Decision making criteria to hire a consultant.

 In the current economic environment, it is important that businesses find ways to stand out,
tighten their operations, and increase their revenues while keeping expenses low. As many
businesses struggle to stay ahead of the competition, the day-to-day operations of the business
are more than enough to keep management busy, especially in smaller businesses where
owners or managers wear many hats. Choosing to use an experienced consultant may allow
businesses the ability to grow, rather than simply attempting to maintain the status quo. 

Based on different types of challenges, to boost the business, at some stage, any Organization
has to take the decision to hire a consultant. Their business can be affected due to various
reasons. Some of can be
a. Their client company’s goes for shutdown
b. Sudden resignation of key personnel in their own organization
c. Unforeseen economic recession such as COVID-19 pandemic
d. War, loss of strategic raw materials or a sudden hike in input costs,
The failure of business due to above reason will be temporary. It may not become a survival
issue.
As per Moya K. Mason a Research Consultant in his study found that, most of the organization
regardless of the type of industry, their business faces terminal crisis because of either the lack
of management skills or lack of proper capitalization, or both. Few of the examples of
Management failure are shown below where the Organization should hire a consultant.

1. Failure of Business model:

A good running busines can fail if it doesn’t change its model. Few examples;
a. If the management has lack vision or clarity as to why it is in business
b. Fail to understand the required key skill for the employees–
c. Owner takes bad decision to start a new venture or missing a good
 d. Loss of focus on core business due to unnecessary engagement in other business.
In short, the company simply cannot grasp what is needed to aspire to sustainable
competitive advantage in the longer term.

2. Changing Markets and customers.

The company may suffer a loss of business if it
a. Fails to understand the changing market condition,
b. Unable to react to the customers behavior in an appropriate manner.
c. Too much dependency on a single or very few customers.
d. Unable to take important decisions and changes in management structure
e. Entry of new competitor with new technology and unforeseen initiative
If any organization faces such problem, it needs thorough market research and a
proper understanding of market circumstances. Simply copying what others will lead
to disaster.

3. Cash Mismanagement
Cash mismanagement is one of the most common scenarios of losing the business. The
reason behind this is,
a. Over borrowing
b. Bad investment
c. Spend its cash before it is flowing positively
d. Inadequate cash reserves and poor credit arrangements.
e. Drying up of single financial source
f. Using business funds for a personal use
Above condition may lead to financial crisis, which will ultimately lead to shutdown
of the business forever if its is not solved in time. In such condition, for cash
management to hire a professional Consultant is the best choice.

4. Financial mismanagement
 Financial mis-management has same effect on business as cash Mismanagement, but
this situation can arise because of
a. Incompetent finance manager
b. Huge inventory of raw material due to poor inventory management
c. Unnecessary investment such as building, man power, etc
d. Lack of enough cash reserve

5. Absence of Business Planning and Poor Performance

Absence of proper business planning is also the product of incompetent management.
What is bad business plan, can be explained as,
a. Without formal business plan, the organization will react to events as and when they
occur.
b. Absence of effective resources allocation
c. Unrealistic future target or no future vision
d. Priorities are not defined and set as per the requirement
e. Focus on short term gain and not sparing time/money for long term sustainability of
the business.
f. Not enough expenditure on marketing, research and development,
g. Unnecessary diversification of business or expansion of business at wrong time
h. Declining sales figure due to competition or incorrect pricing
i. Reduction in profit margin
If any organization is facing such a fatal situation for business, the management
Consultant can help to overcome the crisis.

6. Business Process:
Any organization required to do a performance monitoring of if its different
units/machines/products/pricing and even its staff also. Each department should be
monitored and performance must be evaluated based on defined KPI (Key Performance
 Indicator) For individual KRA (Key Result Area) should be defined and performance
should be evaluated. This will help to assess whether an organization, department or
employee is meeting certain objectives. For such a performance-based evaluation,
external management consultant are the best choice.

7. Poor Management:
The failure of business due to poor management will happen most likely where the
owner is the manager of organization. In absence of professional management team,
owner can take wrong decision, to save expenditure may hire inadequate, inexperienced
or downright poor staff because it is cheap and compliant and may be unable to attract
and retain the right talent. They may experience poor feedback and ‘white lies’ from
ingratiating subordinates or they may be in denial, refusing to accept there are problems
with the business they have grown and which they love.