BUSINESS CONSULTANCY

DR. JAMES E MREMA

TANZANIA INSTITUTE OF ACCOUNTANCY
 Who is a consultant
A consultant is an independent contractor who provides unbiased opinions, advice and
innovative ideas and solutions to a client in return of a fee.
He/she is expected describe the situation, make an independent assessment, tell the
truth about the situation and recommend frankly and objectively
Consultants can be categorized into external and internal. The external is not an
employee of the company requesting the consulting services. He/she should be
employed by registered consulting company or could be freelancer. An internal
consultant is an employee of the organization and does provide advice to his own
organization because of the specialized knowledge and experience in a particular field.
External consultant can be categorized as licensed professional consultants and
general consultants. The former has to meet minimum prescribed educational
requirements, pass professional examinations and be registered with a professional
body before he/she begins to practice example NBAA
 Advantages of using internal Consultant
. They are readily available for assignment
 Procurement of external consultant take long process
Used for quick fix of the problem
They know the environment and organization better than external
consultant hence they come up with more practical recommendations
Less cost is used since they only receive salary
 Disadvantages of Internal Consultant
They lack independence and objectivity as they are unlikely to criticise top management.
They do not bring new experiences

Advantages of external consultant.

1. Cheaper
2. Possess detailed expert knowledge
3. Enjoy some independence
4. Senior management will be free to discuss sensitive issues with them
5. Rich of experience
6. Management learn faster simply by observing a high-calibre consultant at work
7. Useful when management want to make radical changes in the organization
 Disadvantages of external consultant
1. May not be readily available at time they are needed because of their commitment
2. They may not be willing to compromise with clients on the pretext that they are defending their professionalism

3. They do not automatically get involved in the implementation of their recommendation

4. company pays lost of money, secret business information get exposed, not in a better place to guide implementation,
unwilling to release some information, they are not accountable
Steps in Sourcing Consultants
1. Assemble a list of candidates through recommendation from people
2. Given the nature of the problem, determine what type of the consultant is needed
3. Arrange for suitable date for interview
4. Short list prospective and client prepare proposal
5. selecting the right consultant based on the quality of proposal using technical and financial proposal
6. Meet and negotiate the fees
7. Drawing up and signing the consulting contract/forma letter of engagement.
 The role of a Consultant
A client is a person or organization which is seeking professional advice from a professional person
Consulting is simply a business of providing professional advice to organizations that are in trouble, are
on the move or are trying to improve their operations
The roles of consultant includes
1. Under the Purchase of expert model: The client/company require the consultant to bring in their own
independent perspectives about the issue at hand.
2. Under Doctor-patient model, the consultant relies on his/her diagnostic capability by analysing the
client organization problem
3. The process consultation model: Assumes that client possess a vast knowledge on the issue at hand
The importance of consulting services
1. They provide unbiased expert advice to organization
2. They help client to solve problems
3. Bring about collective focus and commitment to solving problem
4. Required to assist the client in implementation of agreed recommendations
5. Employees are readily support recommendations from external consultant
6. helps Client uses his knowledge to analyse problem, design solutions and implement them without
having to hire a consultant when similar problem occur in future
 Why do we study Consultancy techniques
1. To be future consultants
2. To be able , as a consultant, to identify areas needing our consultancy services within org organizations
3. To acquire skills in problem solving that may be helpful in dealing with our own problems

4. To be able to give proper advice to our organizations/employers when faced with problems
5. To cultivate investigative zeal
Essential Qualities of a Consultant
1. They have vast work experience and higher intellectual ability acquired through training and long work in problem
prone organization
2. High creativity and innovation
3. Ability to communicate skilfully, persuade and convince client to accept the recommendations
4. Ability to work closed with the client and the individuals in the client system.
5. They must be people Of integrity, honest and trustworthy
6. They must demonstrate independence, be emotionally mature, exercise self control and be flexible.
7. They must be physically and mentally fit
8. They must be ethical
Why organization uses consultant
1.To access human and technological resources not readily available within the organization
2. To reduce operation cost.

