For every great business consultant that you know I bet you know several bad business consultants. Our experience with business consultants has been fairly negative. I know that there are excellent business consultants out there but they do seem to be the minority. Especially in small businesses I find a lot of business consultants giving bad advice. Small businesses are very unique and face totally different obstacles and challenges than larger corporations. In order to give a small business advice you need to understand small businesses in general. You also need to understand the unique circumstances of the specific small business that you are trying to help. Many small business consultants don’t do a great job. Here is how to identify and avoid a bad business consultant and what you can do to get good advice.
Typical Business Consultant
I think that many business consultants come in with a focus to cut expenses rather than to increase sales. The reality is most likely you need to do both with finesse, but first you need to actually understand what is going on with the business. Many consultants are brought into a small business as experts. Clients expect the consultant to immediately fix the issues with their business.
The problem is that the consultants typically don’t take the proper time to learn about the client on an intimate level. The knee jerk reaction of the consultant is to cut expenses so they can get immediate positive results to prove themselves valuable. The issue with this is that it is neither an appropriate nor a long-term solution for most small businesses. I typically see consultants slash payroll and then hit the client with a large consulting bill.
This really doesn’t do much for the bottom line, but does hurt the employees that have remained loyal and worked so hard for the business. My typical experience is that a consultant comes in slashes expenses and leaves the business in a worse spot than it was in prior to getting advice. So what is the proper way to find good small business consulting advice?
Ask Your Bookkeeper To Be Your Business Consultant
One avenue to consider is to ask your small business bookkeeper to be your consultant. Consider this; your bookkeeper most likely knows more about the financial aspect of your business than you do. Additionally your bookkeeper is not tied to your business emotionally or financially. My thoughts are that you will get real advice from a neutral party from someone that already knows your business financially on an intimate level. Additionally I think you would get great business consulting advice at a fraction of the cost compared to an outside consultant. Of course you have to believe in your bookkeeper and trust them. However, if you think your bookkeeper sucks then it is probably time for a change anyway.
SLC Bookkeeping Approach To Business Consulting
Assess Goals
The first thing we would do is asses your goals. You would be surprised how many small business owners don’t know what goals they have. And these are not just financial goals but also personal goals. Are you incorporating dreams into your small business? I like to keep asking questions of business owners until I find out exactly what their goals are with their business; their true goals both personal and financial. I would then start with a good financial analysis of their bookkeeping to establish a forecast and budget to align with their goals.
Cut Expenses With Growth In Mind If Appropriate
The next thing I would do is to do an analysis of the business expenses to look for areas to cut as well as categories to spend more on. I would only recommend an expense be cut if it were wasteful. This is not always payroll, in fact I find payroll to be a good expense. If your employees are adding value and helping you grow then that is a good expense. Most small businesses waste a lot of money on meals and entertainment and auto expenses. I dislike both of these areas because they are so heavily abused to the point of being wasteful. Of course there are many instances where meals and entertainment as well as auto expenses are productive. If you are actually using the funds to try and grow sales then it is a good expense. The problem is many small businesses get into the habit of expensing meals and auto charges that they become wasteful. They put their business in jeopardy and then try and blame it on everyone and everything else but themselves. You should decrease expenses that are wasteful and increase expenses that are growth oriented like advertising, marketing and productive payroll costs.
Play Offense Not Defense
I think the biggest mistake that many small businesses make when they get into trouble is to focus on defense rather than playing offense. Most small businesses just need a kick in the butt when it comes to sales. Your bottom line is suffering? No problem; sell more. I know that sounds simple but the last thing you should do is sit back cutting expenses and driving your business into bankruptcy. I know that there are times when you don’t have a choice. The bottom line is when push comes to shove I as a business owner will get paid first, no matter what. I will make the necessary adjustments no matter what to draw my paycheck. Sometimes that will come with tough choices and I’m prepared to make them if faced with that situation. However, I will have tried my hardest and exhausted all other possibilities before I start slashing expenses.
As a small business owner my main focus is always sales and marketing. I’m constantly trying to find the balance between new clients, the possibility of losing clients and growing smart. You can’t grow too fast or your service will suffer, but if you slack off and don’t grow you will never be a successful small business. Most small business owners try to do too much of the day to day tasks rather than focusing on growth and bigger picture tasks. Additionally many small business owners are not that good at sales. Sales was not one of my strengths nor one of the tasks I enjoyed when I started out. Then I got some good small business sales consulting and started to understand sales better. I learned the importance of sales and marketing and gradually got better to the point where I actually enjoy both selling and marketing our service.
If you've had a bad experience with a small business consultant you are not alone. The next time you look for help with your business don’t immediately jump to an outside consultant without considering your bookkeeper. Also, don’t think that cutting expenses will solve your problems in the long run.
