FACULTY OF BUSINESS AND DEVELOPMENT STUDIES

DEPARTMENT OF ECONOMICS AND STATISTICS

COURSE: MASTER OF MONITORING AND EVALUATION
COURSE UNIT: CONSULTANCY SKILLS
COURSE CODE: MME 7404
FACILITATED BY Rev. SAMUEL FRANCIS OPIO

Consulting on the social role and responsibility of business & consulting in small
business management CORPORATE SOCIAL RESPONSIBILTY AND
 1. Corporate social responsibility, social responsibility of business, or corporate
citizenship
1.1. Introduction
According to Kubr, (2002) social responsibility of a business, corporate social
responsibility and corporate citizenship mean the same thing. These is the process of
being accountable to society and community through giving back a share of the profits or
proceeds to a just, noble and social cause for the disadvantage irrespective who
supported your business as consumers of your product. The pressure being exert on
business to give back to the disadvantage members of the community calls for guidance
on the knowledge, competence and systems around corporate citizenship management
and building of capacities to manage social responsibility. However, to gain an edge in
management of social responsibility, a business ought to engage a qualified entity or
individual to guide the business in its quest to engage society. This requires for a
balanced guideline on policy issues governing corporate social responsibility and
operational issues related to the business’s social roles, functions and relationships. The
need for consult includes guideline on consequences that are likely as a result of conflict
and crises and device measures to prevent such happenings. The consult is required to
engage the business and demonstrate the need for relate to stakeholders and engage in
non-traditional roles which enhances the image of the business in society for their social
contribution beyond profiteering.
1.2. The social dimension of business
Managers and consultants now view corporate social responsibility of business as a
public relationship measure and as an effort to reduce criticism and pressure about the
disregard for humanity who are stakeholders and determine success by buying their
products. The view of business that corporate social responsibility is not a very realistic
concern and only an academic concern limits that understanding of complexity and
extent of social corporate responsibility. This makes businesses to act without
farsightedness. Since time in memory, the relationship between businesses and society
and the impact created by activities of businesses on the life and development of society
and conversely impact of society on business has been in existence. This relationship is
due to such factors as tremendous growth of multinational businesses, increasing
dissatisfaction of global citizens who form pressure groups. Since businesses are in
constant engagement with society for production, distribution and delivery of goods and
services, they have to satisfy a wide range of social needs. Besides they influence and
impact lives of individuals, families and communities directly as part of the business or
consumers of their products. Recent changes in social dimension of business has been
i. The power and role of business in global development and
ii. New level of awareness, perception criteria, standards and goals, and the will and
capacity to be proactive on corporate social responsibility
A number of countries with good labour laws and institutional enforcement support and
mechanism ensure companies comply with the law while other countries with weak law
the regulatory authority demand for self-regulation for the enforcement of corporate
social responsibility.
However, within countries, different businesses, social groups and societal Organisation
may have different expectations and also apply different standards in respect of various
aspects of corporate social responsibility. In addition, interest in corporate social
responsibility can be for the defense of short term interests whereas others look at long
term interest considering the principle of sustainable development.
In all this, society can adopt an anti-business, confrontational and suspicious of every
new initiative taken by new enterprises although others identify common interests and
the need to negotiate, compromise and seek for solution that benefits all.
In order to develop practical solutions that have been negotiated, developed through a
democratic process, adopted by agreement, recommended to stakeholders for their input,
there is need for consultation which can be donor by a consultant.
1.3. Influence of current concepts and trends
Concept and practice of cooperate social responsibilities in the recent decades have been
influenced by a series of related developments, which have brought the issue to the
forefront. There are a number of factors which include;
i. Government retrenchment. The increasing strain on the public budget and
resources has limited government to non-discretionary (mandatory) spending on
public programs like health provision, unemployment, etc. As a result, complex
social issues like education, social inclusion and safety remain with little
resources which restricts support using public sector budget. The explosion of
commercial sector and growth of businesses has raised the expectations of
regulators and society for this businesses to engage in filling up gaps/void left by
government retrenchment (economizing) and solve societal problems. The
concept of corporate social responsibility is growing amongst countries which
had not yet embrace this tradition.
ii. Globalization and the economic power of business. Improvement in
technology (such as global digital financial system, telecommunications and
inexpensive transport), liberalisation of national economies, growth of dynamic
global capital markets, and access to low-cost labour are some of the factors
creating truly global enterprises. Transnational firms now produce, source and
sell their goods around the world and their operations in many cases touch
literally every part of the world, and affect positively and negatively the well-
being of a wide spectrum of stakeholders through the world. Such firms are
strong player who are able to mobilize, invest and transfer resources that exceed
the gross national product (GNP) of many countries. However, this influence is
facing intensifying backlash and activism against business practices connected
with globalization and this stresses the growing desertification with corporate
