Business consulting is a vague and often misused term. That doesn’t mean that a business consultant can’t be valuable or impactful for your business.
Often, companies avoid hiring a business consultant because they aren’t sure when they need one or are unclear about how to measure the ROI of a consultant.
In this article, we provide a comprehensive overview and definition of business consulting, services that definition includes, how to determine when to hire one, and how to measure your return on investment.
Defining business consulting
A business consultant provides advice, guidance, and training in their area of expertise.
Companies hire business consultants for several reasons. According to an annual consultant report by The Predictive Index, most people hire consultants for their expertise on one of five areas:
Risk and compliance
Source: The Predictive Index 2019 Annual Consultant Report
Since most consultants specialize in specific areas of expertise, you should define your needs before researching consultants.
Unfortunately, anyone can call themselves a business consultant. This opens the market to scammers and inexperienced advisors., Fortunately, it’s not difficult to distinguish between professionals and amateurs:
Check verified online reviews
Review the firm’s case studies
Pay attention to background and experience
Business consultants with expertise and successful track records typically charge $20K+ per project, with some firms charging up to $50,000 or more per project.
Small business consultants can provide more affordable pricing. However, without the experience and expertise of well-established consultants, your ROI may end up lower.
Companies should thoroughly research the consultant’s specialization, success rates, and pricing structure before hiring.
How do you know when to hire a business consultant?
Hiring a business consultant means committing to a large investment of time and money.
If you hire at the right time, though, your investment can return significant benefits for your company’s revenue, reputation, and long-term growth.
As such, understanding when it’s a good time to hire a consultant is essential. Consider the following needs as indications that your team should hire a consultant.
1. Lack of in-house resources
Looking to launch a Facebook marketing campaign but have no idea how? That’s a good reason to hire a contractor or consultant to teach you the ropes and get you set up properly.
2. Expert Insight
When you’re making major decisions that will affect the future of your company, such as changing from a C corporation to an S corporation, a professional CPA can give you some valuable advice.
Having a specialist who understands the nuances of a decision such as bringing on an investor or improving performance on a project can save you from improperly focusing your money and time, and can help you avoid failure.
3. Business processes and operations audits
Maintaining effective business processes and operations is crucial for maintaining your company’s success or failure.
Often, businesses lack the time or ability to critically examine their core operations and need an objective party to diagnose the health of their processes.
For example, think about your sales outreach campaigns: When was the last time you actually read every word of what’s contained in your outreach to prospective clients? Do you know where you tend to put your call to action? Do you know what it even looks like?
Many times, even sales and marketing people involved in creating and sending those messages do not. This isn’t because they are incompetent or lack motivation, it’s because it’s what they do all day. Instead, they may be lost in the weeds of their own processes and either lack the time or the ability to critically reflect on the process they are responsible for.
Hiring a consultant can optimize and develop your core processes, which gives your business an objective set of eyes that can help your company operate more efficiently.
How do you measure the ROI of a business consultant?
Measuring the ROI of a business consultant poses a challenge since they often help in several areas, many of which are measured in long-term growth.
The Predictive Index Consultant Report found that more than one-fourth (27%) of companies choose not to hire consultants because the ROI is too difficult to measure.
To help you gauge the benefits of hiring a business consultant, approach the relationship with a few actions in mind:
Set specific, measurable goals at the outset of your relationship
Look for ways to measure the intangible benefits of their work
Use your scope of work with your consultant to determine how to measure their success. For example, if you hired a consultant to help with your business communications, use metrics such as:
Leads & conversions
To measure intangible benefits, think about the difference in your team’s confidence before and after your partnership. Run an internal survey or reference feedback that led to you to hiring a consultant in the first place with feedback that you receive during and after your partnership.
To sum up
Companies should hire a business consultant when they’re lacking in-house expertise, in need of a second opinion, or need to audit or restructure their business and operations infrastructure.