Thinking of employing a business advisor?
It can be extremely valuable for a business owner to have someone from outside their business who helps them work on the business.
There are literally thousands of people offering business advice — some are really good, but as with other things in life, others range from Ok to very poor.
Here are some tips on how to find the best and how to work with them:
- Value should be at least 3x their cost – A good advisor should be able to help you create improvements that deliver several times their cost to your bottom line, add to cash flow and create efficiency. They should also be able to quantify the value outcome of your work together.
- They are hands on not just instruction givers – Work with someone who doesn’t just give you loads more work to do. You need someone who is ‘hands-on’, who will actively participate in the implementation of strategies with you and your team. They should also be clear about how you can implement actions and not leave you to figure it out for yourself.
- Plain English not ‘gobbledeguk’ – Someone who speaks your language — ‘plain English’ rather than jargon. Don’t feel stupid if you don’t understand what they’re saying — if you’re paying the bill you’ve a right to understand.
- Really understands how to create key drivers – Someone who understands the key drivers of your business is a must. Key Performance Indicators (KPIs) are a fantastic way to measure improvements in all areas of business. Most businesses can be segmented into five main areas:
- Product and service development
- Marketing and sales
- Operations and finance
- Human resources
- Customer service
- Do they understand your industry? – Someone who is prepared to learn about your industry, but not charge you for their learning. They don’t necessarily already need to have knowledge, as a good advisor can be a generalist in all types of businesses.
- Proven with others – Seek someone who has good credentials and a proven track record. Ask them what they’ve helped other clients to achieve and how they did it, and ask them for references.
- Look for someone who ‘walks the talk’ – that is they demonstrate what they are advising you to do. Look at how they present their service, how they market themselves and handle sales, how they operate and handle the financial side, how they work with their own staff and how they handle customer service.
- Proven on-going support – make sure they are accessible and available for you. If you’re working together as a team with them, you need to be able to communicate effectively and bounce ideas off them readily. Having said that, it’s best to be organised about communication and plan for meetings, but occasional ad hoc calls shouldn’t be a problem.
- An all-round focus – someone who doesn’t just push their own ‘hobby horse’. It could be that their area of interest is not your problem, yet this is what they want to focus on, because it’s what they know best. An all-round focus is vital, as key areas needing attention can be overlooked at high cost, but …
- Understands the financial side – someone who understands the impact on all areas of business, especially the financial side. Getting your financials right helps you understand the impact of changes in other business areas, such as sales and marketing. Top sales are great, but the cash flow at the right time to fund them is critical to success.
Once you find the right advisor, you will never want to let them go, because they can help you take your business from strength to strength. The fees charged should pale into insignificance when compared to the results achieved.
A monthly retainer can be the best way to work with an advisor once you’re happy they are the right fit. Monthly fees to say, $1,000 to $2,000 can work out to be a bargain, compared to the cost of employing such a person, who may command a salary of $150k to $200k a year. Oh, and then add on on-costs which could be another 30%!
Don’t fall into the high up-front fees trap. Agree on a ‘trial period’ to minimise your risk if they turn out to be no good.
As well as expecting professionalism of an advisor, you should reciprocate as follows:
- Schedule set times to meet with your advisor with no interruptions or distractions.
- Prepare for meetings with notes of what you wish to discuss with them.
- Perform any agreed actions by the agreed time and provide information required by them.
- Be accountable to them — as a business owner, it’s easy to get away with not doing things, but it’s far more profitable to stick to the arrangement.
- Treat them as part of your team and introduce them to all staff and stakeholders.
- Pay them on time — it’s very hard for advisors to keep motivated if they aren’t being paid, unless there is a specific reason not to.
I can highly recommend working with a trusted advisor, because I do! It can really help you to crystallise what’s important in your business. It’s easy to get bogged down in business with everything you’re responsible for. Someone who comes from the outside, whose perspective isn’t clouded by the day-to-day activities, can help you to see the clear way ahead.