Four Key Shifts That Make Consulting a Real Opportunity: Part Two

Key Shift #2: The New Math

As businesses try to figure out how to grow the top and bottom lines, there is still a major focus on the middle line -- expenses. For most organizations, salary and benefits continues to be their single largest expense. Organizations are trying to prosper by managing costs.

Business owners are also very aware that they may have achieved the maximum productivity gains possible from their remaining workforces. Folks have been forced to do more with less for quite some time now. There is little room in the margins for the remaining workers to tackle important new projects and strategies, let alone improve ongoing operations.

We are seeing business leaders coming to grips with this conundrum. They want to initiate projects to grow their businesses or streamline their operations, but they do not have the bandwidth to get it done. They know that in order to succeed they need to do it, but they will not hire additional employees to achieve it. Spending too much on additional employees may doom them in the short term, yet failing to invest may doom them in the long run. In addition, the people who are still on staff may not have the requisite experience, time or knowledge to tackle special, innovative and strategic issues.

Business leaders who have survived the downturn are more convinced than ever that the answer to their project and strategic needs is not adding people to the payroll. Gains in productivity and the advancement of technology have allowed businesses to survive. This is one of the major reasons economists cite the “jobless” recovery. For years, economists have called 4.5% unemployment “full employment.” Now there is reason to believe that the voting public will accept a much higher number moving forward.

This brings us to the new math. For example, if an employer has a need for additional employees and a budget of, say, $150,000, they have a few choices. They could go out and hire a 30-year professional and spend the entire $150K. This might give them the knowledge capital they need, but not necessarily all of the manpower to accomplish the job. PLUS, with salary and benefits totaling $150k, this new hire may even feel UNDERcompensated based upon previous levels of income.

Option two is to hire two, or even three, young employees. You may get technical knowledge, but little industry knowledge. You may get enthusiasm, but add to your training costs as the new hires take time to come up to speed. You will get the manpower, but not necessarily the strategic understanding to drive the projects.

Option three is to spend the money a bit differently. It is this option that is an enormous opportunity for independent consultants. A business owner could hire TWO folks for $50,000 each AND hire an experienced consultant for $40,000 and SAVE $10,000! This situation gives a business owner the best of all worlds. In this scenario, there would be enough manpower to accomplish tasks, and enough knowledge capital to direct strategic thinking and drive solutions. PLUS, in this scenario, the business owner would also have young talent on board for future growth. And you can add to this the fact that a knowledge transfer would be taking place from the consultant to the staff. Gen Y particularly likes opportunities to learn, so they would prefer being under the mentorship of an experienced consultant. A true win, win, win situation.

Our experience tells us that the market is very open to hiring top talent on a project basis. We also know that during the recession, many businesses put strategic initiatives on the back burner, and now is the time they are willing to tackle these issues. One of the laws of consulting we have learned over these past many years is this: Once business owners have decided to tackle these initiatives that were on hold, they want them done YESTERDAY! This sense of urgency provides a major opportunity for independent consultants.

In addition to the opportunities that are being presented by established businesses, there are also a record number of start-up companies who could use your help. A well-funded start up often looks to a consultant for early guidance that becomes ongoing counsel.

This article is an excerpt from Buddy’s latest book, "Experience Matters: How to Succeed as a Consultant in Today’s World." To download your free copy of the full version, CLICK HERE.