BUSINESS CONSULTATION

Hiring a consultant can help businesses improve performance and

make necessary changes to achieve success.

 Business consultants help companies overcome challenges, increase

revenue and grow.
 It’s essential to work with business consultants who have experience
and previous success with companies like yours.
 Business consultants may charge by the project or hour, or you may
need to pay daily or monthly retainers.
 This article is for entrepreneurs and small business owners
considering working with a business consultant. 

Running a small or midsize business is challenging because of the sheer

number of tasks it takes to succeed. From accounting to human resources to
technical support, it’s almost impossible for business owners to do it all
themselves. But, thanks to the ease of hiring consultants, they don’t have to
figure out everything on their own. We’ll explore what a business consultant
does and how one can help your business thrive. 

What is a business consultant?

A business consultant is a professional with a wide array of skills who assists

business owners with their endeavors. Consultants are knowledgeable
because of their education and previous experience. 

Additionally, business consultants provide management consulting to help

organizations improve their performance and efficiency. These professionals
analyze businesses and create solutions while helping companies meet their
goals. 

Business owners should consider hiring business consultants when they need
help or perspective on their chosen path, or a catalyst for change in their
companies.

Why hire a business consultant?

There are several reasons business owners should consider hiring

consultants. Consultants offer a wide range of services, including the
following:

 Providing expertise in a specific market

  Identifying problems
 Supplementing existing staff
 Initiating change
 Providing objectivity
 Teaching and training employees
 Doing the “dirty work,” such as laying off staff
 Reviving an organization
 Creating a new business
 Influencing other people, such as lobbyists

What does a business consultant do?

Generally, there are three stages of a business consultant’s process:

discovery, evaluation and implementation. 

1. Discovery 

The first step for any business consultant is the discovery phase, where the
goal is to learn about your business. A good business consultant takes the
time to learn as much as possible about a business from the owner and
employees. The consultant will do the following things:

 Tour your facilities.

 Meet with the board of directors and employees.
 Analyze your company’s finances.
 Read all company materials. 

During the discovery phase, the business consultant will uncover the details
of your company mission and current operations.

2. Evaluation 

Once the business consultant has developed an in-depth understanding of

your company, they enter the evaluation phase, with the goal to identify
where change is needed. This phase includes identifying your company’s
strengths and weaknesses as well as current and foreseeable problems.

 Examining established problems and identifying new

problems: The consultant should study problems that owners and
management have already identified. Because of their objectivity,
consultants can also pinpoint new or unforeseen issues.
 Finding solutions: A business consultant should strategize solutions
to the problems they identify and outline ways to capitalize on
 opportunities to grow the business, increase profits, and boost
efficiency. For example, say your company has a particularly strong
sales department but a weak marketing department. This is an
opportunity to increase your marketing resources and capitalize on
your sales staff.

There are two crucial elements to focus on during this process:

communication and feedback.

 Communication: During the evaluation phase, your entire team must

maintain clear, open communication with the consultant. 
 Feedback: You and your team members should take the business
consultant’s advice as constructive criticism. The consultant’s feedback
isn’t meant to be personal. While you and your employees are
personally close to the business, this lack of wider perspective can
hinder positive change and growth; the consultant brings objectivity
and a fresh viewpoint. Of course, you should offer your own feedback
and opinions to the business consultant, but keep your mind open to
new ideas.

3. Implementation

Once your company and the consultant agree on a plan, the consultant
should enter the third phase: the restructuring stage, or implementation of
the plan. In this phase, the consultant builds on your assets and eliminates
liabilities. They also monitor the plan’s progress and adjust it as needed.

Types of business consultants

There are various types of business consultants specializing in different

business aspects.

Strategy and management consultants

Strategy and management business consultants can bring industry expertise

to your business to help you scale, acquire new opportunities, and drive
revenue. 

Consultants with a focus on strategy and management can help your

business do the following:

 Expand into new markets or increase awareness in your current

market.
  Reorganize your business model to create a cost-effective strategy.
 Increase your business’s capabilities.
 Acquire a new business venture.
 Merge with another business or change your business’s structure.
 Stand in as middle management during a transition period.