3. To free internal resources for more strategic operations

4. To gain flexibility and agility in the company’s ability to capability advantages of new opportunitie
5. To introduce changes that transforms the way a company does business.
6. to receive objective and frank opinion on the problem
7. to justify management decisions
Consultant qualities
1. Financial independence
2. Administrative independence
3. Political independence
4. Emotional independence
Nature of the Consulting problem
1. Corrective Problems: consultant is contracted to recommend actions/strategies that would turn round a
deteriorating situation
2. Progressive Problems: The consultant takes an existing situation and improve it
3. Creative Problems: The client contracts a consultant to create a completely a new thing
Securing and managing consulting assignment
Several Techniques that make consulting organizations/consultants more proactive.
1. Keeping in touch with the relevant and or strategic client and potential
2. Knowing the industry in which client is operating-potential and threats
3. Knowing the sector in which you operate
4. Organizing workshops on topical issues and inviting potential clients to come and attend free of
charge
5. Writing brief features articles in influential newspapers and magazine
Methods for soliciting consulting expertise
1. Open Competition:
2. Restricted Competition
3. Request for Quotation
4. Single Sources/Direct Contracting
5. Qualification of consulting firm
6. Individual selection
7. Repetitive Procurement
 Responding to Enquiries for consulting expertise
1. Request for information(RFI) or Expression of Interest (EOI): in this there are several things that a
consultant can try to influence including technical scope, specification, contract type, contract transport
vehicle, pricing, certification and methodology
2. Request for proposals (RFPs) /Request for tender/Invitation to bidder either through international
competitive biding or national competitive biding
The request for proposal consists of two parts namely technical and financial proposal
The technical proposal contain aspect like brief description of the client organization and outline of
recent experience in similar work, comments or suggestions on TOR, proposal on the approach and
methodology, brief description of client staff, detailed cv of each listed staff, work schedules and any
other additional information
Financial proposal shall consider cost associated with the assignment and price should be broken down into
components
Client are looking for technical capabilities, the deliverables/output and sufficient information
Evaluation of proposals
1. Experience in the field of assignment-capabilities and experience
2. Proposed work plan and response to the terms of references
3.Personnel
4. The CV of each expert
Selection of Consultant
1. Quality based selection (QBS)
2. Quality and cost based selection (QCBS)
3. Least Cost Selection Method (LCSM)
4. Fixed budget selection (FBS)
Principles Governing the procurement Process
1. Economy: save time, resources and money and they prevent delay or unnecessary disruptions in the
contract execution
2. Efficiency: all procurement process must be well planned and programmed to be completed in a timely
manner under best cost and quality
3. Competition: encourage participation by greatest possible number of qualified bidders
4. Equality: avoid preferences or discriminatory measures of any kind
5. Transparency: use established rules and discretion in the evaluation process
6.Due Process: opportunity to protest to procurement process
7. Publicity: general public has the right to information
Negotiating for the Assignment
Negotiation should normally include agreement on TOR and work plan, inputs and outputs, time schedules,
condition of contract, including price adjustment, contingencies, quarantees, insurance, professional
liability and financial terms including fees, payment terms and conditions and other reimbursable costs

Signing the consulting contract

Consultant can revisit it in the course of implementation
Managing the Assignment
1. Structure and schedule the assignment: appoint and put in place the team leader/project manager and
schedule the assignment
2.Make the necessary arrangement ready to start the assignment
3. Managing the assignment execution process
Discuss factors for successful team work and characteristics of winning team
4. Keeping records and providing report regularly
Key factors to success of consulting assignment
1. Do proper planning before embarking on implementation
2. Spend enough time in understanding the cues and clues

