Why Management Consultants Can’t Solve SMEs’ Problems (Updated In 2020 With Insider Tips)

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Management Consultants

You are the owner of a small and medium enterprise (“SME”). You are facing immense pressure from crippling problems especially in this challenging year of 2020. You yearn for someone to show you the way out. You wonder if management consultants can be your life-savers.

You started your dream of being a small business owner (“SBO”), free from the shackles of office politics, free from the inhibiting corporate rules and regulations, free from having to slog away for unappreciative slave-drivers. You basked in the freedom with control over your own time and goals.

However, you did not bargain for the unexpected challenges of limited access to finance, lack of databases, low R&D expenditures, undeveloped sales channels, and low levels of financial inclusion. You are at your wits’ end.

You lose sleep at night. You crave help. You wonder what a management consultant does exactly and whether you should engage one.

I am here to help clear your doubts and give you some insider tips based on my 30+ years of corporate and business experience.

Let’s dive right in

Where Do You Stand As an SBO

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Small Business Owner

Congratulations! You are one of the 400m SMEs in the world that are the driving forces of the world economy.

Definitions differ globally on what constitutes an SME. The key differences are mainly the annual revenue and the number of staff employed. In the USA there are 30.5m SMEs that employ up to 500 employees and generate annual revenue of up to US$7.5m. In the EU, an SME has a headcount of less than 250 and a turnover of less than € 50 m.

Global statistics from studies show the frightening fact that at least 50% to 70% of the SMEs will struggle and fail.

The key reason for SMEs failing is the lack of market demand. Studies revealed that 42 percent of small businesses fail because of this reason.

Next, the statistics show that 29 percent of new businesses failed because of funding problems.

Other common problems SBOs faced include picking the wrong team to work with, being outgunned by competitors, running into cost-related issues, and having marketing or sales problems.

In summary, the problems are either customer-centric or a lack of resources, or both.

Faced with perplexing problems beyond your ability to cope, you yearn for help, and the possibility of engaging the all-knowing management consultants crosses your mind.

The crux of the matter is to understand where a management consultant can (or cannot) help you and what role you need to play to ensure collaboration success.

Let’s start with an overview of what a management consultant does.

What Does a Management Consultant Do Exactly

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What Does a Management Consultant Do Exactly

Management consultants are supposed to have the industry knowledge and technical expertise to steer you through best practices in business, corporate strategies, and organizational restructuring. They’ll typically engage your staff to scrutinize their capabilities and investigate the problems.

Good management consultants have the experience and depth of knowledge to guide your directions with their problem-solving skills. They work across a wide spectrum of skills including business strategy, finance, human resource, and marketing.

Management Consultants have been engaged by many large organizations successfully to resolve the following issues:

  • Digital Transformation

The list is by no means exhaustive and illustrates how even large organizations can be plagued by problems that are expensive and time-consuming to solve.

What does that leave you as an SBO?

The next section can help shed some light for you.

Engaging Management Consultants For Trouble-Shooting is a Bad Idea

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Management Consultants

Technology has been a game-changer to catapult some companies such as Google and Facebook to unicorn status. The lightning speed of technological advancement can create problems for small businesses.

Can I be brutally honest with you for a moment?

It’s painful and I can almost guarantee that you won’t like what I have to say. I don’t want you to waste your precious time and money. So, out of respect to you, I like to share the truth with you.

So here goes:

You know how you have been struggling with cash-flow and getting sales? Tried everything, and it’s just not working, right?

Well, it’s not because you don’t know why your cash-flow looks awful. It’s not because you don’t know where your marketing has gone wrong. It’s not because you don’t know your organizational problems.

It’s because you lack focus and got your priorities all wrong.

And if you ever want a chance in hell of solving your problems, you’d better put in some sweat and your thinking cap.

Experienced and ethical management consultants are good problem-solvers for organizations under the right conditions. However, as an SBO there are 5 key points you should consider first before engaging one:

High Cost of Management Consultants

Let’s cut straight to the chase: good management consultants are expensive.

If you are cash-strapped, rushing to bargain-hunt for management consultants may not be a wise thing to do. Paying peanuts will only get you monkeys and you may end up being worse off. I am telling you from my experience on both sides of the fence. I have been ripped off by consultants before in my earlier corporate career. I was also amazed at the unethical stunts some SBOs can pull when I was starting as a consultant.

After my semi-retirement from the corporate and business world, I was approached by several SMEs for help. The SBOs typically paint a contrasting picture of how huge their business can grow to and why they need immediate help to tide through their misfortune. Many defaulted on their payment and some even tried to get me to work for free with empty promises of riches after they succeed in becoming unicorns.

