It can feel overwhelming at times to own a small business simply because there are so many things to learn, especially during the startup phase. From business registration to payroll taxes to dozens of possible marketing strategies, it's impossible to be an expert in everything. You also don't know what you don't know! Fortunately, a small-business consultant can smooth out the journey by sharing expert advice and experience in creating a successful business, which in turn can allow you to feel more confident about your business's future.
However, there are also some disadvantages to hiring a business consultant. Before you make a mad dash to hire one, take a moment to understand whether this professional service is right for you. If the answer is "yes," be sure to ask the right questions to find a consultant who not only can deliver the results you need but is also an easy person with whom to collaborate.
What Is a Business Consultant?
A business consultant is a specialist who has extensive knowledge and experience in a particular aspect of running a business. Consultants help guide entrepreneurs in setting up a new business, educate owners who are facing obstacles or train entire teams in new operational strategies. They help with problem solving and provide a fresh perspective when your creativity plateaus. To know what kind of business consultant you need, identify your weaknesses or any areas of business management that cause you to feel overwhelmed or confused.
Common types of consultants include:
- Management consultants, who provide guidance on overall business strategy, human resources policy, organizational structure and more.
- Financial consultants, who help you prepare budgets, develop an accounting system, understand business taxes and more.
- Information technology consultants, who assist business owners in choosing appropriate software solutions, training employees to use the software, setting up telecommunications devices and more.
- Marketing consultants, who help develop short- and long-term strategies for increasing sales through appropriate channels.
Advantages of Hiring a Business Consultant
A business consultant is someone who complements your weaknesses. Your strength may be the spark of creativity or invention that allows you to develop popular products or perhaps the ability to make a meaningful connection with every single customer. Your weaknesses might include the day-to-day tasks that keep a business afloat, such as financial management, project management, business administration, marketing plans or operations management. The right business consultant for you will fill in these gaps in your knowledge so that your business can not only succeed but also grow.
That leaves plenty of time for you to focus on what you most enjoy about your business without worrying about making rookie mistakes in the areas about which you don't feel quite so confident. Depending on your expectations, you can have a business consultant on retainer to provide guidance on an as-needed basis, or you can hire a consultant for a few months to give you a hands-on crash course in one of your weak areas.
Disadvantages of Hiring a Business Consultant
Hiring a business consultant may not be right for you if you aren't prepared to take a hands-on approach. You may not know everything about running businesses in general, but you're the go-to expert about your business and goals. If you don't take an active role in the consulting process, you may end up feeling like you're either relinquishing control or not getting your money's worth.
Consulting should be a collaborative effort between you and the consultant, not a scenario in which the consultant makes decisions for you or talks down to you. Instead, he should educate you so that you can make a well-informed decision, lay the options out in front of you and then possibly assist you in implementing your choice of action. However, many consultants draw a firm line between guiding and implementing. Be prepared to hire an experienced contractor or employee to actually perform the work recommended by the consultant.
Of course, you'll need to pay a business consultant for his knowledge, experience and time, which makes consulting a more expensive approach than self-education. With the right consultant in your corner, however, you won't end up wasting time with trial and error or half-baked efforts. A consultant should know exactly what will benefit your business while steering you away from strategies that won't prove useful. This means your initial investment in business consulting services should pay off thanks to more rapid business growth.
When to Consider Hiring One
There's really no right or wrong answer about when or why you should consider hiring a business consultant. It depends on what you're comfortable doing on your own as well as your current budget. Some small-business owners may feel like it's less risky to hire a consultant right away, as her advice can prevent a beginner from making potentially costly mistakes. If you have appropriate startup funds for a business consultant and want to experience rapid growth without the usual growing pains, a "from the get-go" approach is an excellent choice.
On the other hand, you can call in a consultant only when you run into an obstacle with which you're not equipped to deal or when you feel a need to reinvigorate your business strategy after your revenue plateaus. However, if you decide to go this route, it's wise to research consultants ahead of time so that you know exactly whom to call. Otherwise, you may end up wasting time finding the right person for the job while your problem either grows or brings your progress to a halt.