3. Hold sharing discussions with consultants and summarize all issues raised for future reference
4. In-depth discussions on the contract and agreement to ensure action is based on solid base
5. Pay attention to the political processes of the client’s organization and reach out to all relevant people
6. delivery of output on time and to the required quality
7. establishing management structures which would allow the participation of all consultants in problem
solving
8. Forging a good working relationship with the client system
Key factors to failure of consulting assignment
1. Not involving influential people
2. Consultant proposing solutions before problem are adequately diagnosed

3. Presenting reports full of content without regard to the process of discussion

4. Moving too quickly
5. Not recognizing the effect of change in one part of the system on another part of the system
6. Not providing consultants with the minimum working facilities
7. Not being close to client
The consulting process
1. Entry phase: it include sub steps like initial contact, initial problem diagnosis, contracting and action
planning. The entry phase is very crucial to both the consultant and the client. After the problem is clear
it is time to proceed with the terms of reference, the information to be made available by the client, the
specific roles to be played by client and arrange for logistical support, pay consultant due as per contract
and assist consultant in implementation of the assignment.
2. Information gathering and problem analysis
3. Action planning and presentation of the report
4.Implementation, monitoring and evaluation
5. Ending the consulting assignment
The consultants assignment report form has the cover page, table of content, acknowledgement,
anexecutive summary, introduction, the study methodology, findings and discussions and major
conclusions and recommendations
Marketing Consulting Services
Marketing is the process of developing, pricing, promoting and distributing goods, services and ideas to
satisfy the needs of customers
Characteristics Features of Consulting Services
1. The buyer purchase are intangible
2. The services may be based on the reputation of a single person
3. It is more difficult to compare the quality of similar services
4. The buyer can not return the service
5. production and consumption of services are inseparable
6. Services are highly perishable
7. services are heterogeneous
Starting and marketing your consulting firm
1. What business are you in?
2. How have you organized your practice
3. Get and update technological tools
4. Arrange an office
5. See time as an ally
6. Do you stand out from the Crowd
7. How is your attitude
 Marketing of consulting service is about
1. Defining the product and market
2. Finding clients
3. Identifying the client needs and requirements
4. Selling the consulting services to them
5.Delivering the services to the client’s satisfaction
6. Retaining Clients
Why should consultant services be marketed
1. To expand the market share
2. To build up professional image and reputation
3. To put up the right consultant in touch with client
4. Public relation and image building
5. Arouse client interest by providing him/her with other technical information
Basic Principles of Marketing Consultancy Services
1. Do not sell more than you can deliver
2. Do not misrepresent yourself
3. Refrain from defaming other consultant
4. Always remember that you are marketing a professional service
5. Regard client’s needs and desires as the focal point of all marketing effort
Strategies to market consulting firm
1. Working the referrals
2. Personal selling ( one to one selling)
3. professional publication 4. Forging favourable links and r/ship with public information media
5. Management seminars 6. advertising 7. Socialization with potential clients 8. voluntary social work 9.
Directories 10. Responding to enquiries 11. location of office facilities 12. name and logo
Six steps to accomplish person selling
1. Prospecting: finding potential clients who are willing to talk to you

2. Approach : making the first conduct with the prospect

3. Qualifying: Not every approach will lead to striking of assignment
4. Presentation: The consultant, once he has identified the prospect should quickly move to
presentation about the benefits of his services
5. Closing: Getting prospect to agree buy the service
6. Managing Objections:
Techniques For Marketing consulting assignment
1. Making direct contact with potential clients
2. Contacts through referrals

3. Responding to invitation to submit proposal/bids

4. Marketing during entry phase using technical and financial report
5. Marketing during assignment execution you need to show good behaviour see page 225
Strategies for Marketing newly formed consulting firm
1. Developing mission statement
2. Identifying and writing the target market profile
3. identify competitors-their strength and weakness
4. Carrying out a service benefit analysis
5. Creating a unique selling proposition
Pricing Consulting Assignment
Chargeable services are those services performed by the consultant that have direct bearing on the
assignment
Pricing Strategies
1. Developing market strategy: perform market analysis, segmentation, targeting and positioning
2. Make market mix decision
3. Estimate the size of demand
4. Understand environmental factors
5. Set price objectives such as profit maximization, revenue maximization or price stabilization
.
 Pricing Objectives
1.Current profit maximization
2. Current revenue maximization

