What is Management Consulting?

All businesses begin with an idea.

Only a few entrepreneurs will look into market data to find a supply gap and fulfill it. This would dictate the "Blue Ocean" strategy, but that's a topic for another time.

The majority of entrepreneurs choose to market their skills or leverage their specific expertise. Beyond this, the success of the newborn business often depends on your hard work, engaging new clients, and marketing to find these clients. During the first five years, about 45% of new businesses survive. If you've made it that far, congratulations! Your business concept has been proven to be viable, but now you would need to consider the best methods to optimize, grow, and scale your business. Although you may be a master of your craft, optimizing operations may be outside of your comfort zone; knowing the business OF the business becomes crucial. This is where a consultant may come in handy.

Depending on the decision you're considering, there may be benefit from a management consultant to review any relevant data to ensure your intended direction is profitable. It can be as simple as creating KPIs (key performance indicators) to monitor current business activities, or as convoluted as projecting ROI (return on investment) when entering new market segments with your next product introduction. The involvement of the consultant can be restricted to the market research and implementation strategy, or creation of new operating procedures to maximize the potential of the investment.

A common automotive repair shop market entry example draws from entry into the tire segment. When tires are mounted to the wheels, a balancing machine is required to ensure the wheel/tire unit is balanced to ensure smooth on-road operation. However, when doing this, many consumers also ask for an alignment to be performed. An alignment rack/lift does occupy a considerable amount of floor space, so calculating the anticipated revenue and return on investment percentages and time become a factor. Multiple variables would be considered, as some other tasks can still be performed when a vehicle is loaded onto an alignment lift. Internal data would be surveyed to determine how often existing clients need tires/alignments, if only puncture repairs would be performed, if tires were needed in pairs or full sets of four, etc. After this, research involving competitors in the area would be gathered (existing tire/alignment only shops, other repair shops with tire services, and those without, along with their typical rates for standardized services). Next, tire suppliers would be contacted to see typical tire margins and any particular sales data they can provide related to our market research area. Many more variables are to be considered as well, but, as you can see, the research and confirmation of profitability and the time-frame for ROI is not as simple as having a gut feeling that something will be successful. Data-driven decisions will help find the optimal strategy to enter or avoid this market segment based on the shop owner's risk tolerance. In the last case, the decision was made to only purchase a tire balance machine, as their customer base only repaired punctures, and alignments were not always necessary when repairing/replacing only one tire. The alignment lift would also reduce the working area where a standard 2-post lift would allow for increased revenue opportunities.

If you've ever faced any specific decisions that you were unsure of, feel free to schedule a free consultation with us. We'd like to make sure we have a full grasp of the situation being assessed before entering any agreements for work to be performed. At worst case, the conversation may give you a new perspective at looking at your situation and create new directions to consider.

I will be posting new weekly information in regards to previous work we've performed (with client anonymity, of course). Please feel free to reach out if you have any particular questions you'd like to see discussed here.