When Should I Hire a Business Consultant?

The Short Answer

Do I Need a Business Consultant?

An owner too close to the business can work on the wrong fire for years. Not from a lack of effort. From a lack of distance. The cost is time spent on the wrong problem while the right one grows quietly underneath.

For Owners

What Are the Signs I Need Outside Help?

1. 1

   A serious problem you cannot put out alone

   Payroll you cannot meet, a safety or legal problem, a key person about to leave, or your health giving out. One is enough. Do not wait for a second.

2. 2

   A fire that keeps coming back

   You built the foundation for it, and it returned anyway.

3. 3

   Numbers you cannot read or do not trust

   If the books do not tell you what is happening, every other decision is a guess.

4. 4

   A big decision that is hard to undo

   A loan, a lease, a partner, a sale, or a second location.

5. 5

   You can no longer tell a fire from a foundation

   You have been too close for too long.

Now the honest other side. You probably do not need a consultant if your problems are new, you have not tried the basic fixes yet, or you want someone to agree with a decision you already made. Start with the free fire or foundation self-check first.

Free advising is easy to reach through the Vermont SBDC, a statewide program of the Vermont State Colleges system. A consultant adds hands-on plan writing on top of that. See business plans for Vermont owners.

For Owners

Who Else Can Give Me Outside Eyes?

A paid consultant is only one option. Match the helper to the problem:

Someone close to you, like a spouse or longtime friend, can see outside your head even when they cannot see outside your business. Use them for that, and use someone further out for distance.

Worked Example

What Should a Business Problem Assessment Give Me?

A good assessment looks at six things, briefly, for your business alone:

• The self-check: fire mode or foundation mode, and how hot
• Serious problems that could do harm in the next 30 days
• Your top fires, ranked on hours, cash, crew, and customers
• The numbers: the next 90 days of bills, your prices, which jobs leave money
• The people: who decides what, who owns what, what happens when you are gone
• What is written down, and what lives only in someone's head

Then do the math on waiting. Say one recurring fire costs you 6 hours a week, and your time is worth $75 an hour. That is 6 x $75 = $450 a week, and $450 x 52 = $23,400 a year. If outside eyes find and fix it in a quarter, the fire stops costing you about three quarters of that, roughly $17,550 in the first year alone.

You should walk away with your serious problems named, your top fires ranked, whether you need fire mode or foundation mode first, and one first step small enough to start this week. All on one page. If an assessment cannot give you the one page, ask why.

For Managers

When Should I Suggest Bringing in an Outside Consultant?

You often see a fire before the owner does. When one keeps coming back, bring facts: how often it happens, what it costs, and what has been tried. Then ask, respectfully, whether outside eyes would help. The decision is the owner's. Making it an easy one is yours.

For Business Students

What Is the Role of a Management Consultant?

A management consultant diagnoses problems a business is too close to see, recommends fixes, and sometimes helps put them in place. For small firms, the value is often distance plus structure: an outside view and a method for ranking problems.

There is strong evidence it can matter. In a randomized trial with 432 small and medium businesses in Mexico, one year of consulting improved productivity and return on assets. Five years later, those businesses had about 50 percent more employees than the ones that did not get consulting. It was one study in one country, but it is rare, strong evidence.

Source: Bruhn, Karlan, and Schoar, "The Impact of Consulting Services on Small and Medium Enterprises," Journal of Political Economy, 2018.

The Utah Valley University SBDC in Orem offers free advising, mentoring, an Entrepreneur Academy and Spanish-language help. It pairs well with paid plan writing from Dr. Paul's Utah page.

Next Step

How Do I Get Started With Outside Help?

Retake the self-check. Tag your top three fires. Write down who your outside eyes are, and book one conversation with one of them this month. If the problem is tangled or the stakes are high, see how Dr. Paul works with owners on business consulting or as a fractional CFO or COO.

Find the fire that is burning on the list of the 14 most common small business problems. Outside Eyes and Red Flag are defined in the glossary.

Questions

What Else Do Owners Ask About Hiring a Consultant?