3. Maximization of quantity
4. Maximization of profit margin
5. Quality leadership
6. Partial cost recovery
7. Survival
Pricing Strategies
1. Competitor’s fees
2. Normal fees : fees established by professional associations
3. Differential fees: for different market segments
4. Promotional fees
5. Skimming fees: setting higher consulting price and to those customers who are less price sentitive
6. Subsidies fees: firm charge lower fees for specific sector of the business
7. Client determined fees
8. Dumping fees
9. Consultant’s image fees
Price you charge to clients depends on the following aspects
1. The consultant’s perceived capability to deliver the expected results
2. The lifestyle the consultant wants to pursue
3. What market will bear
When pricing consultancy assignment, consultants must observe the following
1.Fees must be set on the basis of sound and reasonable ground
2. the costs of production as indicators of price
3. Fee determined must be based on an assignment/work plan
Types of fees
1. Per unit time fee: charged per working hours
2. Flat fee (lumps sum)
3. Contingency fees: after fixing agreed problem.
4. Retainer fees: fee paid monthly or yearly
How to start and manage own consulting firm
Critical issues for consideration
1. Assess own expertise, competence and commitment
2. Specify and decide on the nature of the consulting business.
3. Decide on the business name
4. Decide on the location of your business office asking yourself where should the office be located? How
big and expensive should the office be? What facilities should be made available?
5. Work out on the legal aspect of your organization is it sole proprietorship, partnership, corporation,??
6. Prepare a business plan. See page 251 on the content of business plan
7. Prepare a marketing plan including product/ services, pricing, promotion, placement/distribution, people,
process and physical evidence
Marketing planning goes through four steps
1. Situation analysis ( SWOC analysis)
2. Determining the marketing objectives of your firm
3. Decide on the target markets you want to enter
4. Design a strategic marketing mix. Discuss the characteristics of good marketing plan see page 259
Recruitment and selection of consultants
1. Personal qualities
2. Education
3. Practical experience
4. Potential for further training
5. Age
6. Number of employees
Set up a monitoring and evaluation system for consulting firm
The purpose of monitoring and evaluation system is to attempt to determine systematically and as
effectively as possible the relevance, effectiveness and impact of the activities of the organization in the
light of objectives and performance targets.
Monitoring and evaluation systems perform two important roles
1. As management tool through developing an ongoing picture of the company’s performance, maintaining
quality control, cost-efficiency and cost effectiveness, facilitating a regular review and planning of work
scheduels, assisting in identifying constraints and problems at an early stage and highlight how new
opportunities for exploitation and identifying the needs to make adjustment
2. As a communication tools through acting as an internal communication system and sharing experiences,
results and lessons learned among concerned stakeholders.
Aspects to be monitored include growth in operating income, operating cost, market share, budget and
implementation status of marketing plans
Before designing the set up of MES the RC should go through several steps
1.Identify the different stakeholders who would require information
2. identify the specific information/data stakeholder would require
3. determine frequency of such information
4. Put in place responsibility centre for collecting, analysing and disseminating information
5. allocate adequate resources for smooth and efficient operation of the MES
Three key consideration for any MES
1. Simplicity
2. Adequacy
3. Cost effectiveness
Problems faced by new consulting firms
1. Lack of list of previous client poses numerous problems
2. They can not make references
3. They can not produce testimonies
4. Reduce quality of services by quoting lower price
Breaking and succeeding in consulting business
1. Develop your requisite consulting skills
2. Educate yourself about your new profession
3. Know what to expect from the job
4. Get experience
5. Decide where you want to work
6. Familiarize yourself with the consulting job hunt process