“When we arrived, the company was extremely indebted, sales were not so bad; but profit margins were very low and fixed costs were out of control. What generated the most stress was managing the cash flow. Every week there was a choice between paying providers or paying banks. The fortnight that there was payroll, you could not pay the banks or the suppliers. The process to reverse the problem took almost twelve months. We started with a deep diagnosis, then came the stage of making decisions. Firm decisions had to be made, steps taken with great caution and hard work. ”
This was five years ago. He is one of our newest clients and one of the best examples of tenacity, strength of character and discipline.
An experienced consultant can do great things for your company.
Consultants have enormous advantages and strengths, which is why they are hired by companies of all sizes. The largest companies in the world always have a staff of external consultants who support them. The greatest advantage of the consultant is to be able to see from outside what is happening in the company, that possibility of having an objective vision, plus the experience accumulated in other companies, allows him to see things that the people inside are not seeing.
I have been dedicated to consulting, specialized in financial reengineering and in management strategy issues, for ten years - out of my 30 as a professional. My experience tells me that the investment that a company makes in a qualified and well-focused consultancy is paid many times and recovers in a very short time. The investment is paid because by solving problems, they increase the ability of companies to improve their profits or avoid crisis situations.
About this option of hiring external consultants, I ask you these questions:
• Why do large multinational companies hire consultants, sometimes paying fairly high fees, when they already have experts on their rosters, some even perhaps more qualified than the same consultant hired?
• Why do you have to hire consultants?
• Why pay more than employees are paid?
• Why do some companies hire those same consultants over and over again?
• Why do large companies have such high regard for the services they receive from their consultants?
I will now mention some of the reasons that answer the previous questions and that make an entrepreneur decide to hire a consultant in their businesses.
The first four reasons have been my star services as a consultant, in all this time; I will also mention others not less important:
1. The need to diagnose problems and find solutions
One of the main skills of a good consultant is his ability to diagnose problems and propose practical solutions.
Companies face all kinds of situations, problems or crises that place them at a disadvantage compared to the competition, affect financial capacity and lower profit margins.
Finding where the problem is is the first step in solving a problem. An experienced consultant has the ability and objectivity to diagnose a situation and its causes. Recommending solutions to solve these problems is the added value, as well as the ability to look at the consequences of each alternative, both medium and long. All of this is of great benefit to the companies that hire this consultant.
2. The need for a complete restructuring
Many companies go into extreme situations, requiring extreme solutions. It can be a serious financial crisis, serious working capital problems, extremely high debt levels, high capital costs, or low profit margins.
It could also be the need to take the company to the next level of growth to face the competition or take advantage of opportunities in the market.
One of my clients had to invest almost $ 4 million dollars to double his production capacity. He had to do it for two reasons:
1) The market was expanding and the product of this company was in increasing demand.
2) The company's level of debt required a higher level of sales to cover its increasing fixed costs, mainly the payment of the debt. The financial breakeven point had increased by almost 60%.
A complete restructuring generally includes a deep financial reengineering process, it is not just a managerial and operational issue.
As a specialist in financial reengineering I have participated in these processes many times. I have literally seen many companies go bankrupt from the ashes.
Some consultants also “temporarily” take over the management of a business to solve problems that require more than advice. This happens because, for different reasons, some companies cannot implement the most dramatic solutions with their own people.
3. The need for capital and financing
Every company needs money.
The need for better sources of financing is common in all companies, mainly those that see increased sales or require greater reinvestments in their installed capacity.
Looking for sources of financing is something that both companies in crisis and successful companies are constantly in need of.
Zero debt is a myth about business, a company that wants to continue growing and improving its competitive capacity must constantly finance its operations.
4. Government regulations and taxes
Companies work in environments where there are regulations, controls, laws and obligations of all kinds in order to operate legally and legally.
Companies that do not know or do not comply with the regulations face sanctions, fines and the risk that their operations will be stopped by the government or its institutions.
When these companies operate in different countries, this issue is more complex. When opening in a new country, the most effective way is to hire knowledgeable and experienced external consultants in those new markets that the company wants to operate. This reduces risk and is much quicker and more effective than sending people from the same company to do the research. It is also much cheaper.
Later I will comment on the case of a multinational company that hired my services a few years ago to solve where they should install a plant that manufactured and supplied the Central American market.
5. The need to raise the level of efficiency and competence
A company's profits can increase just by diagnosing and increasing the operational efficiency of the business. This efficiency can be improved both financially, in the operational part or in the sales area.
There are great opportunities to multiply profits, looking for improvements in efficiency levels.
If the competition is more efficient than your own company, it can offer better prices, better service and earn more, perhaps with the same level of sales.
Inefficiency begins to manifest in lower profits, higher operating costs, high fixed costs.
Poor quality, delays, or low productivity are the product of inefficiency.
