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Loading...By Marieta Bencheva, Consulthon
When you start a business, you know you will be facing challenges and risks. In the first twelve months one in five small businesses will fail. Thirty per cent of small business fail in their second year, 50% fail after five years, and 70% fail in their tenth year of operation.
Why is this? Is this number of businesses shutting up shop inevitable?
When a serious problem arises is when many small businesses get stuck. While they have the breadth of skills needed to keep everything running, they don’t have the depth of skills needed to overcome major hurdles. And they can’t afford to hire a specialist full-time.
As a result, small businesses often turn to professional services and consultants which has led to a thriving consultancy market. For example, the UK, SMEs spend a total of £60 billion a year on professional services.
While the advantage of consulting firms is that they’ve likely seen the issue before, the level of experience or the complexity of advice given is often disproportionate to the needs of an SME and the cost too high.
In addition, consultancy firms often dispatch junior team members, using senior resources to manage and control them. As such, SMEs pay top-dollar fees and receive junior expertise
Hence, nearly half of SMEs avoid using external consultants because of over-inflated costs, with 36% citing skepticism about their level of expertise as a barrier.
What can small business owners do to ensure they get the right level of advice, for the right price, at the right time, so that rather than failing their business stays in business?
Ask Your Employees
One of the quickest, economic and effective sources of advice might be your own staff. Over their careers people will often have held different roles in variously sized businesses in different sectors. Just because you hired them as a sales director doesn’t mean they won’t know how to fix an IT issue, for example.
Start by bringing your entire team together for a brainstorming session. This way, staff with fragmented skills and experience can support one another in coming up with a solution that is both practical and effective.
Pros: Staff know your business from the inside-out, so there’s no need to bring them up-to-speed. With no additional cost it’s a good place to start.
Cons: Existing staff will be personally invested in projects and work completed to develop their department. As such, they may be too close to the company to recognize the problems or too attached to existing processes to challenge them.
Ask Your Connections/Personal Network
Everyone has a network: School or university classmates, friends and family, as well as business contacts you’ve connected with over the years. Any of them may have a solution to your challenge.
Go through your LinkedIn connections and send a few messages. The professional focus of LinkedIn makes it ideal for reaching out about business challenges.
Pros: You know these people and can view their skills and experience. People are much more willing to help out someone they know, making it potentially much cheaper than a consulting firm. They may also know someone within their own network who can help.
Cons: Relying on people you know to do you a favor gives you little leverage to make demands. They may not have a lot of time to help, making them slow to reply and little time to focus on the solution. As such, they are pretty unreliable for quick solutions to immediate problems, causing more uncertainty than they solve.
Find Connections Through an Expert Network
If you’ve exhausted your personal networks, you could try an expert network. These are companies that connect businesses with relevant experts from around the world. You send your challenge to the expert network company, they find a suitable expert in their books, and then connect you. Think of it as tapping into someone else’s LinkedIn and getting a guaranteed response.
Pros: As there is a strong financial incentive to help, expert networks are very reliable in terms in connecting you. You’ll receive a fairly rapid response and can quickly jump on a call to discuss the challenge. Calls may total several hours, but it’s still a lot cheaper than hiring a consultant for two full weeks.
Cons: These calls don’t come cheap. Businesses can sometimes pay expert networks up to $1,300 per hour for advice and they have no idea how long it will take to find a solution. There is also no way to personally vet the expert ─ you simply have to trust the network company to connect you to the right person.
Expert networks have also come under increased scrutiny, particularly in the US, after several cases of insider trading were discovered and prosecuted by the SEC in 2012. More than 36 individuals and firms were charged with financial and corporate crimes, causing a swath of regulation aimed at clamping down on unscrupulous practices.
Find a Consultant via a Different Route
With the declining popularity of expert networks and recognizing the need for quick, cost-effective consultancy, a number of disruptive services have now become available. For example, Consulthon, allows businesses to post their challenge to a network of experienced consultants for free. The consultants then pitch an overview of their solution, which the business owner can then discuss or try out without committing to anything. If the business then wants a deep-dive into the solution, they can book a call with the consultant
Pros: Reviewing responses before committing to a consultant means you can find someone who speaks your language. You can assess which of the consultants has the relevant level of experience and offers a solution that you understand, so there is no risk of over-complicating the solution. You can even test the solutions in principle before the call, giving you live data to feed back to the consultant.
Since the network is for expert consultants from a variety of fields, you have a one-stop-shop for all your challenges or a multi-faceted challenge requiring more than one consultant.
Cons: Calls can be expensive (e.g. £250/hr) but you do only pay for the amount of work you need, avoiding the cost associated with minimum contracts. Consultants may also have full-time jobs and therefore be unable to visit your premises or commence work immediately, restricting them to calls only.
With any consultancy option, whether in house, a member of your network or an external consultant, it’s still on you to assess the solution and accept the risk. If it doesn’t work, then you’ve wasted time and money with no recourse.
It’s also on your team to implement the solution. A consultant may be able to help on-site, but they’ll only be responsible for their area of expertise. As you’ll know, it takes a team to make any business successful. A consultant can only help navigate specific hurdles to help you achieve success.
As a small business owner, you want to get the level and quality of advice you need without breaking the bank. I hope the four options we’ve covered here will give you the opportunity to do just that.
Marieta Bencheva is co-founder of Consulthon, a UK Management Consulting Expert Network. Businesses can raise a Business Challenge and the network’s experts will brainstorm solutions. After selecting the answer they like the most, the business can book a paid one-hour advisory call and deep-dive session with that consultant. All the consultants are vetted by Consulthon and the platform offers businesses access to a wide range of skills, in a variety of sectors and countries.
The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer or company.
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