By Guest Contributor Marieta Bencheva
As business owners know there are always risks that have to be faced. One in five small businesses fail in their first year.
Thirty per cent of small business fail in their second year, 50% fail after five years, and 70% fail in their tenth year in business.
What is happening and are such failures inevitable?
One of the biggest issues in small businesses is access to a range of expertise and talent. SMEs work using a ‘startup mentality’ ─ hire people with a range of skills and get them to plug holes as and when they appear.
But what happens when your business faces a serious problem? Many SMEs turn to professional services and consultants which has led to a thriving consultancy market. Currently there are over 700,000 consulting firms around the world and in the UK, SMEs spend a total of £60 billion a year on professional services.
Unfortunately, much of the spend is wasted.
Small business owners may only need the answers to a few questions, yet are forced to pay a minimum fee/contract length for advice that they may not have the expertise to implement.
Additionally, consultancy firms often dispatch their junior team members, using senior resources to manage and control their teams.
For these reasons, nearly half of SMEs avoid using external consultants because of over-inflated costs, with 36% citing scepticism about their level of expertise as a barrier.
What can small business owners do to get the type of advice they need at an acceptable price and rather than failing, help their businesses succeed?
Talk to employees
One of the quickest, cheapest and most effective sources of advice might just be your own staff. Over the course of their careers, people will often have held a variety of roles in a number of variously-sized businesses in different markets. Just because you hired them as a sales director doesn’t mean they won’t know how to fix an IT issue or can’t provide high-level strategy, 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 already know your business from the inside-out, so there’s no need to bring them up-to-speed. Besides, asking your staff costs nothing, so it’s always 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 recognise the problems or too attached to existing processes to even think of challenging them. If you’ll excuse the cliché, they can’t see the wood for the trees!
Contact your network
Everyone has a network whether you’ve deliberately nurtured it or not. People from school or university, friends and family, as well as business contacts you’ve connected with over the years. Anyone of them may have a solution to your challenge.
Start by going through your LinkedIn connections and sending a few messages. The professional focus of LinkedIn makes it an ideal platform for reaching out about business challenges.
PROS: You know these people; you know their background and can view their skills and experience. People are much more willing to help out someone they know than someone they don’t, making it potentially much cheaper than a consulting firm. They may also know someone within their own network that can help.
CONS: If you are asking for a favour you have 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.
If your personal network can’t help…
If you’ve tried your personal networks to no avail, you could always 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 of putting you in contact with someone. 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 are connected with ─ you simply have to trust the network company to connect you to the right person ─ making it a bit of a blind call.
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. In total, more than 36 individuals and firms were charged with a variety of financial and corporate crimes, causing a swath of regulation aimed at clamping down on unscrupulous practices.
Employ a consultant
In reaction to the declining popularity of expert networks and in response to 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 a brief 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 overcomplicating the solution. You can even test the solutions in principle before the call, giving you live data to feed back to the consultant.
Additionally, 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.
Your team will have to implement the solution. 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.
However, if you get your timing right and get good quality advice you can identify the solution to any challenge that is thrown at you. With the solution implemented your business can grow and do so without the burden of large debts or excessive overhead costs.
ABOUT THE AUTHOR
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.
LinkedIn: https://www.linkedin.com/company/consulthon/
Facebook: https://www.facebook.com/CONSULTHON.CO.UK/
Twitter: https://twitter.com/CONSULTHON @consulthon
Instagram: https://www.instagram.com/consulthon.co.uk/ @consulthon.co.uk
References
https://www.fundera.com/blog/what-percentage-of-small-businesses-fail
https://www.inc.com/soren-kaplan/the-business-consulting-industry-is-booming-and-it.html
https://smallbusiness.co.uk/uk-smes-expert-consultants-2538135/
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