Operations consultants

Business consultants who specialize in operations can help you improve day-
to-day processes. These business consultants take inventory of your current
business model and figure out the best way to produce the same high-
quality results at a fraction of the cost and time. These consultants also help
through quality control and understanding how to tweak and optimize your
production for better results.

Financial consultants 
A financial consultant can show you the broader scope of the your business’s
financial health. They mainly assist in investment decisions and help you find
the best way to handle your business’s assets and debts. Financial
consultants may have even further specializations, including financial
planning and advising your business on taxes, daily expenses, and the best
retirement plans. 

Human resources consultants

The best HR outsourcing companies and independent HR contractors can
assist you with your HR functions. These consultants can take over your
day-to-day HR tasks, such as recruiting and retaining employees, processing
payroll, performing administrative tasks, and managing employees’
performance. 

Marketing consultants
Marketing consultants help businesses identify their strengths as a brand
and expand upon them to create brand awareness and exposure. Whether
your business needs a new logo or a social media strategy, a marketing
consultant can be an asset in expanding your business’s reach.

What about consultant firms?

While you can hire an independent professional, you can also engage the
services of a specialized firm for your consulting needs. Big firms like
McKinsey & Co. and BCG wouldn’t necessarily fit a small business’s needs
and budget, but a local firm might work well.
To start, run a Google search on your pain point and location – such as
“Seattle brand strategy firm” – and examine your results. The search will
likely bring up firms you’ve never heard of before, but a closer look at their
projects and client reviews can help determine if they’d be a good match.
Additionally, hiring a local firm means you have a better chance of finding
someone you know or previously crossed paths with on their client list. 

These are some pros of a consulting firm: 

 Extensive resources 
 Multiple professionals’ expertise
 An established brand with hundreds of references 

These are some pros of individual consultants: 

 Affordability
 Flexibility in scheduling and location
 Ability to dedicate their full attention to your case

Whether you should select a consulting firm or individual depends on your

business needs and preferred work style. 

How to choose a business consultant

Choosing a business consultant who fits your business needs can be a

daunting experience. Whether you’re looking for someone to help with your
high-level strategy needs or a niche, solution-oriented specialist to improve
your SEO or product-sourcing processes, it’s essential to know where to
begin and take it one step at a time. 

1. Find the right business consultant.

Finding the right business consultant may be the most challenging part for
the owner or management. The consultant should have a passion for their
work, a drive for excellence, and an eye for organization and detail. It’s
essential to find a consultant who has expertise in your industry or
experience with the kinds of problems your business faces. 

 Leverage your existing network. Start your search for a business

consultant by leveraging your existing network. A recommendation
from a colleague, partner or other business owner who was in a similar
position is often more reliable than generic reviews or accolades. Ask
 your contacts if they know of any experts in the field who can assist
with your specific problem.  
 Explore dedicated marketplaces. Explore dedicated marketplaces
that can help you find consultants by topic, budget and location.
Popular sites include Catalant, Graphite and Business Talent Group.
Don’t hesitate to utilize social platforms like LinkedIn as well.
Numerous recommendations are usually a good indicator of a potential
consultant’s expertise. Search for keywords relevant to your issue, and
take a close look at the top results. [Learn more about using
LinkedIn for your business.]
 Visit freelance sites. If you’re looking for a niche specialist, consider
exploring popular freelance sites like Upwork, Dribble, Fiverr and
Freelancer. Note potential consultants’ popularity, engagement levels
and reviews from previous clients. 

2. Vet your potential business consultant.

 Ask questions. If you rely on a personal recommendation, ask

detailed questions about your colleague’s experience, the consultant’s
process and, most important, the results of their consulting work. Your
colleagues can give you a unique insight into the long-term impact of
following the consultant’s recommendations rather than just their
short-term gains. 
 Learn about the consultant’s background and
qualifications. Look at the consultant’s resume, educational
background and certifications relevant to your industry. It’s a good
sign if they seem willing to explore new learning opportunities and
keep their skills updated. 
 Ask the consultant about their hands-on experience. Hands-on
experience is significant in the business world. If someone came
directly out of college labeling themselves as a consultant, do they
know anything more than you? Consider looking for consultants who
have successfully owned or run small businesses, enterprise
organizations or specific departments.
 Ensure their experience applies to your business. A former bank
CEO may seem impressive, but do they have the knowledge and
experience to turn your cupcakery into a profitable small business?
They might, but if you’re also considering a former restaurant owner
who now makes a living successfully helping small eateries grow, this
consultant may be a better match for your business. Look for
consultants who have worked in your industry and with businesses
that match yours in style, size, needs and goals.
 Check out their website. You should also vet the consultant through
their website and materials. Look for professional images and well-
 documented information about their services, and thoroughly review
contracts and consultancy fees.
 Examine their consulting track record. You don’t just want a
consultant with the right experience; you want a consultant who has
demonstrated success with companies like yours. Ask for a portfolio or
list of brands the consultant has worked for, and request references.
Look for a consultant who has helped businesses overcome the types
of challenges you’re facing or who has grown businesses very similar
to yours, and reach out to those companies to find out if they were
satisfied with the services.

