What Is A Consulting Firm?
The current globalized, digital business ecosystem of today has seen an explosion in information, technology, and business revolutions that have made it possible for enterprises of all sizes to expand, scale, and reach new goals. As business models have evolved, corporate practices have changed, and business ideals have been radically altered to meet the growing needs of a more informed consumer base. In order to keep up and scale, businesses have called on a specific group of experts and professionals (who have several years of experience and theoretical knowledge) to objectively provide an outside perspective and expert suggestions. Their advice is based on both industry-data and their copious amounts of experience. These professionals are consultants, and they typically work within the realm of consulting firms. Beginning in the late nineteenth century in the U.S. – followed by Europe – management, technical, and corporate consulting firms, which started off as advisory businesses, became commonplace, resulting in a myriad of firms who specialize in everything from finance to information technology/security, to HR, to R&D, to marketing, to sales, to data science, to engineering, and more.
Consulting firms are composed of internal teams of specialists who are experts in a variety of fields and who operate as business advisors, offering a variety of tips that can radically alter a company’s direction and bottom line:
- How to set up a marketing funnel system and align it with a sales funnel chart.
- Setting up a more optimized sales pipeline and linking it with dynamic website assets.
- Securing, optimizing, and hardening all software and hardware business systems.
- Merging on-site private data silos with off-site data centers.
- Utilizing Artificial Intelligence and Machine Learning-based Chatbots for optimizing – and automating – critical workplace tasks.
- Translocating all business assets to Cloud data systems.
- Utilizing more advanced technology, like Business Intelligence suites, Big Data systems, and BlockChain technology in order to offer more products/services, and/or increase productivity and efficiency.
- Choosing, installing, and securing IT infrastructure suites, applications, systems, and hardware/software, along with training personnel.
- And more…
Consulting firms often conduct case interviews (simulations) to determine whether their skilled experts can offer assistance to a variety of clients based on such simulations. Along with such consulting case studies, consulting firms are able to study a variety of business problems that typical enterprises (of all sizes) might face, which allows them to come up with the pertinent solutions.
Some of the most common issues that businesses face are:
- Having a low net income, as well as low profits or profit margins
- Lacking expertise
- Starting a new business or venture
- Lacking a strategy
- Lacking a budget
- Being behind on Technology
- Needing to update and secure Technology
- Lacking knowledge on certain regulations
- Needing to optimize and streamline workflows
- Needing to optimize management for projects
- And more…
There are a large variety of consulting companies that offer services to enterprises, including two core types:
- Purpose-based: This type of consulting looks at helping a company achieve a particular goal, and is based on a purpose, such as helping management optimize their executive and management methods based on data and case studies. Management Consulting and Strategy/Corporate Consulting are examples. Under this umbrella system are the consultants who help to implement plans as quasi-contractors – instead of just offering theoretical insights – and often include more hands-on consultant cases associated with IT and computer-security projects.
- Area-based: This type of consulting looks at specific departments and/or function within a company, and includes consultants that work specifically with the IT department, or HR department, or the Finance department. Under this umbrella system also includes consultants that work with companies associated with a specific industry, such as a firm that works with healthcare agencies, or firms that work with computer engineering enterprises.
As noted by Statista, consulting firms have become a massive industry on a global scale: two years ago (in 2017), the management consulting sector alone had a size of $133-139 billion, while the entire market was forecasted at about $262 billion. Additionally, the global technology consulting market was $48 billion, and the global strategy consulting market was worth $31 billion. Paying a well-qualified consultant to help a business optimize its services and workflows to better their bottom and top lines is an important way in which modern businesses get ahead of the competition.
There are several industry leaders within the global consulting ecosystem. However, the Big 4 (PriceWaterhouseCoopers, Ernst & Young, Deloitte, and KPMG) are commonly regarded as the most comprehensive consulting firms globally. Even so, there are a myriad of other critical and qualified consulting firms that can help your business save money and increase its productivity.
Why Businesses Hire Consulting Firms?
There are several reasons why a consultant might be brought onto a project, or into a company to view workflows and internal processes. Consultants are expert professionals with years of experience (often in a very specific niche) that can help complement your company’s internal teams/skills, and can offer novel ideas, tips, principles, and suggestions that internal teams may not have the experience to create. To this end, managers and executives often seek the assistance of a consulting firm for new workflows and specific projects, and when venturing into unknown territory. Essentially, consulting firm employees are thought leaders within an industry and are composed of the most experienced go-to people for business advice and suggestions.
Many scenarios arise where a business may seek the aid of a consulting firm. We’ve given a few examples below.
When Your Business Is Not Doing Well
Ultimately, a business should meet its financial goals and should keep profits and income aligned with long-term forecasts (as closely as possible). A typical example of why a business would seek a consulting firm is for financial reasons, i.e. the business is not doing well. This can mean a business that is not scaling or a company that is simply slow and/or has a low net income. Increasing the bottom and top lines of a company is one reason why consultants are often brought in.
