The Value of a Business Consultant

By Ron O’Herron, SBDC Lead Consultant

A business professor once asked his class if they knew the definition of a business consultant. After several earnest guesses, he finished the joke, “A business consultant is a person who rides down from the top of the hill after the battle is over and shoots all the wounded.” Another definition that circulates in the business community is, “A business consultant is a person who borrows your watch to tell you what time it is, and then charges you for it.” Ouch. These jokes are less funny if you actually are a business consultant, like I am, but I’m sure that quips like these wouldn’t be popular unless they had grains of truth. A bad business consultant deserves sarcasm and scorn if their main contributions to an organization are inefficiency, frustration, and lack of accountability. But it’s not always that way at all, and although opinions and mindsets will vary, the truth and fact of the matter is that a good business consultant can and will add significant value to the overall operation and growth of a business.

A strange but true example of the value added by a business consultant relates to a serious problem that existed at a nuclear power plant. Their trouble was detected in one of the reactor transmission lines, which was becoming very costly and creating a possible safety issue. A consultant was called in and after studying the problem for several days and meeting with numerous operations engineers, he provided a solution. On a diagram of the reactor and transmission lines in question, he drew a symbol for a strategically-located special type of monitoring/relief valve. The device was obtained and installed as suggested by the consultant. Immediately, the problem went away, cost savings were realized, and the safety threat was eliminated. Upon receiving the consultant’s $75,000 invoice for work performed, the Chief Engineer was shocked and questioned the consultant. The explanation was quick, factual and simple…$25,000 was for the specialty valve, and the balance was for knowing where to locate it!

There are many success stories from businesses that incorporated the use of good consultants to solve operational issues and enhance the strategic growth of their business. One such story involved a metal fabrication business that was contracted with several aerospace operations and a major construction equipment manufacturer. The business was experiencing a fair amount of rework on parts they were fabricating for one of the key customers. Although their business was successful and strong, the rework was costing them lost profits and valuable production time. Their mindset was that if something ships out and is returned, they will make it right and correct whatever the defect is. A strategic business consultant was brought in to review the overall operation. After spending time on the production floor, talking with engineers, employees and management, it was determined that these returned parts were not being thoroughly inspected by the QC Department. A program was developed and implemented to alleviate this issue. The results were an immediate reduction in rework, operational cost savings and increased profits. Although the solution was somewhat simple and easily implemented; however, the “forest and trees” scenario and old industry paradigms got in the way of identifying and correcting the problem.

Another story that is more sales and marketing related, involved an aerospace engineering and design company with multiple office locations in several states. Although successful, the business was constantly concerned and upset with the delays in obtaining product and systems approval from several key aircraft manufacturers. An operational business consultant was involved at the time and was allowed to sit in on weekly conference calls between offices to discuss the status of various projects with their clients. Each office would give an update on the status of their projects and often management would voice their disproval as to the status. When questioned as to the status of the projects, responses would often be that messages were left with engineers and purchasing departments regarding the status of the order placement. The consultant noticed that virtually all of the projects in question had a similar status….their follow up methods all involved inquiring as to the status of the particular project purchase orders. After some careful analysis, discussions with various office engineers and management, a meeting was held with the following suggestion:

“When contacting and following up on specific projects, rather than simply checking on the status of the purchase order, pick out a very important technical issue for the project and inquire with the engineer if they understood the operational issue and the value that the system offered the clients operation.”

Surprisingly enough, purchase orders began to be issued and projects closed successfully. Over the course of the remaining several months, business revenue increase by approximately $25 million!

The value of a GOOD business consultant is that they don’t get caught up in the “forest for the trees” mindset. They don’t bring any industry-specific paradigms or limited perspectives to the table. What they do bring, however, is an ability to listen, ask questions, think outside the box, analyze and provide value added solutions to the desired growth direction of a business, its owners and its employees.

The business consulting world has an array of consultants and consulting firms. Some are generalists, while others specialize in a given field. Many of these consultants aspire to a “one-stop shopping” process, in that the process and methodology that they use will work for any business. However, once again, the reality is that every business has its own personality. It’s the sum of the personalities of its owners, managers, employees, the products and services offered, the market or industry and, equally important, their customers and clients. Without a good understanding of all these operational areas and how they affect the business, a consultant’s suggestions and advice are “wishful thinking” at best!

So, with all that said, making the decision to use or to not use a business consultant rests on the shoulders of the owner of the business. A GOOD business consultant has “been there and done that” and their methodology and number one objective is helping you and your employees grow the business and be successful, by analyzing the past, dealing with the present and planning for the future.