Why Would You Use A Consultant?

 

The most common answer is that you wouldn’t.  A consultant cannot offer value where value is not needed, so if your business is going great, you are enjoying a decent lifestyle and there is nothing on the horizon that is bothering you, then don’t ask someone to come in and fix things that are not broken.

 

Secondly, if you are a small business turning over less than $2 million, be very cautious about hiring consultants and ‘gurus’ as there is very little they can produce for you in a tangible sense.  Small gains might be made in systems and team cohesion, however net profit will remain largely unchanged meaning that it was a costly exercise.

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Before you go paying crazy sums of money for a spread sheet you didn’t need, check out our DIY Consulting for small business.

If neither of those scenarios apply to you, then you might yeild some significant benefits from engaging a consultant.  Most importantly, before you do engage, you should have some idea of the area that you require assistance with, or at the very least a broad goal that you want help accomplishing.

Here is a very high level list that might assist you to get your mind around your requirements.

Business Life Cycle Consulting

1. Start-Up Phase

This involves the birth of the business, where the idea is conceptualised, a business plan is formulated, and initial funding may be secured. Consultants often assist in market research, feasibility studies, and laying the foundational strategies.

Consulting Focus

Market Validation

KPI: Customer Discovery Rate (Number of validated customer segments)

Financial Stability

KPI: Burn Rate (Monthly expenditure)

Operational Efficiency

KPI: Time to Market (Speed of product development and launch)

2. Growth Phase

During this stage, the business gains momentum, acquires customers, and experiences expansion. Consultants may focus on scaling strategies, operational efficiency, and market penetration to capitalise on growth opportunities.

Consulting Focus

Customer Acquisition

KPI: Customer Acquisition Cost (Cost to acquire a new customer)

Revenue Growth

KPI: Revenue Growth Rate (Percentage increase in revenue)

Market Share Expansion

KPI: Market Share Percentage (Percentage of market captured)

3. Maturity Phase

Here, the business has established itself in the market, and growth stabilises. Consultants might work on refining processes, optimising operations, and diversifying products or services to maintain competitiveness.

Consulting Focus

Customer Retention

KPI: Customer Churn Rate (Percentage of customers lost)

Profit Margins

KPI: Gross Profit Margin (Percentage of revenue retained after costs)

Operational Streamlining

KPI: Efficiency Ratio (Productivity vs. resources used)

4. Decline or Renewal Phase

Businesses might face challenges or changes in the market, leading to a decline in growth. Consultants can aid in restructuring, innovation, or pivoting strategies to revitalise the business or gracefully manage decline.

Consulting Focus

Cost Reduction

KPI: Cost-to-Income Ratio (Ratio of operating costs to income)

Product/Service Innovation

KPI: New Product Adoption Rate (Percentage of customers using new products/services)

Rebranding Impact

KPI: Brand Perception Score (Customer perception of the brand)

5. Exit or Succession Stage

This marks the stage where owners might consider exiting the business through a sale, merger, or passing it on to successors. Consultants might assist in preparing the business for sale, ensuring a smooth transition, or strategising for succession planning.

Consulting Focus

Business Valuation

KPI: EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation)

Transition Readiness

KPI: Succession Plan Execution Rate (Completion rate of succession plan milestones)

Deal Negotiation

KPI: Deal Closure Time (Time taken to finalise a sale or merger)

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