Business consulting programmes provide direct and tailored support to entrepreneurs and business managers to identify and implement better business practices with the aim of achieving firm growth and higher profitability. This normally involves the consultant conducting an initial diagnosis of the business to identify weaknesses and opportunities for inclusion in an improvement plan and then providing tailored support during improvement plan implementation activities.
These support schemes assume that a lack of managerial capital by owners and managers is part of the reason why small and medium-sized enterprises (SMEs) fail to grow. It’s also assumed that working directly with professional experts to identify and implement better business practices can be an effective strategy to overcome this barrier to growth.
We’ve reviewed 11 experimental studies that look at the effectiveness of business consulting. Here’s what we’ve learnt and some ideas worth trying!
Offering subsidised business consulting seems to be an effective way to spur business performance and growth among firms that have at least five workers, but in some cases it might take as long as two years for the positive effects on sales and profits to be revealed.
Subsidising the costs of an SME’s first experience of using business consulting services can make them more willing to pay for and more likely to use similar services in the future.
Group consulting can work better if support expands over several sessions and group members face similar management problems so that peer learning is feasible. One-on-one consulting might be preferred when only shorter interventions are to be provided.
Should I complement my business training programme for micro and small firms with one-on-one consulting sessions?
The results depend on the type of firms to be involved. Complementary one-on-one management consulting seems to have positive medium-term effects only for relatively larger micro-businesses and those run by more entrepreneurial individuals. Consulting based on Kaizen seems to work better for light than heavy manufacturing firms.
Should I promote other market-based solutions for accessing expert knowledge beyond business consulting?
Business consulting isn’t the only way to provide SMEs with access to specific expertise to boost performance. Partially subsidising the costs of hiring a worker with the right expertise or outsourcing specific tasks to external professionals can be effective and cheaper alternatives.
Evidence-informed ideas for designing business consulting programmes
Ideas worth trying
AT A POLICY LEVEL
- If you’re interested in improving business performance in the medium run, try offering subsidised consulting sessions to SMEs with at least five employees.
- If you’re interested in offering consulting services to improve the performance of firms with fewer than five employees, try focusing on firms run by highly entrepreneurial individuals.
- If you want to increase the use of business consulting, try subsidising a first experience for firms that have never used these services before.
- If aiming for a cheaper intervention than free one-on-one consulting, try offering SMEs partial subsidies to hire a worker with the required expertise or to externalise specific tasks.
On a programme
- Try including in your business consulting scheme specific support for implementing the recommendations from the initial diagnosis.
- If you’re offering several sessions of business consulting to SMEs that face similar management problems but aren’t direct competitors, try substituting or complementing one-on-one sessions with small group sessions.
- If you’re considering a single consulting session, try using a one-on-one format to grasp the benefits of tailored advice.
- If running a business training for micro and small firms, consider offering follow-up consulting sessions to participants running larger and more flexible firms and those with a stronger entrepreneurial mindset.
- If offering management training to light manufacturing firms, try adding one-on-one consulting sessions based on Kaizen principles at the end of the training.
- If aiming for a cheap complement to your business training programme for microbusinesses, try using a talk by a role model instead of a more expensive one-on-one consulting session.
- Try offering information on the quality of the business service providers available to firms to help them to screen higher quality ones.
What to avoid
At a policy level
- Avoid trying to train the entrepreneurs themselves in all the areas relevant for firm growth instead of helping them access professionals with the right expertise to support them.
- If offering tailored business consulting, avoid targeting firms with fewer than five employees as they’re likely to benefit the least.
- If aiming to increase the use of business consulting, avoid only providing information on providers if you are not simultaneously providing complementary measures for reducing other barriers to use.
On a programme
- If working with micro and small firms, avoid complementing intensive training with business consulting sessions across the board without taking into account the entrepreneurs’ characteristics.
- Avoid using group consulting sessions in contexts where peer learning isn’t feasible, such as very short programmes where there isn’t enough time to build trust among participants.
- If only offering a one-off consulting session after a training programme, avoid running it at the business location instead of at a central location. The evidence suggests that holding it at the business location might not add value but increases the cost of the programme.
What more should we learn?
We would like to see many more experiments happening in the field of business consulting. Testing more policies, programmes and approaches to delivering business consulting would enrich the body of robust evidence that exists today.