What Is Consulting And How Can Your Business Benefit?

Benefits Of A Consulting Firm
Consulting is, to put it simply, the process in which an expert provides professional advice to businesses, along with suggestions, tips, principles, and counsel on how to manage their affairs. Consulting has evolved, transitioning from encompassing a broad range of specialties associated with the entire business on a macro-scale to having specialists—associated with specific departments—provide advice on intra-departmental matters.

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What Is Consulting?

Within the global ecosystem of professional enterprises, internal teams are typically comprised of experts who specialize in carrying out specific duties within their purview. As global businesses became more prominent and organizations needed experts to fill knowledge gaps, consultancy practices, starting in the United States, became commonplace in the late nineteenth century. Consulting is, simply put, the process where an expert provides professional advice to businesses, including suggestions, tips, principles, and counsel on how to manage their affairs. Consulting is, to put it simply, the process in which an expert provides professional advice to businesses, along with suggestions, tips, principles, and counsel on how to manage their affairs. Consulting has evolved, transitioning from encompassing a broad range of specialties associated with the entire business on a macro-scale to having specialists—associated with specific departments—provide advice on intra-departmental affairs

Consultants usually have an “information” or “experience” advantage and have usually completed years of academic study, along with training and certification, and have gained years of experience.

Consultants often present to the organization’s board and may report to and collaborate with the top three C-suite executives, including the Chief Executive Officer, the Chief Operating Officer, and the Chief Financial Officer.They may take on entire projects or give advice on general, low-level processes across an organization after a careful review. Regulations are in place to protect both consultants and companies, and contracts are usually in place – along with a non-disclosure statement – so that the contractor protects the proprietary information and the rights of the company. It is important to note, however, that ultimately, the consultant works in the interest of the company, while remaining independent and objective.

A consultant will often be brought in on a job for his/her expertise on a process or subject, in order to provide an external, objective, expert opinion where it is needed. They will typically review key data, cases, infrastructure information, strategy, plans, and goals, along with an understanding of the business model. They then write a report or give a presentation explaining the direction a company should take. He/she may also end up working on his/her plans, in order to implement the solutions as a contractor. Thus, consultants are typically involved with management cases (assisting management with optimizing and organizing short-term projects and business activities/workflows), and strategic planning (assisting executives with fulfilling their long-term objectives by altering any number of business structures, processes, or projects).

With outsourcing becoming more affordable (hiring contractors and/or consultants), SMEs often rely solely on consultants without having internal teams carry out specific tasks that an outsourced specialist can handle. This often entails management consultancy and strategic planning.

The Consulting Industry

As a role that is typically filled by seasoned, senior experts in a field and/or those with years of experience, consultants operate as professional, objective advisors who offer an external view on how a business can improve, along with presenting to executives what is working in their company, what isn’t working, and what needs to be implemented for further optimization. Regarding the latter, consultants—sometimes synonymous with contractors—may assist with the implementation processes aimed at optimizing a company’s projects, workflows, and internal processes.

It is also important to note that many business consultants – or business analysts – have, in recent history, merged with the practices and speciality of data science, in order to give counsel not just based on experience (like the original consultants), but also based on a careful analysis of data and business intelligence. In this day and age, such practices often involve the use of IT systems and advanced technologies, such as Big Data systems, data science suites, and Business Intelligence, along with Artificial Intelligence/Machine Learning. That said, a consultancy firm is, essentially, a business advisory firm, and today, general “business consultants” often specialize in any number of standard organizational departments, including Information Technology (or information security), marketing, sales, management, etc.

The most popular types of consultancy include financial consultancy, management consultancy, corporate/business consultancy, IT consultancy, and marketing/sales consultancy. According to consultancy.com, 36 percent of the U.S. workforce work as consultants, and according to Statistica, in 2017, the global consultancy industry was worth $262 billion. Additionally, one of the more critical consultancy specialties, management consultancy, had a rough size of $139 billion in 2017.

Different Kinds of Business Consulting

There are a variety of different consulting sub-domains that focus on a broad spectrum of corporate systems, or specific departments/processes within an organization, the most important of which are management consultancy, marketing consultancy, IT consultancy, and corporate/strategic consultancy.