For example, if a small business is struggling to establish a foothold in the online book-selling department via their single web asset (an e-commerce website or platform, like Amazon), they can hire a marketing, IT and/or sales consultant to help give them ideas or insights on creating a content marketing system, and using SEO with social media to market their brand and increase their top line.
When You’re Not An Expert
One of the more conspicuous reasons for bringing in a consultant is the fact that a company’s internal teams may not have all of the necessary, specific skills that are required for certain projects. Rather than train and/or hire a salaried specialist, it is possible for companies to outsource to a consultant/contractor who can bring in the required expertise on a certain subject and/or offer their assistance with projects (temporarily, as needed). Such a system can save money and time while giving a company much-needed expert opinions and advice that is outside of the purview of internal personnel.
For instance, a company that does not understand cybersecurity regulations or how to maintain due diligence may bring in an IT security consultant to ensure that the company’s e-commerce website complies with PCI-DSS, among other things.
When You’re Starting A New Business
When starting a new business – especially when it comes to small enterprises with little capital – having a business, management and strategic consultant can greatly help with reducing overhead, and getting the best ROI on every project. Many consulting firms specialize in startups. So, to avoid mistakes, it’s best to consult and make effective plans and strategies.
Imagine a family who wants to begin a family-owned business selling rare gems in an uncharted region. Such a venture may require a corporate and strategic consultant to help them chart a long-term plan, help them establish their projects, manufacturing and supply-chain systems, and inventory, along with learning the best marketing tactics to align with their business model.
When You Have A Limited Budget
Budgeting is one of the most critical – and difficult – parts of managing a company’s entire financial portfolio. Ensuring that overhead is reduced and that all funds are going to the most critical projects is something a financial consultant can do. Finance consultants can also help with both tactical budget planning and long-term strategic planning that can help a company align their financial goals with their critical projects and overall business model. Ultimately, to avoid the high cost of staffing a salaried financial officer, hiring a consulting firm is more cost-efficient.
For example, a company that is unsure of how to increase profit margins may ask a financial and marketing consultant to help them reduce overhead and sell products to a new demographic, such as online instead of via a brick-and-mortar store.
When You’re Behind The Technology
In this digital age, adopting the most modern technology is a must to establish strategic differentiators, and to stay ahead of the competition. Consumers want the most recent and best products/services, so companies that lack the latest technology (i.e. those using legacy software) may put themselves behind the competition while also risking security vulnerabilities and less-optimized workflows. Projects for upgrading technology infrastructures can include tapping the expertise an IT consultant that strategically plans for a company or enterprise to be set up with several IT assets:
- Native Mobile Apps
- Cloud Systems
- E-commerce websites
- Social Media Apps and Social Media Marketing accounts
- Business Messaging Apps
- Artificial Intelligence Systems
- Big Data Systems
- Internet of Things systems
- Data Analytics Systems and Business Intelligence Suites
- ERP and CRM apps
- Blockchain Systems
- And more…
For instance, a company that is utilizing legacy workstations without any cloud data center or cloud analytics systems may require an IT consultant to help them migrate their data to the cloud and install both security measures and data analytics suites within their IT infrastructure.
When a company is unsure of how to be brought up to the modern age (digitally), hiring a consultant to lead the way is a good idea.
When You Don’t Have A Strategy
Companies that go into their business without a strategy will most likely have issues with scaling, marketing, and remaining competitive. A strategy is a long-term plan – a blueprint – that helps establish the direction that a company wants to ultimately take to stay within its business model and meet its overarching goals. To get there, strategic consultants and corporate consultants can help a business chart projects, workflows, and steps that are needed to get to the destination. Without such a map, a company may remain stagnant or unable to scale.
Say a new company that sells computer hardware parts and who aspires to being an industry leader in a particular region may not have the expertise to expand and reach new regions, customers, or demographics. Without a strategy, the company has no real way of setting a system in place for getting to the destination of being an industry leader. A strategic consultant can be brought in to use their expertise to draft up a blueprint that can help the company reach its overarching goals, while providing management with the know-how for tactically planning and producing the requisite long-term projects that can help the enterprise get to the ultimate, planned destination.
What Does A Consultancy Service Do?
Consulting services carry out a variety of important tasks that can help a business have a more objective, data-driven perspective on how to tactically carry out projects, strategize their long-term projects, and leverage resources most effectively. In order to do this, consulting firms conduct certain industry-standard processes that can help an enterprise of any size reach their goals.
1. Conduct Industry Research
One of the most important tasks of a consulting firm is to carry out professional, industry research on specific aspects associated with a company’s business model, including competition (benchmarking) – which may include the products, prices and strategies of industry competitors – along with consumer trends, market trends, and even new regulations. Such aspects have a direct impact on how a business operates, and how well a business may do in an industry or region. Such critical market research helps businesses or companies stay current with the latest and most critical industry trends.
