How to Avoid Wasting Time and Money on Ineffective Business Consulting for Your SME

Small and medium-sized enterprises (SMEs) often find themselves at a crossroads. With a vision to grow and succeed, the expertise of business consultants can seem like the silver bullet for navigating the complex world of entrepreneurship. But while engaging a consulting firm holds significant potential, it can also lead to costly mistakes if not approached with caution.

Step 1: Assess Your Needs with Precision

The first step in consulting is often the most overlooked – defining what you need. Assess your business with a critical eye and pinpoint the areas where you require external expertise. Are you struggling with strategic planning? Do you need help coding a marketing survey? Are financial models gobbledegook to your team?

Articulating your needs with precision shapes the type of consultant you should be looking for. Whether it’s a general business consultant or a specialist in a particular field, clarity of need will save you time in the search process.

Don’t rush this step; it’s crucial. Spend time in different sections of the business, talking to managers and frontline staff, reviewing past performance, and gathering data. A SWOT analysis might also be instructive.

Step 2: Set Clear Objectives

With a defined set of needs, develop clear, measurable objectives that you expect the consulting project to achieve. Are you aiming for a certain percentage increase in sales? Do you seek to develop a new operational workflow that reduces errors by a specific margin?

Concrete objectives help to keep both you and the consultant on track during the engagement. They also serve as a point of reference when evaluating the success of the project. Ambiguity in objectives can lead to scope creep and dissatisfaction with results.

To set clear objectives:

• Use the SMART criteria – objectives should be Specific, Measurable, Achievable, Relevant, and Time-Bound.
• Align objectives with your overall business strategy.
• Communicate objectives with everyone involved in the project.

Step 3: Research and Cross-Examine

Armed with your specific needs and objectives, take time to research consulting firms extensively. Start by asking for recommendations from industry peers and professional networks. Online reviews and case studies are also invaluable resources.

But don’t stop at the first five-star review. Cross-examine your findings by:

• Investigating the background of consultants within the firms you’re considering.
• Conducting informational interviews with potential consultants to understand their approach and expertise.
• Requesting client references and following up with those references.

Consulting is a people business, and the right fit can be just as important as the firm’s reputation.

Step 4: Evaluate Proposals Cautiously

As you narrow down your options, you’ll receive proposals from consulting firms. Evaluate each proposal with a critical eye. Look beyond the glossy reports and fancy presentations and focus on substance.

Key things to look for in a proposal include:

• The consultant’s approach to meeting your objectives.
• A clear project roadmap and timeline.
• A detailed breakdown of costs and deliverables.
• An outline of key performance indicators (KPIs) and how success will be measured.

Remember, a proposal is just a document. Don’t be shy about discussing your expectations and negotiating terms to better align with your needs.

Step 5: Keep Communication Lines Open

The success of any consulting engagement hinges on effective communication. Once you’ve selected a consulting firm, maintain open lines of communication to ensure that both sides are clear on expectations, deliverables, and any changes that may occur during the project.

Update the consultant on business developments that might affect the project’s scope or timeline. In turn, expect the consultant to relay pertinent information to you.

Consider setting regular check-in meetings to go over progress and address any concerns.

Step 6: Oversee the Process, Don’t Micromanage

While it’s important to stay involved in the consulting process, avoid the temptation to micromanage. Remember, you’ve hired the consultant for their expertise, so give them space to work.

Your role as the SME owner or manager is to provide guidance, support, and resources as needed. Trust the consultant to carry out the project according to the agreed-upon terms and only intervene when necessary.

Micromanaging can be a red flag to the consultant and might stifle their ability to deliver their best work.

Step 7: Measure and Analyze Results

Set up a robust system for measuring the results of the consulting project. Regularly track the agreed-upon KPIs to assess progress. This might involve analyzing financial data, customer satisfaction levels, or operational efficiency metrics.

If the results are not meeting your objectives, act on it. Discuss the findings with the consulting team and look for solutions. Sometimes, a project can be salvaged with course corrections. Other times, it might be necessary to cut your losses and part ways with the consultant.

Conclusion

Every consulting engagement is an opportunity to learn and grow your business’s capabilities. Take the time to debrief with the consulting team and internal stakeholders. What worked well? What could be improved in future engagements?

Apply the lessons learned to your internal processes, and consider how to build the newly acquired knowledge into your business’s long-term strategy.

Finally, if the consulting engagement was successful, consider a longer-term relationship with the firm or the consultant for ongoing support or future projects. A trusted consulting partnership can be an invaluable asset as your SME continues to grow and evolve.