What is business consulting

Consulting is the business of providing advice to clients for a fee in order to help them solve a particular problem or range of problems within a certain area of business. Consulting services are provided by consultants, a majority of whom have gained their expertise from previous employment. Some consultants work for large consulting firms, such as Anderson Consulting or Gemini Consulting, that offer expertise in a wide range of business areas; other consultants hail from academia and assist companies with problems relating to research or theory; and still other consultants are self-employed, independent contractors who offer specialized skills in a certain field. For example, a former stock broker might become a financial consulant sultant; a computer scientist might become a computer consultant; a former employee in a non-profit organization might open a business as a fund-raising consultant; and an accountant might become a tax consultant.

Expertise alone, however, does not make someone a consultant¡ªat least not a full-time one. To be a consultant requires applying that expertise to practical problem solving. Consulting, moreover, is a business, so it also requires marketing skills and the ability to reach out and establish job contacts. Personality also plays a role in consulting success. In general, the kind of people who can put the needs and interests of clients before their own, who are not condescending, and who are unfailingly courteous and patient have the best chance at success. A small minority of consultants work as internal consultants for one firm, usually a very large one. The majority, however, work independently and with no partners, often from their own homes, or run their own small consulting firms.

Consultants constitute a growing number (as yet undetermined, since there are no licensing requirements for consultants) of the self-employed. This growth began in the early 1990s, when the trend toward corporate downsizing left many skilled professionals without jobs. According to the American Consultants League, the failure rate for first time consulting businesses is extremely high¡ª91 percent in the first year. Those who do succeed, however, usually earn as much if not more than they did in their former employment. Reasons for failure often involve a combination of such factors as poor initial planning, careless marketing of one's business, and intense competition. The successful consultants are usually those who find a market niche for themselves through research, intensive marketing, and locale. Charging the right fee and avoiding falling into the trap of "free" consulting (for instance, when a client whose contract with a consultant has ended insists upon additional "feedback" or "follow up") requires business sense. Consulting fees can vary from almost nothing to several thousand dollars per assignment, depending on the assignment, market conditions, and the minimal rate for that type of work.

Since the vast majority of consultants are self-employed professional business people, consulting typically is a business that involves long hours and much pressure. Consultants must study their fields of expertise continuously to keep abreast of developments. To the millions of entrepreneurs who enter the consulting profession, however, the attraction and challenge of creative, independent work performed in a comfortable environment outweigh the difficulties. And while competition is great, the number of large firms that dominate this profession are few. While some consulting fields have become saturated¡ªsuch as the computer and environmental fields¡ªthere are always new trends emerging. For instance, with the unexpected fall of communism, the demand for eastern European specialists and "free market" consultants skyrocketed. As the need for business information grows and changes, and the demand for consultants should continue to escalate.

Types of Consultants

Consultants help all sorts of businesses find and implement solutions to a wide variety of problems, including those related to business start-up, marketing, manufacturing, strategy, organization structure, environmental compliance, health and safety, technology, and communications. In addition to size of the operation and field of specialty, consultants can be categorized in a number of other ways. For example, an advisory consultant analyzes the problem and turns recommendations over to the client, but is not involved in implementation of the solution. In contrast, an operational consultant remains on hand to assist the client in proper implementation, or in some cases handles the implementation without the client's assistance.

Part-time consultants are generally employed full-time within their field of expertise¡ªmarketing, for example¡ªbut also offer their services to other companies on the side. Although they are not usually able to charge as much money as full-time consultants, they also are not expected to devote their undivided time and energy to the client. Process consultants are skills-oriented generalists. With expertise in one or more technical areas, these consultants can apply their skills to any industry or organization. In contrast, functional consultants apply their skills to a particular environment; for example, a hospital facilities planner would concentrate on consulting to hospitals, rather than to other types of businesses that require facilities planning