Management Consulting

As one of the most critical forms of consulting within a business, management consulting involves optimizing how executives and managers work to increase operational efficiency and productivity. As consultants typically focus on a specific sub-domain within a business, management consultants focus on the specific methodologies used by management, and thus, they typically work with C-suite executives.

Business Strategy Consulting

While management consulting focuses on how management operates in order to better the bottom line, strategic consultants focus on assisting C-suite executives with creating a concise, goal-oriented long-term strategic plan, which includes the overarching plan, along with working with the CFO, CIO, and CMO, etc. to create a financial strategic plan, an IT strategic plan, a marketing strategic plan (respectively), etc.

Sales Consulting

The sales pipeline is one of the most important aspects of any business. Sales consultancy has a sales expert assist with insights on how to optimize an enterprise’s sales pipeline, such as by suggesting the use of sales funnels and marketing charts.

Marketing Consulting

Along with sales consulting, marketing consultancy includes building an inbound marketing plan, using content marketing for more leads, reducing churn rates, implementing SEO in website assets, and otherwise optimizing a company’s marketing system.

Brand Consulting

Brand consulting is related to marketing consulting, but focuses more on the representation of the company in the eye of the public and includes optimizing public relations workflows, along with creating the most effective logo/design associated with the company’s assets, and even training customer service reps.

IT Consulting

As IT drives many factors within a company now, an IT consultant often works with a CIO in order to give insights on how technology systems can be merged, legacy hardware can be replaced, cloud systems can be leveraged, and how advanced technology (Big Data, A.I., etc.) can be utilized to better the bottom line.

Software Consulting

Software consulting is related to IT consulting and includes assisting a company with optimizing their workflows for testing software, optimizing their software development life cycle (SDLC), implementing new software development frameworks like DevOps, and securing all software systems in the company, among other things.

Corporate Consulting

Unlike management consulting, corporate consulting does not focus on management or high-level executives. Instead, it concentrates on the broad aspect of how the underlying business operates, with a similar goal of optimizing productivity and efficiency within corporate workflows, projects, and processes.

Operations Consulting

Operations consulting includes working with the COO to ensure that internal operations work in a smoother fashion, that workflows are optimized and streamlined, and that projects are able to be completed with maximum efficiency.

Corporate Finance

Finance consultants work with the CFO to ensure that all financial resources are being utilized with the maximum ROI, profit margins are optimal, financial plans are in line with the company’s goals and prior history, opportunity costs are recognized, and that the company can both scale and reduce unnecessary overhead.

Human Resources Consulting

HR consulting includes working with executives to ensure that all personnel are organized, regulations are followed, resources are being utilized with maximum efficacy, and that ultimately, the organization’s chief form of capital – personnel – are an asset instead of a liability.

Environmental Consulting

Environmental consultancy is associated with sustainability and the most efficient and effective use of resources, along with ensuring that all matters related to environmental issues (such as government regulations) are followed. Additionally, such consultants focus on care for the environment with regard to industrial and commercial organizations.

The History of the Consulting Industry

As noted beforehand, consultancy likely existed in antiquity in some form, while modern firms started in the late 19th century in the U.S. – as advisory firms – and spread throughout Europe after. The beginning firms focused on financial and technical consultancy, which then evolved into management and other forms of consultancy.

The First Consulting Firms

While it is perhaps impossible to objectively determine the first consulting firm to exist in history, some of the first Western consulting firms are well-known, including:

  • Booz Allen Hamilton: The first management consultancy firm to offer advice for both governments and public industry, Hamilton founded his firm in 1914.
  • McKinsey & Company: The first modern strategy consultancy firm that also offered management advice.
  • Arthur Dehon Little: One of the first management consultancy firms, created in 1886 by Mr. Little, and focused on technical research and advising.

How Consulting Has Changed Over Time

Throughout the years, consultancy has changed from a focus on finance, corporate/management optimization, and technical advising, to having experts in virtually every field offer expert advice on how to increase efficiency and productivity in a business of any size.