An experienced and expert consultant can collaborate with the entrepreneur, greatly in this. The profits are huge, sometimes with small ones; but precise changes in the areas of the company that have the capacity to generate more value.
6. The need to increase your sales
No company can be maintained over time without sales.
If the company is new and has invested in expansion, it must reach the operating and financial breakeven point as soon as possible. And to generate cash flow, you must exceed that level of sales in record time.
Sales reflect for the company, customer satisfaction and loyalty to the brand and its products. More sales are more customers, or more sales per customer.
When a company needs to increase its sales in the short term, a specialized consultant can be of great help to a company.
7. The need for fresh ideas
It is natural that management and its team are immersed in the day to day. Daily problems can block the mental ability to find other solutions or open space for new ideas.
A consultant with excellent problem-solving skills, even if I don't know the company in depth, I can make big changes. Not being involved in the day-to-day or ignorance itself, allow the consultant to look at the circumstances of the company from a different perspective.
8. Company policies
About five years ago, a Mexican company with operations in Central America made the decision to manufacture directly in Central America. They came assembling their products in Guatemala, from where they distributed their products to El Salvador, Costa Rica and Panama. They wanted to expand operations to Honduras and Puerto Rico. They had to figure out where to install their own manufacturing plant. Its General Manager, Mexican by origin, suggested opening in Costa Rica, where he had lived with his family for more than seven years, but other people suggested the possibilities of El Salvador, where there was cheaper labor, a very industrial park attractive and excellent ports.
What did you do? They hired a consultant in El Salvador. I was hired to analyze the Costa Rica option. It was up to each one to assess the advantages and disadvantages of each country for this new expansion of the company. In the end they decided on Costa Rica.
Companies know that the subjective aspect can bias the decision making or the approach of solutions by the people who are within the company. What benefits or hurts personally, the members of a management team, can have a huge influence on decision-making.
This makes large companies hire external consultants to objectively assess the proposals presented by the managers of their companies or their middle managers.
The consultant works as a filter that objectively evaluates the different proposals.
In the case of the Mexican company, its regional manager preferred Costa Rica, because there he had made his life with his family; but also because he knew the country better. By hiring me, the parent company managed to better filter the two options it had in mind.
That same company then hired me to “air-condition” the company's Code of Ethics, since it had to be implemented in Costa Rica and had to be adjusted to reality and regulations. Other experts participated in this new project, including a lawyer specialized in labor law.
I can mention several additional reasons that lead companies to hire external consultants:
• The need to hire temporary staff.
• The need to train employees.
• All topics that have to do with computers and data processing.
• And now, increasingly, everything related to ensuring that companies have a presence on the internet. This world is becoming more virtual every day and, year after year, sales made through the Internet are greater than sales outside the Internet. This is already a reality. In 2010 Internet sales were higher than sales in the physical world.
The last point above is very interesting. In my own experience as a consultant, things have changed dramatically with the new economy that the internet has been creating. Before, all my clients demanded that I personally visit the company to “see myself”. They used the phrase "presence is important". I still serve clients that way, but in 2010 I began to provide a mixed consulting service, I visit them several hours a month and coordinate the rest of the work via the internet. You can monitor my clients from anywhere in the world! For the year 2011 I will be implementing the Montenegro Platinum Coach VIP Program that will allow me to serve clients through virtual consulting 100%.
Signs that indicate the need to hire a consultant
There are specific situations that arise in companies that indicate the need to hire a consultant.
If you face any of these situations, it is because you need to analyze the option of hiring a consultant:
• Your company does not have a business plan or structured business plan to guide your future planning.
• You are not satisfied with the profits of your business and your knowledge of the business tells you that there are opportunities to double or triple them.
• The global economy is going through times of crisis, your business sales are stagnant, fixed costs continue to rise and margins are decreasing.
• There is a chronic shortage of cash flow that manifests itself in constant stress in choosing between payroll payments, supplier accounts, and bank fees.
• The company must increase its production capacity to face competition or to take advantage of opportunities offered by the market.
• Low levels of efficiency in some departments of the company, high staff turnover, low motivation by staff, employees with excessive workload, delays in deliveries, deficiencies in service.
• The company requires a capital injection, being able to improve working capital, its cash flow, to enter new markets or to increase its production capacity.
• The General Management or the Board of Directors has little reliable and useful information about the market, about the company itself and about the competition.
Hiring qualified, but above all, experienced consultants can help improve overall business efficiency levels, increase profits, and help the entrepreneur take their business to the next level of growth.
• Are you currently facing any situation or problem that needs to be resolved?
• Have you come with this problem for a long time to the point that it has become chronic?
• Do you want fresh ideas for your business and an external point of view that allows you to see opportunities for improvement and growth?
Perhaps it is time to hire a good consultant for your business.
