Hiring a business consultant is costly enough without hiring the wrong one.
There will be a time when you and your business will face the need for outside consulting and help. It might be market information you need, or advice, skills, strategies and techniques that don’t exist in your organization. Consultants can provide solutions for a huge range of business issues. Different types of consultants bring different ideas to the table but you need to know when and why to use them.
In general, a business consultant works with you on strategy, planning and problem-solving. They might help you develop a business skill and grow knowledge. You might need to learn how to design a business model, create a marketing plan or determine which marketing techniques you need to use and how to use them.
Consultants come in many forms. A lot of people are familiar with the big players like PWC, (PricewaterhouseCoopers), Deloitte, Ernst & Young or KPMG but there are many, many other firms as well as individuals.
Firms, especially the big ones, do not share their fee structure. Fees are considered a trade secret that is kept under tight control. In addition, fees vary per region, client, service, etc. With that said, fees for the big firms have been reported to start around $3,200 to over $6,600 per hour. And in a survey of individual consultants completed in 2017 by Consulting Success, 14 percent of consultants made more than $50,000 per project fee.
Consultants fall into five categories.
1. Strategy and Management Consultants
These firms or individuals will have a deep understanding of your specific market and know best practices of your industry. They can offer help in enlarging your market footprint, expand your product offerings, help you reorganize for efficiency and cost savings, increase your company’s capabilities or help you make a large equipment purchase or even buyout another company.
2. Operations Consultants
These companies focus on increasing your process quality and efficiencies. You might use them when you are looking to map out existing processes, analyze them and get suggestions/advice to improve quality, reduce steps or mistakes and increase margins and decrease costs.
3. IT Consultants
Probably the biggest growth area in consulting right now. With the rapid pace of technology and tech support needed, most companies have hired a consultant at some point to help integrate and improve their computer or phone systems or storage space, upgrade servers, etc.
4. Human Resources Consultants
These businesses are used to work specifically on employee needs. You might use them to recruit top talent, improve employee retention and determine compensation to align with your company goals. You might use them for leadership and communication development.
5. Sales & Marketing Consultants
Firms in this area are used to create marketing plans, work on positioning statements, develop a brand, launch advertising campaigns, establish social media strategies, initiate sales process and improvement, or design sales training and coaching.
So why would you ever hire someone from one of these categories?
Expertise: You might not have the internal resources or skill set within your company to tackle your project, goal or what you want to accomplish. Using a consultant or power player within your industry might pay big rewards.
Seasoned change agent: Navigating office politics and taking the blame for reducing headcount or other cost-cutting measures, consultants are change agent experts and can act as that outside voice to break up the roadblocks and make things happen.
Process improvement: Your consultant will be an expert or even a leading expert in their field and have years of experience in what you are attempting to solve for the first time. Why try to invent a best practice when a consultant has probably already implemented it multiple times?
Idea generator: A consultant can bring a fresh perspective to your business that you might not have. They can see the bigger picture of the market and where your company fits into it by being an outsider. The insights they have can boost your internal team to new ways of thinking and approaching problems.
Trainer: By the nature of the job a consultant does, they are natural trainers. Their job is to share their knowledge, insight, and experience. They would be a good choice to do a training course, presentation or do one-on-one or team coaching.
Consultants are a good resource but one of the biggest drawbacks can be making sure the use of one results in actionable, observable outcomes that you can clearly see impact your profits and bottom line.
Too many times a consultant might give you a strategy and blueprint on how to make it happen but there is no follow through on making sure it’s implemented, followed and that results are tracked. This isn’t necessarily the consultant’s fault. They may have been hired to only do the setup and certain tasks. Consulting can also be very expensive and take a long time. Large companies can spend hundreds of thousands of dollars and have nothing to show for it after nearly a year.