You can also hire a business consultant to help you perform the more unpleasant tasks associated with business ownership. For example, you can hold employees' feet to the fire or even let problematic employees go with the consultant's help. Being a small-business owner can feel a little lonely when it comes to making these tough decisions because there's often no one else to defer to or to have your back. A consultant can provide logistical and emotional support as you learn how to fire or reprimand employees.
Typical Cost of a Business Consultant
Business consultant fees can run the gamut. Less-experienced consultants striving to gain a foothold in the industry may charge a low price in order to attract clients. However, hiring someone without a proven track record is a gamble because you may not feel confident that the guidance will work for you.
On the other end of the spectrum are consultants whose former clients have been wildly successful. As such, they can command high prices for their expertise, potentially into the hundreds or thousands per hour. The average business consultant's fees land in the middle. According to Thumbtack.com, the average consultant fees are $100 to $130 per hour.
To make the most of your sessions, have specific questions and concerns in mind and don't get off track venting about a past scenario. Your business consultant can't fix what's already happened. Regardless of price, a good consultant will end up "paying for himself" by increasing your revenue — whether directly or indirectly — thanks to his expert advice.
How to Find One Suitable for You
Not all business consultants are suitable for working with you or your business. For example, some consultants specialize in certain industries and won't have the network, resources, experience or knowledge to efficiently grow your business. Other consultants may have a very narrow focus, such as helping with only the startup process but not with long-term marketing.
Therefore, it's important to screen potential business consultants according to their proven results in your industry and in your particular area of need. If their portfolio isn't clearly available online, contact them to ask about their typical clients and areas of expertise. It's not necessarily a deal breaker if they haven't worked in your industry as long as they have experience with a business plan similar to yours in terms of size, budget, target audience, competition, etc.
In addition, ask about the consultant's process. Does she have a one-size-fits-all formula that she applies to each business, or does she customize the approach? Will you be expected to have a hands-on role, or is it a "done for you" package? Finally, be sure that you choose a consultant with whom you can easily talk and collaborate.
Do You Need a Certified Consultant?
Consultants can obtain certifications to show that they meet minimum standards established by the certifying organization. Do you need to find a certified consultant? Although education and certification can demonstrate a consultant's skills, they aren't as important as a consultant's experience and prior results.
While a consultant's qualifications speak to his training, his portfolio and references will speak to his success and efficacy. When you find a consultant who matches your criteria, ask for some evidence of his results, whether in the form of a case study or as a reference.
On the other hand, you can use certifying organizations like the International Council of Management Consulting Institutes as a great starting point in your effort to find the right business consultant for you. Use its index of certified management consultants to find consulting firms or individuals in your region or who specialize in a problem with which you're struggling.
Should Your Consultant Be Local?
You might find a good consultant who is a little farther away. Before you worry about paying travel fees, consider the possibility of virtual consulting. You can get great advice from a business consultant over the phone, via email or through video conferencing. Thanks to cloud-based technology, you can share screens, work on virtual white boards or exchange documents in real time.
Virtual consulting opens you up to a plethora of possibilities in terms of finding a consultant who is experienced in your industry and who communicates well with you. Aside from local laws pertaining to business registration, permits and licenses, most advice a consultant can give you isn't location specific. You can even work with a consultant based halfway around the world and still get great results.
On the other hand, you might really appreciate the ability to work with your consultant face to face, to write notes on paper, to watch a software demonstration over her shoulder, etc. Perhaps having someone visit you in person will help you feel a greater sense of accountability too. Although virtual consulting is a great option, it's not right for everyone, and that's OK. Do what's most helpful for you.
Individual Consultant vs. Consulting Agency
If you can't find a single consultant who has the experience you need, consider looking for a consulting business or agency instead. An agency will have people with all kinds of skills, experience and educational backgrounds on their payroll and can assemble an entire team to suit your needs. An agency can also offer greater flexibility in terms of matching your schedule, whereas an individual full-time consultant might be booked for several weeks or months.