Why Do You Need Business Management Consulting?

When business grows crossing the boundaries defined by limited internal resources, including your own and your executives’, it pays to engage the services of external business management consultants. Large business management consulting houses such as Business Company, pride in their vast exposures to handling wide ranging business complexities under differing international conditions.

Businesses become complex as time passes by and handling them is a new challenge. Business houses of all types and sizes depend on external experts, management consultants, who analyze the situation on hand and optimize the possible, profitable way ahead. This may include ways to improve the firm’s structure, efficiency and returns.

When fast growing companies in the small sector find it difficult to manage various aspects like inventory control, expenses and legal matters, they have two options to choose from, in order that they tide over the situation into a smooth settlement.

· They recruit managers with proven expertise
· They hire the services of external business management consulting agencies

The latter option always gives the firms the cost benefit over recruiting managers, without the long term commitment. Normally, small businesses are served by small consulting firms which range in size from a single practitioner firm to a team of professionals.

Why Large Corporations Hire Business Consultants?

The spread and expanse of large, multi billion dollar corporations involves operations in complex situations besides being engaged in a variety of transactions. They may not find it worthwhile doing onetime operations and tasks themselves. Here is a snapshot of other circumstances when large corporations engage management consulting firms.

1. Market researching and site selection for their offshore expansion plans to help make decision on a new venture.

2. Explore the possibilities of merger and acquisition of a firm engaged in the same line of business or a related one. And help complete the legal, corporate as well as financial formalities till end.

3. Fund raising through either of the IPO, private placement of instruments of investment or loans and venture capitals including fulfilling statutory requirements

Vertical and Horizontal Expertise of Business Management Consulting Firms

Barring a few large consulting firms, most of them specialize in particular lines of businesses. You might have heard of Public Issue Management firms or firms specializing in Market Research and Finance Management and so on. Such consulting firms can be termed as vertically specialized in their fields. Where as companies like the ones mentioned above, Company are experts in multiple areas of business conducting right from financial auditing to offshore acquisitions and can be termed as firms with horizontal specialization.

Business Management Consulting Firms, by their virtue of experience of having handled various situations will have a practical approach to problem solving. This is another plus in favor of them.

How Do You Set Consulting Fees?

One of the most frequent questions I receive from those who are trying to start or grow their own consulting business is: “How and what do you charge clients for your consulting services?”

The ways of billing clients are numerous. There are hourly rates, by-the-job fixed rates, contingency or performance arrangements, flat fee plus expenses, daily fee plus expenses, and many other methods of charging for your consulting services. Which one is best?

Let us consider some ways of billing for your time.

1. Hourly or Daily Rate

Many consultants charge by the hour or day. To establish an hourly or daily rate, they try to calculate the number of billable hours in a year. Many hours will be spent marketing and in administrative and other functions, so this time is not chargeable to the client. As well, vacation time, holidays, sick days, and so on, can not be directly billed to the client.

Consultants, like other businesses, must charge enough to cover their overhead expenses and also earn a profit. If a consultant wants to earn twenty-five dollars per hour of working time, he (or she) might have to charge one hundred dollars per hour to the client. This assumes one half billable hours and fifty percent overhead and profit.

Your hourly or daily rate may be limited by what your competition charges, especially if you have not positioned yourself as different from them.

2. Fixed or Flat Rate

Some consultants charge by the job or a flat rate. For example, a tax consultant might charge three hundred dollars to prepare a tax return for you and your spouse, including an unaudited income statement for your business from information supplied by you. If the consultant takes only one hour to do this, he grosses three hundred dollars per hour. If, though, the tax consultant miscalculates the time required, he could take twenty hours to complete the job and make only fifteen dollars per hour.

Of course, consultants can also make a profit on the labour of their employees or subcontractors.

Many consultants claim to make more on a flat rate than on a hourly basis. Advantages include being able to give a quote to the client up front and less disputes on price (as the total bill was agreed upon in advance).

To protect yourself on flat rate assignments, always limit the scope of your engagement to something that you can calculate easily.

For example, if you are asked to give a quote for setting up a website for a business, you might break this project into smaller assignments.

First, you could give a quote for preliminary research and recommendations. Estimate the time required to meet with the client, learn about his business and goals, develop strategies and a budget, and prepare recommendations on how to proceed. Then, give the client a quote (perhaps in the form of a one page letter agreement or proposal). Upon acceptance of the offer by the client in writing, you may proceed with this phase of the project.

Some consultants collect one-half of their fee up front and half upon assignment completion for each phase of the consulting project.

If the client doesn`t like your recommendations, at least you get paid for the work you did. Perhaps you can charge him to prepare alternative suggestions.

If your website project was not broken into smaller steps or assignments, you could find that you spent way more time on the project than anticipated.

Also, you might not find out until you present your bill for the whole project that your client won`t pay, either because he is not satisfied with the results or because he is unable or unwilling to pay.

Breaking down a project into smaller assignments helps you estimate more accurately and limits your financial exposure.

