Business advisors, consultants and coaches are increasingly common. Since the 1970s, published references to those terms have leaped, as this graph shows:
Why ? Here are three reasons:
- Stagflation & Reform: In the 1970s, developed economies suffered from a combination of high inflation, higher unemployment and low growth. Consultants offering potential solutions to business and governments proliferated, and the increasingly complex policy reforms that were common from the 1980s provided ample work.
- Education: Increased access to tertiary education produced more graduates in business and professional disciplines than large corporate employers needed for compliance type work, such as auditing or HR management. Many professional firms grew through offering expanded consulting services.
- Technology: The digital revolution has made it easier than ever for “corporate castaways” to offer their services directly to clients without working for big firms - and also created new problems for increasingly specialised consultants to work on.
But this increasing availability doesn’t make it easier for businesses to determine if they really need a business advisor, consultant or coach - so how are they different ?
What is a Business Advisor ?
Early this year we published an article comparing mentors, consultants and coaches - to expand further:
- Business Coaches: tend to work with businesses to help individuals build their own skills, eg as leaders. They don’t generally deal directly with business challenges.
- Business Consultants: typically work alongside business owners and leaders short-term, to solve a very specific problem, sometimes getting very “hands on” and often using highly specialised technical skills.
- Business Advisors: usually provide broad advice to business owners and senior leaders over the medium to long term, to help identify and address strategic, “whole of business” challenges that usually call on wide-ranging expertise.
Of course many of the best business advisors are also very skilled consultants and coaches as well - they often start their careers in a narrow area of expertise, like accounting - but it doesn’t always follow that great coaches or specialist consultants have sufficiently broad skills and perspectives to be terrific business advisors. In fact we think that great business advisors have to be strong across all Six Pillars of business health, working as individuals or as a close team.
So if you have a healthy business but a leader needs advice to personally succeed in role, get a coach. If your business encounters an isolated problem that it can’t fix yourself, hire a consultant. And if you need help across the business as a whole, especially when you don’t have a strong Strategic Plan, engage a business advisor.
Business Advisors Provide More Value
Just like a family doctor can deal with many common medical issues, the broad expertise that true business advisors have means that they can help small and medium sized business owners and leaders with many of their challenges without having to call on “narrow” consultants that might actually cost more. And just like GPs, the best business advisors are well networked and can help their clients find the right specialist advice, when it is genuinely needed.
Why Business Advisors Focus on Business Health - and Why Business Owners Should Too
Improving business health may not be high on your priorities right now, however small business survival rates in Australia were pretty grim even before 2020, with an average businesses survival rate of only 64% over a four year period. However, according to the Australian Small Business & Family Ombudsman’s most recent data, survival rates increase if your business can successfully grow:
- Sole operators have a survival rate of only 56%.
- Micro businesses with 1 to 4 employees had a survival rate of 68%.
- Small businesses with 5 to 19 employees had a survival rate of 77%
- Medium sized businesses with 20 to 199 employees had a survival rate of 82%.
- The largest firms, with over 200 employees, had the highest survival rate of 83 per cent.
So businesses that can grow healthily - ie they seize their opportunities but also manage their risks - are much more likely to not only survive, but to thrive, and become more valuable. But few small and medium sized business owners and leaders can grow a healthy business without help, which is why the best business advisors support sustainable growth by providing broad, strategic advice about both opportunities and risks.
How Does a Business Advisor Actually Help ?
If you ask a failed business owner the reason for their business closing, it is usually never one, single problem - it is usually a series of interconnected issues affecting multiple parts of the business.
We’ve already explored why well qualified and suitably experienced business advisors are ideally placed to help business owners with “whole of business” challenges over time - here’s five highly practical and useful things that they can do:
- Strategic Planning From recent ASIC data, 43% of businesses fail due to a lack of strategic management and planning. Most business owners find that they have a number of critical junctures in their business journey. It could be survival, growth, or increasing business value. It can feel overwhelming where to start. Business advisors can help business owners with their strategy by assessing the key components of a business, confirming its goals and mapping required actions on a “critical path”.
- Accountability with Flexibility Strategic planning provides a direction, but good execution requires accountability and oversight. Business advisers will keep you accountable to your strategic goals and plan. But even the best strategy will have gaps or mistaken assumptions and you will probably need to “pivot” - having access to a great business advisor will help you spot those pivot points early, and make the right changes in real time.
- Your Second Pair of Eyes There should never be one critical decision that “makes or breaks” a business. A great business advisor will help you break down the critical decisions you make into smaller steps of discovery, and make sure that you don’t miss something apparently trivial but ultimately critical. Never underestimate the business value of someone who “has your back”.
- Learning & Development Nothing replaces learning and developing your skills by “doing the work”, but your business advisor can make that process more effective and efficient by sharing their practical knowledge and tools with you. This will then help you to become more independent and successful, with reduced need for business advisors, consultants and coaches over time.
- Clarity & Confidence: What's keeping you awake at night ? More often than not, problems in your business will wake you up at 3am unless you know that you have the right support. The very best business advisors help you to see your business opportunities and risks more clearly, and take the right steps to deal with them, with full confidence.
Its apparent from this list that, while there are many fabulous business consultants and coaches out there, only a true business adviser can give a small business owner or leader what they really need to succeed, in an increasingly complex and troubled business world.