3. Decide if they’re the right consultant for the job. 

If your potential consultant’s references are excellent and they’ve proven to

be reputable and effective, meet with them to ensure they’re the right
person for the job. Clearly outline your pain points and expectations, and
see if you’re comfortable with their style and personality. If the consultant
checks all your boxes, it may be time to move forward.

Designing a business consultant agreement or contract

Once you’ve found an excellent consultant, done your due diligence and
vetting, received satisfying and verifiable references, clearly outlined your
pain points and expectations, and made sure you are comfortable with their
style and personality, it’s time to confirm the arrangement.

Consultant agreements or contracts are typically drawn for three to six

months with the option to renew. Agreements usually include details like the
names of the responsible parties, consulting parameters, fee structures,
payment schedules, outlined deliverables and established deadlines. 

A defined and confirmed deadline ensures that your consultant has sufficient
time to deliver the promised results while prompting timely progress.

How do you measure a business consultant’s success?

Unlike an employee performance review, there’s no widely accepted,
objective methodology for measuring consulting performance, but it is
reasonable to set goals and measure deliverables. This process is similar
to Peter Drucker’s management by objectives and SMART principles for
managing employees. 
 1. Set clear, measurable objectives. At the beginning of your work,
ensure that you and your consultant establish clear objectives that are
as specific, measurable, achievable, relevant and time-oriented
(SMART) as possible.
2. Establish the tangible results you want. Establish your desired
financial and other measurable outcomes, such as increased revenue,
annual savings, or reduced employee turnover.
3. Determine the intangible results you want. Ensure your
consultant knows the intangible results you want to see, including
improved morale, strong implementation of business values and
increased customer satisfaction.
4. Measure progress at each phase. Measure your objectives’
progress at every phase of your collaboration.
5. Evaluate KPIs. Evaluate the set key performance indicators (KPIs) at
the end of your consultant’s work.
6. Use a consultant questionnaire. A consultant can provide a
comprehensive questionnaire that covers the entire business
ecosystem and desired areas for improvement at the onset of the
project, and then they can offer the same set of questions at the end.
This way, you’ll be able to easily compare the results, especially when
it comes to intangibles. 

To evaluate the consultant’s performance, it can be helpful to answer the

following questions: 

 Were the KPIs met and delivered on time?

 Was the collaboration process smooth, and was the consultant
responsive and helpful throughout?
 Did they provide you with the necessary skills and resources to
improve your business?
 What are the short-term, midterm and long-term impacts of their
work? 
 What was your ROI on the consulting services?

Business consultant FAQS

How much do business consultants charge?
According to the Bureau of Labor Statistics, the median annual pay for a
management consultant was $87,660, or $42.14 per hour, in 2020. But
consulting charges are typically higher to cover business expenses. 
Consultants don’t always charge by the hour. According to a consultant fee
study by Consulting Success, these are some popular fee arrangements and
the percentages of consultants who favor them:

 Per project – 31%

 Hourly – 24%
 Monthly retainer – 15%
 Daily rate – 13%
 Value- and ROI-based – 17%

According to the study, 40.5% of consultants earn up to $5,000 per project,

though some make more than $100,000 per project. The project’s size,
scope and length will determine the cost.

Business consultants are a considerable expense, but their feedback and

planning can help you increase business and boost profits while eliminating
problems and identifying opportunities to ensure future success.

How do you measure the ROI of a business consultant?

