What is Small Business Consulting?
If you've never worked with a Small Business Consulting, "What is Small Business Consulting" is a reasonable question.
Small Business Consultants are Management Consultants or external advisors that primarily work with small business owners to help them improve their businesses. Many business owners hire consultants to provide direction or expertise in areas such as accounting, HR, marketing, IT and other areas. Ideally, this helps the business owner benefit from years of expert experience without having to invest in a full-time resource and lets them reduce business risk. The length of the engagement will depend on the type of work required.
Examples of other areas Small Business Consultants might address include:
- Guiding startup companies to avoid costly mistakes and help get them access to resources they will need to get started successfully.
- Working with growing companies as they need to staff, get access to capital, manage differently and maintain their customers' expectations.
- Partnering with established companies to expand or grow their market share.
Small Business Consultant Specializations
Some business consultants specialize in helping companies work through different phases in their lifecycle, which might look like Startup, Growth, Maturity, Decline, and Exit.
- Those that work in the first two phases - Startup and Growth Consultants are typically tasked with helping the company during its formative years
- Those that work in the decline phase might be Turnaround Specialists, who find ways to bring the dying business back to life.
- The last phase belongs to the Exit Strategists, who help a business owner determine how they want to get out of the business - whether through sale, passing it down to another family member or simply liquidating the assets.
Of course, these aren't the only types of consultants; there are those that focus on brokerage, IT, Operations Improvement, Change Management and any number of areas. Sometimes it takes an Advisor just to determine which consultants to bring in and when.
Hiring a Small Business Consultant
If a company were to hire a Small Business Consultant, you would want to make sure that the company or consultant
- Can meet your needs
- Matches your company's values and beliefs
- Will take the time to understand your business in order to provide you with the appropriate level of service.
You will accomplish the first two by doing your research, looking at a company website, professional profiles, social media, published work and the like. The third is a little bit more challenging but should come across in your meeting with the client. You'll want to hear the consultant seeking to learn about you and your drivers rather than discussing how he or she is the best positioned to meet your company's needs.
Cost of Hiring a Small Business Consultant
Consultants normally charge based on an hourly or a project rate depending on the consultant or the firm. Rates can range from free to over $1,000 per hour, although it appears that most range between $75 per hour to about $300, dependent on their experience, education, area(s) of expertise, values and other considerations. Some firms offer what is known as a blended rate, which means that you would be hiring a team of individuals at different rates. Depending on the work, this tends to be a more efficient model. Consultants normally do not publish their rates
Results of Working with a Small Business Consultant
Results from consulting work do not necessarily present themselves overnight. A consultant might get some "quick wins" - addressing a or some specific issues that are easily fixed. However, the real work that a consultant does may not present itself for months or in some cases, years. A rule of thumb is that you should be able to multiply what you are paying a consultant by 20 to calculate your return on investment. Which means that if you pay a consultant $20,000 over the course of a year, you should expect to receive at least $400,000 in return over time.
Lastly, you'll want to be able to hold the consultant accountable to do what they say they are going to do within the timeframe that they say it is going to be done in at the level of quality that you expect. You are investing funds with the expectation of getting results from them. While there are many factors that consultants face while working with you, inspect what you expect and make sure you are getting what you are paying for. To feel better about your investment, you may wish to do the following:
- Ask for and call the references
- Make sure that the consultant truly understands your goal(s) and has a plan to help you address them
- Make sure that this is a person or a firm that you truly feel you can partner with
- Understand the timeline, payments and have clear expectations
- Make sure there is an agreement to protect your assets and your company