In my earlier days as a management consultant, I took on some of the SOSs out of respect for contacts who referred my relatives or their business associates. I learned a lot about why SMEs run into problems from the repeated traits observed. The underlying problems were often in line with the 7 biggest challenges SBOs face.

You must be aware of the costs needed if you want to get a good management consultant to sort out your mess. No experienced management consultant will take on a project without clear guidelines and payment terms.

Availability of Your Life-Saver

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Life-Saver

A good management consultant is highly sought after and likely services multiple clients at one time. Their availability is limited and they may not be at your beck and call as you might hope for.

Consultants typically give you the strategy but they do not execute it. You will still need to have the resources for the execution.

No Guarantee

Consultants do not come with guarantees and you may end up worse than you started if the consultants are inexperienced and unable to even point you in the right direction. Not all consultants are capable of analyzing problems and coming up with appropriate solutions, especially if you are vague with your problems like “I want to fix my cash-flow problem fast”.

Limited Company Knowledge

Consultants lack knowledge of your company culture and established procedures. Work conflict with your regular employees may occur if the consultants are insensitive or inexperienced by just following the contract to the letter. Consultants with management experience are likely able to side-step unnecessary friction but they are usually more expensive.

Communication and Quality Concerns

Engaging a management consultant is a two-edged sword. If you do not have an in-house expert to communicate with the consultant and work through the deliverables, you run the risk of getting results that are not what you are looking for. You have to ensure that the consultant thoroughly understands the problems and constraints. For example, a consultant who develops a marketing strategy that none of your marketing staff can follow through would not help you grow your business.

5 Proven Steps to Deal With Your Management Issues

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Solutions to Management Issues

I have trodden the paths of having an illustrious career and also spectacular business failures. I fully understand the challenges of a C-suite Officer or an SBO. Many SBOs dream of being the C-suite Officer of a large corporation. Few wake up into that reality.

As a qualified engineer with a Ph.D., I always go back to fundamentals in analyzing complex problems.

Follow the 5 proven steps to gain insights into your management issues:

#1 Know your clients

  • Have you adequately identified who your clients are?

#2 Know your team

  • Does your team have the skills you need to manage your business?

#3 Know your resources?

  • Have you done adequate research and develop a comprehensive business plan before you started your enterprise?

#4 Know your business objectives

  • Do you have revenue and profit targets?

#5 Know your weaknesses and the critical areas you need help

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Know Your Weaknesses and Where You Need Help

You are the owner of a small business. You need to know your strengths, even more so your weaknesses in managing an SME. Be brutally honest with yourself.

I realized some years ago how backward I was with IT and managing businesses online. I know that my retirement will be permanent unless I have a working knowledge of managing online tools and technology.

I invested time and money into acquiring a working proficiency with WordPress, website design, affiliate marketing, e-commerce, SEO, guest blogging, content marketing, and social media marketing. My options expanded into many new areas with my new knowledge and skills.

Technology has been a game-changer to catapult some companies such as Google and Facebook to unicorn status. The lightning speed of technological advancement can create problems for small businesses.

If you do not wish to invest the effort into picking up the skills, you need to have the ability to identify good team members and convince them to be part of your team. If you lack leadership skills, be honest with yourself, and get a mentor or coach to brush up the learnable skills.

As the leader, your vision and directions are key to your success or failure. I leave you with an old saying from a renown philosopher that is often applied to business:

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

Sun Tzu, The Art of War

When Should You Use Management Consultants

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When to use Management Consultants

Let’s do a simple exercise where you can and should be honest with yourself. Imagine that you are an investor with huge cash reserves and you have just been pitched with investing in a company exactly like yours with an owner that has all your characteristics and traits.

What would you advise this owner to do?

Here are some suggestions:

  • critically assess if the business should and can be saved

Looking at the situation as an investor, would you invest?

If you honestly think you would, what would make you invest?

This exercise is crucial and will help you immensely to look from the outside in. You’ll avoid the self-delusional tendency where your emotions trump over your logic.

If you have done the exercise honestly, you will know the value of your business and exactly what you need to do. You will know how a good management consultant can help you and what details or instructions you need to give him or her.

The Way Forward

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Success Finally!

You’ll be pleased with surviving yet another crisis and acquiring new-found knowledge and skills as an SBO. You’ll be proud of your new-found skills to analyze your problems systematically without emotional baggage. You’ll be elated with being the rare few SBOs who know when and how to use management consultants.

You’ll be on solid footing with the key problems resolved. You’ll be confident in the future and look forward to upcoming successes.

Success is waiting for you. Start to implement the tips shown above.

Cha-ching!

Written by

Write content that helps businesses and entrepreneurs to excel, health-conscious people to stay healthy & fit, in a God-centered way. cytan2016@gmail.com

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