3. Contingency or Performance Arrangements

Sometimes clients will ask you to become their partner. If you do, you are no longer an objective consultant.

What if your client asks you to do management consulting for twenty-five percent of the net profits? Will there even be any profit by the time he writes off his car, home office, entertainment, travel, wages to self and family members, and other expenses?

On the other hand, if you are a marketing consultant that is absolutely certain that you can increase a client`s sales, you may feel confident charging a fee based on the increased sales volume of the client. Are you sure your client will co-operate with you in the attaining of this goal?

Some consultants charge a flat rate plus a percentage of ownership or profits for their services.

Fees based on contingency or performance arrangements are risky. Most consultants are better off charging a fair price for their services and leaving the risk of the client`s business to the client.

4. Value Based Fees

Sometimes consultants can justify fees based on their value to the client. For example, if you save a client one million dollars in taxes, your fee may be higher than normal to reflect the value of the services rendered.

You might pay an accountant or lawyer a fee of fifteen hundred dollars based on time for certain tax related services. What would you be willing to pay to legally save an extra million dollars in taxes? Ten thousand dollars, one hundred thousand dollars, or more?

Can you apply this information to your own consulting practice? Is there some particularly valuable service that you can render that would justify premium rates?

However and whatever you charge, be sure that your fee is a good value for your client and also compensates you fairly.

Know The Real Worth Of Your Business With The Help Of Valuation Experts

Painting a precise picture of your business requires the services of business valuation experts in Australia who integrate experience and science in determining the worth of both concrete and intangible properties. A business valuation professional provides a clear view of a business’ financial affairs and strategic, operational activities so that clients can understand the real worth of their business as a whole.

Why is business valuation service essential?

It is essential that company owner comprehend the worth or value of their business. Also, it is also critical for business owners, gigantic or small, to identify the elements which increase the value of their company, too, to find out how worths change based on different factors that have a direct or indirect influence on business.

A business valuation firm partners with the company owner, experts, and even attorneys to produce a meaningful and extensive valuation report. A comprehensive business valuation report needs to be quickly understood by customers and other end users. Business valuation report ought to likewise be accurate under contentious and non-contentious conditions.

What kinds of services work valuation companies offer?

A validated business valuation agency must be able to provide reliable reports for the following circumstances:

  • Appraisals for start-ups that will assist in the negotiation of equity ownership to offer and compute the real worth of equity during the crucial capital raising period. Investors will want to know how much your business is worth and is unlikely to take you seriously without a comprehensive valuation report to back up any claims that you might have about your business.
  • Collect and process business data to come up with methodologies to fully maximise the value of a business, determine sales capability and channels, and evaluate business and liquidation costs
  • Business valuation is likewise essential in the financial restructuring and owner structure improvement procedure.

Indeed, hiring a business valuer can be a significant aid for business owners when making crucial economic and financial investment choices. Professional and reasonable recommendations from valuation professionals concerning critical areas of operation will assist increase efficiency, profitability, and durability with time.

International Business Consulting

Businesses today are becoming more and more complex. As a direct result, international firms and enterprises are faced with a new set of challenges every single day.

To help them remain competitive amid these changes, many firms rely on international business consulting analysts whose job it is to analyze an organization’s structure, efficiency, or profits.

In private industry, an international business consulting analyst is simply called a management consultant. Besides analyzing the problem-ridden organizational structure of a business, the international business consulting analyst will also propose ways to improve these weak spots.

For instance, your company may be small but it is rapidly growing and you need help improving your methods of managing and controlling inventories as well as expenses. An international business consulting analyst who has expertise in just-in-time inventory management would be the professional to hire.

How about if your company is a large one and you are in the process of creating a new division? You may still need to hire an international business consulting analyst who will help reorganize the corporate structure and eliminate duplicate or nonessential jobs.

An international business consulting analyst may be working independent of any management consulting firm. And even management consulting firms may range in size from single practitioners to large international organizations that cater to an international market.

Some analysts may specialize in specific fields of industry while others take a more general approach. So you may end up hiring an international business consulting analyst who will handle health care or telecommunications and a different one who will be responsible for human resources, marketing, logistics, or information systems.

The Work Process

Once an international business consulting analyst is contracted for his or her services, the first thing he or she does is to define first the nature and extent of the problem. This is the initial phase of an international business consulting analyst’s job where they are required to analyze relevant data, including annual revenues, employment, or expenditures.

They may also need to interview managers and employees as well as observe the different operations in the specific area of business.

After identifying the problem, the international business consulting analyst will then come up with sound proposals and solutions to address the problem. To prepare these solutions, the international business consulting analyst takes into account the nature of the organization, its relationship with peers in the industry, and its internal organization and structure. Often, an international business consulting analyst will gain insight into the problem by building and solving mathematical models.

Afterwards, the analyst will report his or her findings as well as recommendations to the client. Generally, these recommendations are submitted in writing but some international business consulting analysts may make oral presentations, depending on client preference.