Startup culture is thriving. Success stories like ByteDance, the startup developer behind TikTok and DouYin, Uber, AirBnB and Elon Musk’s SpaceX are inspirational.
What do they have in common?
All have been valued at over $75 billion, were founded less than two decades ago, and have revolutionized their respective industries.
The pandemic has also turned the world upside down. With redundancies or disruption of the usual work routine, more and more potential entrepreneurs are putting their ideas into practice and starting new businesses of their own. The pandemic has shaken the business world up, for good as well as bad.
But even before the pandemic, there were plenty of signs of new life. In the UAE, for instance, government policy has long been very welcoming to startups with flexible registration policies and incubator programs. These policies have proven successful, raising AED 65 million in the first six months of 2020, despite the initial turbulence of the pandemic.
However, becoming an overnight success story is, of course, not how it plays out for all startups. Cultivating a new business that is successful and profitable is a difficult task, particularly through turbulent times. Strategy is key. It’s naive to think that all it takes is a great idea and lots of enthusiasm.
Finding the right guidance when it comes to finances, business models and strategy is all too often the difference between make or break for startups. Creativity and innovation are important, of course, but without the right strategic expertise, a startup can quickly flounder. This is why external business consultants are so valuable to startups
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How do business consultants improve the chances of success for startups?
A business consultant often has several specialisms and can offer comprehensive assistance to startups in several ways.
Transaction advisory services, for instance, are a business’ support system for every step of the way. These professionals are highly skilled in critical thinking and analysis. A wealth of experience across multiple industries means that they are best placed to help startups as well as established businesses with ongoing strategic support.
Mergers, acquisitions, restructuring, valuations and exit planning are all examples of junctures where entrepreneurs are likely to benefit from the strategic support of a business consultant.
Here’s an overview of the most frequent ways startups benefit from expert help.
1. Market research and feasibility studies
Initial market research is crucial. Without it, an appropriate strategy cannot be devised. Market research identifies potential problems and barriers. This in turn means you can tackle these issues head on when you create a startup business strategy.
Feasibility study consultants provide a valuable insight into the likelihood of success for any startup. The study must be properly constructed and conducted to be worthwhile. Feasibility studies will examine potential returns against risks. They check that the business concept is both technically sound, operationally viable and legal. It is worth noting that most lenders require a feasibility study as a condition for lending.
2. Industry-specific expertise
Business consultants work across industries. A well-respected consultancy will be able to provide you with expert advice relating to the industry you seek to specialize in. They will be able to identify your strengths in the relevant market and will help you build on them.
They will ensure that your startup’s business processes are aligned with industry standards. Standard operating procedures (SOPs) and compliance reviews must be embedded in your business processes. A consultant can help with the development of these.
3. Objective analysis and feedback
It is all too easy to fall into some common pitfalls when assessing the strengths and weaknesses of your own business. Objective help is recommended to ensure that you don’t miss potential issues or over-inflate your strengths. By using expert impartial analysis, you can safeguard the long term health of your new business.
Feedback into your policies and processes is also more useful when it is external rather than internal. A business advisory service knows how to implement best practices that will reduce costs, raise productivity and improve profitability.
4. Employee training and development
It is vital that staff are aligned on procedures and strategic concepts.
Providing optimal training can prove difficult in startups where staff may have little experience of initiating and producing high-quality staff training. Business consultancies can take over this difficult role.
5. Stakeholder influence
Startups must have the backing of the right people and the investments it needs to succeed. Pitching a concept to get the backing needed to proceed can be very difficult for many. Transaction advisory services can assist with all aspects of stakeholder management. They can help you accurately describe your business model and outline your funding requirements.
They can also help you persuade potential investors why you are an ideal option for their investment and enable you to best showcase your concept. An advisory service will help you highlight how you will outperform the competition.
Why use an external consultant?
Many businesses, particularly startups, choose to work with external consultants. This enables them to form the most effective strategies, ensure robust business procedures, secure investments and maximize the chances of success.
Those who choose to manage these tasks internally run some risks. Firstly, there is the chance that your business will not be competitive when others in your field are working with highly skilled consultants to ensure they maximize their share of their market. And while many entrepreneurs feel they have enough experience and knowledge of their field, it can be difficult to see a business objectively when you are so impassioned by the idea behind it.
An external business consultant can be a crucial investment from the get-go.
They can assist in making the best and more profitable choices from before the very first transaction takes place. They can continue to advise as your share of the market increases, helping you identify further opportunities for your business to grow.
While some entrepreneurs may hesitate given the hiring costs, a lack of proper guidance could prove much more costly in comparison. It is prudent to invest in proven industry and business strategy expertise from the infancy of your business.
If you wish to emulate SpaceX or ByteDance, a business consultant will be the secret to your success.
Mini Madhavan is a Management Consulting Partner at Affility, a comprehensive advisory services firm assisting clients in the UAE and worldwide with IT, risk and management consulting solutions. A specialist Audit and Consulting Professional with over 12 years of experience, Mini is an EY alumnus, a Fellow Member of ACCA who helps Entrepreneurs and Business leaders to accomplish their business goals by planning, optimizing and implementing their business processes