You measure ROI by examining specific key metrics to determine the
consultant’s work. Most companies look at their net profits in the quarter
before hiring the business consultant and then evaluate their net profits in
the next quarter or two after implementing the consultant’s
recommendations. You should deduct the cost of the consultancy before
calculating the ROI.

Considering ROI is a crucial part of hiring a business consultant. If you’re

paying a business consultant more than $5,000, you want to see an
established ROI after the project. Established business consultants should be
able to show their former ROI data to prospective clients. 

According to The Predictive Index, 27% of surveyed businesses chose not to

hire a consultant because the consultant could not demonstrate ROI. This is
the most frequent reason for companies not using consultancy services, and
it falls on the consultant to use big data to demonstrate past ROI. [Learn
more about big data solutions for small businesses.]
How do you determine a budget for a business consultant?

Hiring a consultant can be a significant expense. Considering that fees vary,

it’s essential to establish a realistic and reasonable budget. Consider setting
the consultant’s cost as a fixed percentage of your total sales. For example,
if your monthly sales are $10,000, paying a monthly consultant fee of
$5,000, which amounts to 50% of your earnings, might not be advisable. A
5% fee on $100,000 of revenue seems more reasonable. 

If you establish clear phases for your consulting project, you can reduce
costs and risks by assessing the progress at each stage. For example, if you
employ the consultant’s marketing expertise to bring a range of products to
market, evaluate their efforts after the first launch and potentially apply the
same strategy to the rest of your product line without needing continued
services.

Many consultants will be able to assist you with determining your project’s
scope and budget as part of a free consultation. This interaction can also
help you test the waters and determine whether the consultant is a good
match for your business needs. 

Should you employ a virtual consultant? 

When defining your consulting project needs and KPIs, determine whether
the work must be done on-site or it can be carried out remotely. Opting for a
virtual consultant can broaden the potential talent pool, as you wouldn’t be
tied to your local market. Additionally, it can reduce the consultant’s cost
and ensure flexibility. 

When it comes to niche specialists, especially in the digital space, remote

arrangements, if clearly defined, can be mutually beneficial. At the same
time, some consultancy work involves working hands-on with your team and
is better suited for in-person collaboration.

What are the common mistakes to avoid when working with a

business consultant?

Several common mistakes can prevent you from achieving success in your
work with a business consultant.

 Automatically hiring the most established or accoladed

consultant: While a proven track record, glowing reviews, and
certifications are all essential when choosing a consultant, it’s even
more crucial to ensure their experience is relevant to your industry
 and business case. Ensure your selected consultant is familiar with –
or, better yet, ahead of – relevant trends, technology and methods.  
 Hiring a jack-of-all-trades: A consultant or consultant firm that
claims to “know it all” may lack niche experience or skills that you
require. Find a consultant with focused expertise who has vast
experience and can assist you with your specific needs. 
 Treating a consultant as an employee: It’s essential to treat your
consultants as equals, respecting their working style, existing workload
and schedule. They might not be available on short notice or jump on
a task outside the defined scope. They won’t know everything about
your company’s operations, and they may not choose to put in
overtime. They’re there to advise you and improve your business
operations, not become another team member. In fact, their external
perspective is what makes consultants so valuable.
 Ignoring the outlined action plan: It’s the consultant’s job to draft
a map and set you up for success, but you and your team are
responsible for creating change and implementing the
recommendations. If you’re unwilling to “walk the walk” once the
consulting project is over, you won’t see the value of engaging a
business consultant.
 Treating the consultant’s suggestions as absolute truth: While
you’re paying for and relying on your consultant’s expertise, it’s
essential to reflect on your own experience, apply common sense and
treat their recommendations as helpful directions rather than a hard
set of rules. Don’t be afraid to question their suggestions. You know
the ins and outs of your business best and will be the one dealing with
the long-term implications of the consultant’s recommendations.   

How do you know when to hire a business consultant?

Hiring a business consultant isn’t a one-size-fits-all solution. You’ll need to

evaluate your company in these key areas:

 Human resources
 Business strategy
 Operations
 Compliance and regulations
 Financial planning

If your business is struggling in any of these areas, it’s a good idea to seek
out a business consultant who’s a verified expert. If you note any declines in
profits that you can’t explain, this could be another sign that it’s time to hire
a business consultant who can pinpoint potential reasons for the decrease
and suggest ways to remedy them.