2. Analyze The SWOT
The SWOT (Strengths, Weaknesses, Opportunities, Threats) is a Management consulting framework that is used by management consultants and corporate consultants to help a business identify critical aspects that can help the business improve.
Part of a consulting firm’s responsibility is to analyze the Strengths, Weaknesses, Opportunities, and Threats of a client company and ensure that their current business practices and plans are optimized for success and scalability.
3. Identify The Issues And Challenges
Every business has challenges and pain points that need to be solved. This requires research and analyzing the market to pinpoint weaknesses in a company – what isn’t working – and how to transform such weaknesses into strengths.
4. Come Up With Solutions
Finding the lowest-cost solution and implementing solutions in the most effective manner possible is part of the job of a consulting firm. Consultants will present to a company a thorough analysis of the company’s issues and how to solve them in the most feasible way possible. Sometimes consulting firms come up with completely novel approaches and solutions to companies’ pressing problems or challenges, giving enterprises a unique way of dealing with common as well as uncommon problems.
Assess Pros And Cons
The SWOT framework above is a detailed way of carefully determining what is working within a company, and what isn’t working. A consultancy firm will come in and determine how to make things better within a company, which includes assessing the pros and cons of the company’s structure, projects, workflows, and workplace culture.
Develop New Processes
One of the jobs of a consultant is to find novel ways to solve old problems. This may include developing new and novel workflows and/or suggesting the use of completely new systems, such as IT applications or even project management methodologies. For instance, in a company that has too many issues within departmental silos, a consultant may suggest integrating pipelines within projects to create a more cohesive, streamlined, and problem-free working environment, which also increases its efficiency.
Develop Training Procedures
If necessary, consultants may develop training materials and/or implement training programs to help personnel work with novel methodologies and/or new systems. This can include working with new software or hardware systems or utilizing new workplace methodologies (i.e. DevOps or a Secure-Software development life cycle) for optimizing daily efficiency.
5. Implement The Agreed Solution
Oftentimes, consultants will go beyond simply giving advice or suggestions on what to do, and will undertake (or assist with) the actual tasks associated with implementing the new system or methodology (including training). This is important, as consultants are not just business theoreticians, but are experts who have real-world, hands-on experience with their specific corporate niche. They can offer tips and solutions, and then help to implement them.
For instance, a marketing consultancy firm can suggest to a growing e-commerce based enterprise that they should adopt a marketing strategy aligned to the use of SEO on their web assets. The consultancy firm can then help to implement the SEO-based system on the web asset and can help draft a marketing strategy based on viewing the company’s pertinent corporate profile/information and portfolio.
6. Reconcile and Present Information Through Reports
A consulting agency will reach their conclusions and/or implement the chosen solution by preparing a variety of visual, at-a-glance reports, presentations, and graphs to keep company management fully briefed of what is happening, the timeframe and budget associated with their implementation plans, and all other pertinent information. It is the job of the consulting firm to prepare and design beautiful and informative presentations and reports to communicate with company executives in an easy to understand format.
7. Make Recommendations For Improvement
Consulting agencies and firms are proficient at knowing how a company can improve, which includes:
- Optimizing workflows
- Increasing company productivity and efficiency (e.g. by utilizing business messaging apps to increase and optimize intra-departmental communication)
- Making project management more efficient
- Utilizing IT systems in a more effective manner
- Maximizing ROI on all required business systems
- Reaching more demographics via marketing, sales, and brand consulting processes
- Reducing overhead
- Improving profit margins
- Using more effective financial analysis tools
- Creating better long-term strategies for scalability
- And more…
Consulting agencies are key to identifying how to make a good business transform into a great business or enterprise.
Consulting Is Not Just About Providing Information
Ultimately, a consultancy agency or firm is one of the most critical partnerships that a company can form in this globalized age. Consultancy is more than just providing information or giving advice. Though the process begins there, it ends with a company receiving a systemic set of directives and principles that can result in a business going from point A to point B. In other words, consulting is a way to improve, optimize, increase, and better the business by utilizing the expertise and knowledge of an outside expert that knows how to carry out certain tasks in a better way. Consulting workflows contain a lot of valuable input, expertise, and assistance that a business can gain, which can help it thrive and grow.
A Consulting Firm is Useless if They Can Not Communicate Effectively
A consulting firm may have decades of experience within your field and they may offer a comprehensive set of consulting services, but if it appears like their communication skills are average at best, you might want to look elsewhere. The ability to communicate clearly and effectively is one of the most important factors that determines whether a consulting firm is a good fit for your organization. A consulting firm that puts effort into its ability to communicate is more likely to be trustworthy and reliable, and will be more capable of helping your company meet its business goals.