Heed good advice

Business consulting has witnessed a boom in the last decade, thanks in part to the entrepreneurial nature of British business and a robust economy. Originating in the 1920s, management consultancy is now a multi-billion pound industry that has spawned thousands of agencies, independent consultants and contractors and two trade bodies: the independent Institute of Business Consulting and the Management Consultancies Association.

Lynda Purser, director of the IBC, said that managers approach consultants for help such as long-term future planning and designing and implementing financial management.

She commented: "Budgetary controls are popular because a lot of entrepreneurs are seat-of-their-pants people that can become convinced a business will work without spending a lot of time on the accounting side. This kind of thinking can only continue for so long."

While some brokers advocate the benefits of working with a consultant (Centor chief executive Neil Walton told PB last month that using O'Byrne and Kennedy had allowed him to "stand back and strategise"), others remain set against it. Moorhouse Group's chairman Lyndon Wood falls into the latter category. He said: "External consultants are a waste of time. Why fork out £10,000 when you can do it yourself?" (See The PB Interview on pp. 32-35)

Rates are high but negotiable, starting at £250 a day for an independent contractor and rising to £3,000 a day for a senior-level consultant; without setting goals carefully, costs can spiral. Purser explained: "It's important to manage the project well. If you aren't strict with what you want the consultant to achieve, they will go off and keep finding other ways to improve your business."

Cost is not the only sensitive area of consideration when bringing in a consultant. Being told how to run your business can involve swallowing some pride. Aash Patel, senior consultant for management consultancy Winchester White, believes the idea of hiring a third-party manager can be uncomfortable for some brokers because they are emotionally invested in their businesses and resent the idea of relinquishing control.

Patel said: "You see the managers that are comfortable with the way their businesses operate because they tick over nicely, however they need help to see how the company can continue to grow."

Ensuring you choose the right consultant can make the difference between good and bad experiences. Patel commented: "You must be comfortable with the consultant ... aligning your working culture with them is as important as assessing their expertise."

Larger brokers may have the funds to consider someone from the bigger agencies, such as KPMG, PricewaterhouseCoopers, Deloitte and Ernst & Young, while smaller companies may respond better to an independent specialist rather than break the bank on a larger consultancy. Finding such a specialist can be challenging, so brokers are advised to contact a trade body like the IBC or MCA. Alternatively, word of mouth can be a great way to find a good consultant; Winchester White claims that 80% of its new business is sourced through recommendations.

As professional structures at brokers continue to become more sophisticated, it will be interesting to see if the value consultants can add to a business leads to them gaining a higher profile in the sector and becoming more integral to the way brokers are run in the future.