than you can ever be” brigade, and don’t even think of that. To make small business consulting profitable, stick to your guns and be a consultant primarily, and act as direct service provider only when the client asks you, and only when you can afford to do so at the client’s rates.