What does a Management Consultant or Business Advisor actually do?
There is sometimes great mystery around the question – what does a management consultant or business advisor actually do? This is particularly important to know when you are considering engaging one for your small or medium business. An even bigger question is “what value is delivered to a business owner who engages with a management consultant or business advisor?” Let us explore the answers here.
A typical management consultant or business advisor is a business person with practical experience in managing a business effectively, and implementing best business practices learned while honing his craft. Ideally, he is not simply an academic who puts concepts to the test in the real world but instead, he is someone who has worked in and around a wide variety of businesses, and often specific industries, where he has particular expertise. This, most often, is in one or more four core areas – strategy, people, process and technology.
In bigger businesses, management consultants often form part of a core team on internal projects where some skills are missing on the project team or where there is insufficient capacity wihin the existing team to deliver the project within a desired timeframe. They may even run the project as project leaders or program managers.
In smaller businesses, management consultants and business advisors frequently serve as an extra arm of management for client companies and frequently take on the role of trusted advisor to the CEO or senior management team. They bring new ideas as well as tried and tested concepts, frameworks and benchmarks to the business and act as a sounding board for executives of the business.
Why would I engage one?
Most small and medium businesses engage a management consultant or business advisor in the following circumstances:
- when they need an unbiased sounding board that can give them guidance based on the management consultant’s or business advisor’s experience, expertise and connections
- when they want to get an external view of how their business is performing, particularly if they want to benchmark their business against their competitors
- when they lack some skills that they deem necessary for completing a project
- when they are unsure of the correct strategy to take in a business situation
- when they want to sell their business
- when they want to acquire other businesses
- when they need to make an investment in technology
- when they want to improve their business processes and gain efficiencies in their business
- when they need guidance or help in recruiting and retaining the best talent for their business.
How should I go about getting one?
Presuming that you cannot afford a Big 4 consulting firm, the best place to start is with your own network. Talk to friends, family and business associates about the fact that you need a little bit of external help in your business and seek recommendations from them for people they have used in the past. If this turns up nothing useful, check online for management consultants or business advisors with the right profile and experience. If you find one or two that seem to be a good fit, go meet them and get to know them and their work. If they pass this initial test, then seek contact details for people they have worked for before and seek their permission to make direct contact with these former clients for a reference check. Always do the reference checks and don’t just take it on trust.
Is it expensive?
This depends on the experience of the management consultant or business advisor and whether he comes from one of the top firms. If you look to the Big 4 – KPMG,Deloitte, PWC and Ernst & Young , you can expect to pay significant fees in much the same way you will pay more for branded goods or professional services from the best medical or law practitioners. On the other hand, if you deal with smaller firms of consultants or solo-consultants, you can expect to pay far less, simply because the smaller consultants are not supporting a huge brand and they do not have the associated costs. If you are smart, you will look for a fixed cost for delivery of whatever program you need and thus avoid daily or hourly rates that can sometimes get out of hand.
How should I proceed?
Make sure that you like the management consultant or business advisor and don’t just hire him on the basis of his resume. You need to have an open and trusting relationship with him, at least for the duration of the assignment, and nobody likes to work with people that they cannot easily relate to.
Don’t nickel and dime the consultant. A positive return on your investment is a must, but you need to recognize the contribution that an experienced external person can bring to your business and you surely know that if you pay peanuts you will inevitably get monkeys. Most management consultants and business advisors are professionals and they will work hard to deliver what you or your business needs, just so long as they get a fair pay day.
Agree the scope of what is required at the outset and agree the procedures for scope change. Negotiate the best price you can but make sure you focus on the value to be delivered rather than the price you pay. Don’t do a deal purely on a hand shake. Make sure you get a detailed written proposal, which is clear, precise, unambiguous and easy to understand. When accepting a proposal, do so in writing and ensure milestones and delivery dates are set, as well as stage payments. If you can, try to negotiate that a set percentage of the fee is payable post project completion and dependent on the success of the project. They won’t always agree to this, but it certainly reduces your downside risk if they do.