You don't get paid for demand: what is consulting and why does your business need it?

Third-party business advice: how to understand that you need it?

Business is a complex endeavor that requires constant concentration and action to increase profits. However, the reality is that sometimes it is simply not possible to understand which direction to move in, and it seems that there are no alternative solutions. But some people are ready to offer a fresh look at the company, which will be possible after analyzing the reports. External audit and consulting is still perceived by entrepreneurs as something incredible and unnecessary. In fact, it is a great way to establish sales, increase revenue, and improve the efficiency of the enterprise.

Project plateau: the essence and differences from the ceiling

The business could stop developing for two reasons.

The first is the market itself - the company has reached a ceiling.

The second reason lies in the enterprise itself - this term is called a "plateau". In practice, it looks like this.

Let's imagine that the turnover of a local hairdressing salon has abruptly stopped growing. This does not mean that the hairdressers are doing their job poorly. Rather, it is a sign that the entire potential audience has already been conquered. A real ceiling. If the company has hit a ceiling, then there is no need to change it. You need to look for new consumers and gain new market shares. In such a situation, a business consultant should answer the following questions.

1. How big a market can you capture? Should you open a new hair salon in the neighborhood, or try another city or district? What kind of profit can you expect with each option?

2. What will have to be changed when opening a new branch? After all, now the entrepreneur will have two outlets instead of one. They will have to divide staff, supplies, and other issues between them.

3. Do you only do hairdressing services? You can also try manicure and pedicure. In other words, think about the goods and services that can be added to the new enterprise.

In addition to the ceiling, another situation can arise in business, called a plateau. Its essence lies in the fact that the company is not profitable, although prospects are visible, and it seems to be clear where to move. But all attempts to change the business fail, and the entrepreneur loses hope of success. Such an entrepreneur simply needs professional advice. In the process of conducting an audit, eyes may be opened to an obvious solution that for some reason did not occur to the businessman himself. Most often, either an increase in turnover or a reduction in costs is used to increase profits. The auditor will analyze the situation and give a lot of useful recommendations to the entrepreneur, who will be able to leave the plateau and start growing.

4 popular mistakes in the CIS related to the work of consultants and auditors

Unfortunately, Ukrainian entrepreneurs have made little progress in understanding the nature of auditors' work over the past 20 years. Here are the most popular myths they believe.

"I don't need consultants, I can handle it myself"
Unfortunately, most businessmen think so. This is especially true where businessmen have been operating for many years. But in recent years, buyer activity has declined somewhat, the market has changed, and businesses need to change too. But stubborn entrepreneurs continue to believe that good times will come back on their own, and no action is necessary. This is a false position, and without modernization, the business of such people may soon fade away completely. Therefore, they are advised to reduce their ego and turn to professionals who will find shortcomings in their business activities and help restore the company's profitability.

"Only large organizations need consultants"
In fact, it is exactly the opposite. Large enterprises are able to create entire departments for analytics, risk assessment, and efficiency improvement, which is not the case with small and medium-sized businesses, where the entrepreneur is guided solely by his or her understanding of the market and intuition. But not everyone has enough experience or industry knowledge to really optimize a company on their own. That's why you need a professional auditor who can quickly identify all the shortcomings of the business model and suggest ways to modernize it.

It is especially important to use the services of a consultant if you are planning to enter a new market or expand your business. In this case, it is difficult to cope on your own, and the advice of an experienced professional will definitely not hurt.

"Consulting costs incredible money"
Of course, a comprehensive analysis of the entire enterprise by one of the market leaders is not cheap. But it's worth noting that consulting on a specific issue from a small consulting company or a private entrepreneur will be much cheaper. You should not immediately apply for a full check, it is much easier to ask for a solution to a really urgent problem, which will not cost as much as a full consulting cycle.

"Auditors are dominated by fraudsters"
Business is a field where you constantly have to check your partners for their reliability and transparency of intentions. The same goes for consultants. It goes without saying that scammers can work in any business area, you just need to be able to distinguish between honest consultants.

Where can I find a good auditor, and how can I check for reliability?

To make your work with an auditor as productive as possible, it is important to pay attention to the following qualities of a particular consultant.

• Skills. The auditor must understand the subject of the study. To improve a marketing campaign, you will need a marketing analyst. A professional accountant-auditor will find problems in accounting. An experienced employee of the relevant department will be able to work on the modernization of the sales department.

• Relevance. This term refers to the auditor's knowledge of the company's specifics. If the company is engaged in road transportation of goods, an auditor with experience in maritime logistics is unlikely to be useful.

• Trust. An entrepreneur who invites a consultant provides him with unlimited access to his statistics and other data. It is important that trade secrets are not subsequently declassified. Therefore, it is important to clarify as many details as possible about the potential auditor, ask about his or her knowledge of the business area in which the particular company is located. Honest auditors will not be evasive when answering and will immediately say whether they can help or not. In case the consultant does not have enough experience to help in a particular situation, he or she can recommend a colleague who has the appropriate experience and skills.

It is important to note that recently so-called "full-cycle auditors" have begun to appear, who are supposedly able to eliminate all the shortcomings of the enterprise on their own. However, it is impossible to know everything, so you should not turn to such specialists, since their knowledge of all areas of entrepreneurial activity remains under great scrutiny.

So what is consulting: a scam or a panacea?

Consulting can be called neither one nor the other. You can't guarantee that an auditor will build you a scheme that will triple your profits, or do everything on your own. But the most important thing that a professional auditor can provide is invaluable information about the market, business model and its process. To make communication with an auditor as productive as possible, it is best to follow a few simple rules.

The question should be equally clear. "How to attract customers?" - is wrong. "Advertising on the radio, SMS or direct mail with such and such an amount of money allocated for advertising?" - is already better.
Don't leave the consultant alone. Ideally, you should join them in the process of analyzing and finding solutions. It may well be that it is the joint coordinated work that will lead the entrepreneur-consultant team to the right decision.
You should not delay the implementation of innovations. The market is constantly changing, and recommendations that are relevant today may lose their value tomorrow. Therefore, it is better to do everything as quickly as possible, but there is no need to rush things - you can make mistakes.