As we previously discussed the various types of owners involved in a business, we concluded that eventually most would lose interest or lack the skills to run their company. Whether, it is the inventor, entrepreneur, salesman, or the successor. Each will need to face the issue of whether to hire an outside Management Consultant at some time in his or her tenure, whether for a specific task or a complete review.
The vast majority of owners will need help in solving their business problems but recognizing when it is the time to act is often slow to develop. Exactly when this occurs can be critical to the overall success of the company. Often an owner does not know what he does not know as his business experience is limited and he fails to act in a timely manner. There will always be reasons a change can be desired, but the nagging question is still: How can a Consultant know more than me about my business than I do?
Well, does he or she? The numbers will tell the story of the business. In other words, if you maintain a set of books, they will reveal to the consultant, just what is happening in the company. In most cases, unless this has been taught to the owner and someone has developed his “instrument panel” or measuring tools, owners rarely look at the numbers. When they do, it may be too late or done too infrequently to make the necessary adjustments. Once in a while, an accountant may point out the value of the numbers, but in the majority of cases, it is rarely done. Therefore, an owner is most often operating his company without the necessary “instrument panel” to guide him in the decision making process.
Every owner feels that his company and its problems are unique. Depending on the size and sophistication of the company most issues are not unique. They are very often the same problems depending on the stage of the company development. What is true is that a “uniqueness” may stem from the personalities of the owners and top managers. Everyone is different, and each may offer a different solution to a problem. Most problems are repetitive no matter the type of business. The key is the development stage of the company. How many hats are required to manage this business?
Even the decision to hire a consultant is clouded because of the owner’s lack of understanding of the numbers; can he afford it? (Can he afford not to?) What benefit will he see? The expense of the consultant must be viewed as an investment in the business– an investment to make it grow and become healthier and more profitable. The changes that a Management Consultant would bring to the table should create a return on investment that will carry over for years into the future. Other, persuasive reasons to hire a consultant may include the following:
- Working Harder– Not making additional money. Owner’s return on his investment does not justify the effort required to maintain the company.
- Experience– A Consultant has faced most of your issues multiple times. He can create a solution much faster than the owners. Having broader knowledge of what works and what does not, will hasten change and save money in the long run.
- Lack of “Big Picture” Viewpoint – Some owners involve themselves in everyday operations even though it may not be necessary. He or she may miss the forest for the trees, and fail to come up with what might appear to others to be obvious solutions because he or she will not step back or delegate aspects of operations to capable employees.
- Lack of Manpower– Knows that change is necessary but does not have the manpower to implement it while carrying on the day-to-day business operations.
- Outside Opinion– You may have reached a critical juncture in the thought process that makes you want to have an outside opinion. Did you miss something in coming to a conclusion? Or, may there be a different solution (see experience) that is not as complicated or less expensive?
- Lack of Critical Skills– Owner may not be a good people manager or may lack the financial skills to understand what the numbers are indicating.
- Poor Productivity– Realizes he is getting unwanted results but has no solution.
- Catalyst-Needs a consultant to help make corrective changes.
- Resistance– People not always welcoming of change. May need a facilitator to accomplish the required changes and justify that they are necessary.
SUMMARY– When you review the reasons for engaging a Management Consultant, it is apparent that every small business will need to involve the expertise of a Management Consultant. However, some will ignore their problems and not seek to make any changes. This will probably cause them never to reach their full potential, and in some cases close their doors forever.
Those that do recognize the value of a consultant, and hire one, stand to benefit for several years and enjoy the increased earnings, improved operations and greater profitability that will result.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: