Introduction
Consulting, what is it? You’ve probably heard of it, and you may have asked yourself “What do consultants actually do?”. This post will give you an idea of what consulting firms do, how consulting services can help your business, how to go about finding the right consultant for you, and how Parametric Pro uses our data-driven methodology to add value.
Throughout this post, we’ll cover:
What Is Consulting (And How Can It Help You)?
Six Specific Ways Consultants Can Help You Succeed
How To Choose And Hire A Consultant
5 Tips And Reminders About Consulting Firms
How Parametric Pro Adds Value With Data
It’s important to keep in mind that consultants have different areas of expertise, approaches, and resources, so make sure you find the right one for you!
What Is Consulting (And How Can It Help You)?
When you hear the word “consultant”, do you think of someone in a fancy suit advising a massive corporation on their entire strategy? If so, you’re not alone. But that isn’t a totally accurate visual of a consultant (though personally, I love a good suit).
By definition, consulting is “the business of giving expert advice to people working in a specific field”. Put simply, a consultant is someone who enables an organization to achieve their goals while providing accurate and reliable information to improve decision making.
Consultants work across all types of industries, roles, and locations to apply their strategies and skills to each unique case. Because of this, you’ve probably heard of several different types of consultants, usually names for their specific industry:
Management consultants will work with executive teams to solve business problems and strive for organizational-level goals. They are also known as business consultants, strategy consultants, or HR consultants.
Independent consultants often started consulting after working in another industry, so they are highly specialized in a specific area, and don’t answer to a firm.
Financial consultants typically work in the M&A space at large accounting firms, and provide insight into risk mitigation and financial forensics.
IT consultants, or digital consultants, focus on helping their clients develop and implement new information technology (IT) solutions. Not to be confused with the day-to-day IT workers who maintain systems, IT consultants are the ones creating the systems.
These are a few broad categories of the different types of consultants, but that should clear up any confusion for the most part.
So how can a consulting firm help your business?
The most common reason you may want to hire a consultant is to temporarily use a skillset that doesn’t currently exist within your company. You might want access to a Lean Six Sigma professional, or maybe someone who can structure the financials and contracts for a merger.
The list goes on, and there are likely quite a few skills that consultants have at their disposal that can help you.
Another way consultants can help your business is by filling employment gaps for certain projects. Projects that are extremely resource intensive can draw staff away from your other day to day operations, but since these projects are usually one-off deals it isn’t worth hiring full-time employees.
This is where you can bring in a consultant as a temporary skilled employee to fill the gap, and since the consultant is generally contracted rather than a full-time employee, you can save money on benefits while allowing your full-time employees to keep doing what they’re great at.
A third way you can benefit from consulting firms is through the outside perspective. You’ve probably had an issue in life at some point, and turned to a friend or family member to see what they think about it. Businesses can often benefit from this practice too, especially when making very impactful decisions. For example, you could have an idea of how to solve a problem and want to confirm that your decision is the right one by bringing in an expert.
A consultant is perfect for this because they provide not only an outside perspective, but also their experience and expertise. Your consultant may have worked on a very similar project previously, so they can tell you first-hand what works or doesn’t.
Definitely the least pleasant option here, consultants can also help you carry out controversial actions. If you need to undertake a substantial restructuring and lay off several employees, it may be best to hire a consultant. Consultants can help you with this by not only providing an outside perspective, but also providing a lack of connection to the situation, ensuring that emotions don’t come into play while undergoing the process.
Lastly, if you are pitching an idea to partners, management, or executives that may not be taken well, it can be very valuable to have a consultant backing you during your pitch to provide credibility. Along with providing a review of your idea, your consultant can help you plan out and execute your pitch.
Six Specific Ways Consultants Can Help You Succeed
Environmental Scans
One of the longest-standing services of consulting firms is the environmental scan. Environmental scanning is one of the most essential tools your company can leverage to get ahead or stay ahead of the competition.
In a general sense, environmental scans help you find and analyze trends and forecasts, stakeholder requirements & inquiries, and internal strengths & weaknesses to prioritize the most strategically valuable projects.
There are many ways you can perform an environmental scan, such as the SWOT analysis, PESTLE analysis, and the Porter's 5 Forces framework. When used in conjunction with each other, these three frameworks provide a great snapshot of what is currently happening in your market, as well as potential future events that you can prepare for.
The SWOT analysis is used to identify internal Strengths and Weaknesses, as well as external Opportunities and Threats. This is a good framework to keep updated throughout each year, as it can be brainstormed relatively quickly in meetings.
The PESTLE analysis reviews the Political, Economic, Social, Technological, Legal, and Environmental influences on your business, and is regularly modified into other forms such as PESTE, PEST, STEEP, etc.
Porter’s 5 Forces help you evaluate the current conditions of an industry by analyzing the Powers of Buyers & Suppliers, and the Threats of Substitutes & New Entrants, and how they interact with the degree of competition in the market.
Financial Restructuring & Modelling
Financial restructuring is the process of reorganizing a company’s financial structure, which mainly consists of debt and equity. A restructuring typically takes place during a period of hardship for a company, but can also happen while preparing the company for sale, buyout, or merger, shifting the goals of the company, or a transfer in ownership. The end goal of a restructuring is generally to leave the company with more financially viable operations.
Debt restructuring involves reshuffling your balance sheet to reorganize the debt capital of your company. Debt restructuring is more common than equity restructuring, because debt restructuring is a simpler and more efficient way to maintain an optimal cost of capital.
Equity restructuring involves the reorganization of your company’s equity capital, including the retained earnings and shareholders’ equity that appear in the balance sheet. Equity restructuring is an arduous process as it is highly regulated, and mainly deals with the premise of decreasing your company’s shareholders’ equity.
You may want to consider debt restructuring if your company needs working capital, has become insolvent, or if you want to replace high cost debt with debt of a lower cost. There are several reasons to undergo equity restructuring, such as providing an exit mechanism for shareholders, maintaining your debt-equity ratio, or raising new finances.
Since this process can become very complicated, consultants are generally brought on to help with restructuring in order to optimize the new debt-equity structure.
Mergers & Acquisitions (Deal Advisory)
When performing any type of M&A transaction such as a merger, acquisition, or joint venture, there are many things to consider. A well-executed M&A transaction can be extremely lucrative, and provide value for years to come.
Oftentimes, consultants are brought in to help through all stages of a given M&A transaction. This includes the preparatory stage, where a rough negotiation takes place and usually results in a Non-Disclosure Agreement or a Letter of Intent being signed.
Next, and probably one of the most important parts, is the Due Diligence stage, where you must sift through the other party’s documents to ensure everything is as it should be, and the other company is valued correctly. This process can be extremely time consuming and is generally where consultants are required the most. By hiring a consultant with a financial background to go through financial statements, you may uncover some ‘creative’ accounting practices that are used to inflate the value of a company.
A favorite of ours at Parametric Pro, consultants are also used to assist during negotiations. By having the backing of an experienced consulting firm, you gain leverage in a negotiation. Combine this with the nuanced negotiation tactics that firms can employ, and you will find yourself getting more out of a deal than you may have originally anticipated.
Finally, during the documentation, signing, and closing stage, everything is formalized and written into contracts. Consultants are able to add value here by making sure the legal wording isn’t allowing for loopholes or potential contract breaches. After everything is finalized and the money changes hands, consulting firms are often then used to make sure the transition period goes smoothly.
If you’re selling your company, it’s a similar process but the consultant will work with you to optimize your financial statements and maximize your cash flows in the period leading up to the sale. This will maximize the value you are able to receive from the transaction, and make sure everything is above board and transacted smoothly.
Whether buying, selling, or partnering with another firm, consultants can offer assistance at every step of the way to ensure that you are getting the best value from the deal.
Process Flow
Creating and managing process flows can be amazingly rewarding for your business, optimizing labor, material usage, and the overall efficiency of your firm to increase revenues while decreasing costs. A good process flow can greatly reduce bottlenecks, redundancies, and potential risks during a given process.
Process flows are generally used in three ways - visualizing a process for training or sales purposes, explaining a process for training and informational reasons, and process improvement through mapping and analysis.
Consulting firms are often brought in to perform process flow analysis and improvements, as it is a very time consuming task if done thoroughly. The firm will look into every single task performed within each process, until every high level process is covered in depth. This allows consultants to find any inefficiencies in even the most mundane tasks.
After performing an initial analysis, the consultants will work to build an optimized version of the process flow. At Parametric Pro, we will also help to implement the new process flow and make adjustments if necessary.
During the implementation process, KPIs (Key Performance Indicators) will be formulated and benchmarked so that you’ll know if the new process flow isn’t being followed, ensuring that the newfound efficiencies will remain in place.
Organizational (Re)Structuring
Whether you’re an entrepreneur just starting out, a small business, or a multinational corporation, a comprehensive organizational structure is important. Organizational structure is a very important factor for your company’s success - a mis-aligned one can create gaps in your workforce causing employees to take on more work, greatly reduce your agility as a company, and even decrease customer loyalty & satisfaction.
Regardless of the age or size of your company, gaps and inconsistencies among the organizational structure can exist. Gaps in the structure cause your organization to become inefficient, while inconsistencies between your mission, values, and operations can lower employee satisfaction & productivity.
Consulting firms can be brought in to help you create a cohesive organizational structure from the ground up, or modify your existing structure to ensure that it is consistent and without gaps.
The restructuring process can be an uncomfortable one as there may be resistance to change within the company, as well as the potential need to let some people go. At Parametric Pro, we work with resistant employees to demonstrate how the restructuring can benefit them, and are experienced in having the tough talk with those employees who no longer have a place at the company.
Contract (Re)Negotiation & Procurement
Contract negotiation can be a very long process as all parties look to maximize their value while minimizing risk. When taking part in contract negotiations, it is important to ensure that you fully understand the contract and all possible outcomes before signing it.
Bringing a consultant into a contract negotiation is a very valuable asset, as they can have experience dealing with certain loopholes or creative writing, and can spot anything out of the ordinary.
Another benefit of bringing consultants into contract negotiations is the added negotiation experience. Our CEO Nic Green has won negotiation competitions around North America, and prides himself on getting the best outcomes for his clients.
Consulting firms can also examine your existing contracts to find any opportunities to add value, and renegotiate them on your behalf.
But what if you don’t have contracts to negotiate in the first place? You can hire a consulting firm to find and initiate valuable contracts for your business, be it with suppliers, distributors, or other firms.
Contract procurement is often hired out to consultants due to the vast amount of connections that can be beneficial. Whether you’re buying, selling, need distribution, or anything else, a consulting firm likely knows where to find contracts for your company.
How To Choose And Hire A Consultant
So you’ve come to the conclusion that hiring a consultant is probably your best option to advance your business, how do you go about choosing one and then hiring them?
Determine which service(s) you need from the consultant
The consultant you hire will depend on the services that you need. The first step to choosing your consultant is to identify what gaps you need filled, and come up with a specific definition of the work that you need done.
Do you need help growing your market share, creating an ERP system, ensuring congruence throughout your company, or retraining employees? Or maybe you need to buy out a business partner, undergo an acquisition, or apply for additional funding?
In any case, having a well-defined plan for what you need will ensure that the consultant is a good fit, resulting in a quicker turnaround and better results.
Determine the type of firm you’d like to hire
After deciding what you need from your consultant, you can look into different types of consulting firms based on their expertise, track record, and specializations.
Would you prefer a general consulting firm, or one that has specific areas of expertise? A general firm can offer a holistic approach to wide-scale company changes, while a specialized firm may be better-suited to help with a specific project.
Would you rather work with a large firm or a smaller firm?
Large firms can offer more resources and possibly more experience in a general sense, but they may offer less attention to detail as they deal with several clients at a given time.
Smaller firms can offer more focused expertise in certain areas, and they understand what it’s like to grow a small business. A lot of small firms are started by entrepreneurs, so they’ve likely been through many of the same challenges you are facing.
Create a list of potential firms to hire
After identifying what you need and what your preferences are for a firm, it’s time to compile a list of firms that you may be interested in working with.
You can also have firms come to you by putting together a Request for Proposal. More detail about that here.
When creating your list, make sure to include at least two or three choices so that you can compare rates, competencies, and culture fits across the firms.
See what each firm has to offer
After creating your list, it’s time to start interviewing firms. By booking an introductory call, you can ask about the specifics of what the firm is able to do for you, and how they may approach your problem.
In addition to the consultation calls, you’ll want to look into the firm’s website, including what services they offer as well as past clients.
It can also be helpful to check out the LinkedIn profiles of the consultants to see their education and work experience.
Weigh the efficiency of the expense
One of your main reasons for hiring a consulting firm is to reduce the potential expenses associated with a project. Naturally, you’ll want to factor in the cost of the firms that you’re considering and check that they offer competitive rates that will fit your budget to maximize value.
A consulting firm’s fees will vary greatly depending on the industry, region, level of expertise, and other factors. According to a 2019 survey, the majority of consultants (31.37%) charge on a per-project basis, while 23.38% charge by the hour, 17.30% use a value-based approach, 15.40% use monthly retainers, and 12.55% charge by the day. Find the cost method that you’re most comfortable with.
While it can be enticing, you don’t want to choose a firm solely based on how low their rates are. Rather than affordability, look into the efficiency of the expense. If a firm has a higher rate but can get the project done in far less time and with better results, it is a more efficient cost than a low-rate firm who would take longer to complete the project.
Ask about the firm’s methods
When you hire a consulting firm, it isn’t just an exercise in handing off a project, then getting results back later. Expanding your marketing efforts, restructuring a deal, making an acquisition, and any other services you may need are collaborative efforts. You must work with your consulting firm at every stage of the process to maximize the success of your project. Because of this, it’s important to know how the firm operates.