Advantages Of Consulting for Businesses

There are myriad advantages associated with using the services of a consultancy firm for your business, most of which revolve around the fact that utilizing the expert advice of external parties can reduce overhead, increase productivity, and provide a new platform for more optimal scaling, all of which can improve both the bottom and top lines of the company.

Knowledge Of Outside Market

While internal teams may possess certain skills and knowledge about their department and industry, external parties may have more specialized knowledge and skills within a specific niche that can assist a company when such knowledge, though not always needed, becomes necessary. Essentially, consultants have extensive knowledge of different aspects of business due to their experience in their field of expertise. Consultants can, thus, share valuable knowledge and information with their client – critical knowledge that the client may not have the capabilities of obtaining without a consultant.

An Independent Perspective

While internal teams may be paid to subjectively think a certain way, outside consultants may offer the most unbiased, objective view on certain issues and can provide a perspective that internal personnel – and even executive management – may not provide for critical pain points associated with the company.

Focused and In-Depth Problem Solving

While management and executives make the final decisions on how a business operates, consultants can help alleviate the burden of strategic planning by offering unique insights. This allows business owners and company personnel/management to focus on operations rather than devising new strategies and plans for implementation within the organization.

Specialized Skills

Consultants are experts in their field and can offer a unique set of specialized skills that a company can leverage in order to carry out strategic planning that otherwise would not be possible.

Catalyst For Change

Change management consultant roles are some of the more critical roles that a consultant can play to help drive a company into a new direction by offering critical, novel, and key insights that can help a company optimally alter its course in order to meet its goals.

Common Misconceptions of Consulting

There are many misconceptions about consulting, from the qualifications required to be a consultant, the nature of being a consultant, the pay associated with being a consultant, to the notion that only the Big 4 Consulting Firms (PwC, Deloitte, EY and KPMG) qualify as consultancy firms. Additional misconceptions exist and are related to internal views of consultants within a business, such as consultants being there to “step on other’s toes,” and/or that consultants are rented help – albeit, “overpriced.”

A Threat to Leadership

Some feel that consultants – who are an external, non-salaried advisor – may represent a threat to managers, or may come in without proper knowledge of internal processes. Though the ideology may seem credible, it is usually incorrect as consultants mainly offer advice, and do not ultimately make the decisions that drive a company in a particular direction. Usually, the CEO, COO, CFO, other C-suite executives, and the Board, etc. work to strategically plan the next steps that an organization will take. Consultants typically review all relevant information associated with a business and provide expert advice intended to align with, rather than oppose, company policies, strategies, and leadership.

Overpriced Rented Help

It is not uncommon for some individuals within a business to perceive consultants as unnecessary added expenses, or to consider consultants, who often charge by the hour, as overpriced. Such a generalization is usually incorrect, as many consultants have immensely positive impacts on growing – or even scaled – organizations, while not charging as much as would seem. In fact, since consultants often increase company productivity and efficiency with their strategic insights, they usually better the bottom line of a business and decrease the required overhead for projects. Even if they are an added cost, consultants usually maximize their value and end up helping a business save in the long run.

Other misconceptions associated with consulting that are usually incorrect include:

  • Consultancy qualifications: Not all consultants have or require extensive degrees or certificates. While most do possess academic theoretical knowledge, certification, and years of experience. It is usually more important for a consultant to have experience over theoretical or academic knowledge, yet it is always important for companies to inquire as to the academic background – and experience – of any potential consultant that they seek to hire.
  • Consultant Pay: While many consultants make upwards of six-figures annually, it is not always the case that consultancy is to be synonymous with large offices and elaborate firms. Anyone who has expert knowledge in a subject can be a consultant, while – at the same time – only those who are truly experienced often work successfully with larger companies.

Leverage a Consulting Firm To Grow Your Business

Consultants are an invaluable source of expert information and advice that can significantly and profoundly improve the direction of your business. Consultants have usually undergone their “rite of passage” and gained copious amounts of knowledge and experience in a given field, which enables them to complement any company’s internal teams to give an outside, objective view – a novel perspective – that no internal staff may be able to see from. The right consultant, working with the right business teams, can help a business of any size optimize their workflows, scale, and increase the productivity and efficiency of their projects.

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