Consider asking the firm how they will approach your project, what tools they will use, and what communication methods & strategies they’ll be using while working with you. Ask how they will delegate responsibilities so that you know who is accountable, who the project manager(s) is (are), and who you can connect with to provide feedback and get updates.
The main takeaway you’ll want to find is the ease of communication and the level of collaboration with the firm. Try to find a balance between micromanaging and handing off the project completely, one that works best for you.
Make sure there isn’t a culture clash
Before entering into a binding contract with your chosen firm, make sure you’ll actually be able to work with them through the project.
If the firm’s workstyle and culture doesn’t align with your business, it can result in conflicts mid-way through the project.
Schedule a meeting to discuss workstyles as well as potential concerns to minimize any unforeseen obstacles down the road.
Read the fine print (or get a lawyer to do it)
After you feel comfortable to fully onboard your chosen consulting firm, it’s time to read over the contract. Ensure that you go through it thoroughly and read all the fine print, including the quoted turnaround times, payment terms, and any other details that may have been discussed.
Read the contract carefully to ensure that you don’t have any surprises throughout the project, such as unwanted costs or project delays.
Even if you fully go through the contract, it can be beneficial to hire a lawyer to look it over in excruciating detail.
There are lots of considerations when hiring a consultant, and we have a deeper dive here. This post includes things like Request for Proposals, what to consider after hiring a consultant, and guidelines for developing a contract with your consultant.
At Parametric Pro, we pride ourselves on tailoring our services to each client, and working with everyone in the company from the ground up for the best possible experience and outcome. To see how we may be able to help you, book a free consultation call with us.
5 Tips And Reminders About Consulting Firms
A great consulting experience should feel like a business partnership that can grow over the long-term. More than just providing additional resources and knowledge, you want to be able to envision working with your chosen consulting firm over multiple projects, as the more you work together, the better the outcomes will be. The right firm can add exponential value to your business, so doing your due diligence is key when hiring a consulting firm.
Remember that disagreements happen, and your consultant may offer you advice that you disagree with. Be sure to hear them out, as they may have experience in what they’re suggesting.
When offering advice from an outside perspective, a consulting firm may propose something unconventional or untraditional. These suggestions can spark pushback from staff, but it is important to analyze the outcomes before dodging progress.
Communication is key. If your hired firm isn’t performing, or is straying away from your vision without discussion, be sure to talk to the project managers about it. By making sure everyone is on the same page, the project will be accomplished more efficiently and effectively than a project with disjointed communication.
If your consultant tells you something and you don’t understand (we love our acronyms), don’t hesitate to ask! Nobody will judge you, and it’s better to have a clear understanding of the conversation rather than trying to piece together bits of understanding.
How Parametric Pro Adds Value With Data
At Parametric Pro Consulting, we believe that almost every process can be converted into a mathematical algorithm, process, procedure, or long term initiative to handle the majority of daily business. Parametric means a set of factors (or parameters) that define a system and determine its behavior.
All great businesses are systems with hundreds of variables, factors, and parameters that dynamically affect day-to-day operations and decision making. These constant decisions present a drain on everyone from the executive team down to the customer-facing sales representatives.
Our goal is to optimize these parameters using a variety of strategies. We base our decisions on what works according to the data along with analyses from our expert team, resulting in a data-driven comprehensive strategy being formulated for our clients.
A well built business system that is optimized with data will minimize the conscious drain on the executive team, giving your most important staff the time and ability to look forward and prepare for growth.
In addition to freeing up resources at the executive level, optimization will ensure that your ground-level employees’ operations are as smooth as possible, maximizing your cost efficiencies.
Closing
After reading this post, you hopefully have a better understanding of the value that consultants can bring to your business. Remember that while consultants may make recommendations, the final decision is still yours to make, and the accountability that goes with it.
We looked at several ways consultants can offer value to your firm, how to go about finding and hiring a firm that fits into yours, and some ways you can go forward into creating a thriving business partnership. Finally, we looked at how Parametric Pro uses data-driven methods to perform our consulting duties.
If you’d like a more detailed look at how Parametric Pro operates and the methods we use, check out our strategy frameworks and marketing frameworks. These resources are free to use, and we hope they can provide you some value.
To learn more about how Parametric Pro can help you, book a consultation call with us here:
If you liked this post, please consider sharing it with your network!
Check out our Business Strategy Frameworks and Marketing Starter Kit guides for more useful tools.
Are you interested in the consulting industry? Parametric Pro Consulting Foundations offers more in-depth knowledge on this article as well as several other topics to prepare you for a career in business and consulting. Check it out here!