power interest and behaviour. Questions have been raised by society concerning
corporate practices towards the environment, human rights, payment of livable
wages, sourcing policies, and destruction of the cultural infrastructure or
 internationally uncompetitive local industries and agriculture contrary to the view
of fairness.
iii. Crises. Business have created several crises in society that has had devastating
consequences. For example, as stated, explosion of the union carbide plant in
India, Exxon oil spill, shell crises in Nigeria demonstrate the need for businesses
to reconsider their relationships with community activist, non-governmental
organizations, and society at large. Crises can inevitable and necessary but
requires swift interventions by business so as to reduce the consequences on the
population.
iv. Incentives. While the threat of the “stick” looms large, the size of the “carrot”
encouraging socially responsible behaviour in the corporate world has grown as
well. This new perspective sees corporate citizenship as supporting the corporate
value chain. Evidence is growing that corporate citizenship may be an important
differentiator in the minds of consumers and employees. “Reputational capital”
appears to be gaining more and more credence in financial markets. Built on a
foundation of trust rather than image, reputation is influenced significantly by the
attitudes of key stakeholders towards companies. A reputation as a good
corporate citizen is viewed more and more as an important asset in risk
management. This is particularly relevant for companies and industries that find
their “license to operate” becoming more influenced by grassroots organizations
and stakeholders. Finally, a more radical revolution is occurring as leading
companies re-examine their business models. Environ- mental responsibility is
being recast as efficient manufacturing. Traditionally excluded markets in low-
income and minority communities and least developed countries are increasingly
viewed as the last commercial frontier. Another facet of this revolution is the
proliferation and fast growth of socially screened mutual funds, which include or
exclude firms on the basis of social performance criteria.
1.4. The influence of activism and pressures for compliance.
Over the past decade activist have achieved success in influencing behaviour of
companies.
Several events have shaped the activities and actions of several large industries.
Exposure of issues related to sourcing and labour practice supported by advancement in
ICT has facilitated and expanded grassroots activism. There are several emerging trends
that have shaped corporate social responsible for example;
i. The increasing visibility and influence of civil society which have a significant
voice in the discussion of the social role and responsibility of business.
ii. Growing involvement of international organizations and their role of actively
calling for participation of business in social affairs.
iii. Awareness and private initiatives about their social role and impact of their
business on social responsibility.
 1.5. Definition of Social responsibility
At its core, managing the social role and responsibility of business, or corporate
citizenship, involves engaging, relating to and managing networks of stake- holders that
include shareholders, customers, employees, suppliers, community/ social interests and
environmental interests. A stakeholder is commonly defined as any individual, group, or
interest than can influence, or is influenced by, the operations of a business. Other
definitions try to distinguish the relative primacy of stakeholders by identifying the
relative levels of risk that a stakeholder creates, or bears, from corporate activity. Others
use rather narrow definitions such as involvement in community affairs. This variety of
terms and definitions for corporate citizenship creates some confusion. Constituencies
advocate for their preferred terminology, while companies find themselves sorting
through a variety of pitches from potential consultants that use the same language to
describe different things, or different languages to describe the same thing.
1.6. Consulting services
In their attempts to address the various demands and developments concerning social
corporate responsibility, businesses are turning to consulting companies for assistance. In
a rapidly expanding and wide-ranging field, consultants are assisting companies to
develop corporate visions and strategies for their citizenship efforts, guiding them in
introducing management systems to support the visions, and helping them prepare for
certification under various schemes. The scope for consulting projects in the corporate
citizenship arena is vast usually focuses not on a function, initiative, product line or
business unit, but the sum total of the business. To become a good corporate citizen often
means a complete retooling through training. Specific programme can range from
establishing a volunteer programme, to creating procedures to ensure ethical global
sourcing. There is an emerging consensus among business leaders around the process
elements involved in corporate responsibility and that it should be managed in an
integrative, strategic fashion, with commitment of leadership who specify goals, assign
roles, and ensure cross-functional integration, effective and efficient resource allocation,
and appropriate management and communication systems. At the same time, there is a
convergence of views that the corporate citizenship strategic management process should
create systems for transparency, accountability, stakeholder dialogue and engagement,
and measurement/verification.
1.7. A strategic approach to corporate responsibility

Consultants should possess expertise in a strategic management and Organisation

change if they are to assist clients to achieve excellence in corporate responsibility.
Consultants can serve their clients by helping them formulate and implement a social
cooperate strategy, develop their codes, strengthen their stakeholder involvement,
measure performance, and train/coach their senior executives and middle managers in
leadership and management. Clients can then use consultants to provide advice and
support on the more specialized and technical aspects of social responsibility, such as
environmental remediation, human rights practices, supply chain management or
community involvement.
According to Waddock & Bodwell, (2004) what is called “total responsibility
management” (TRM) and the approaches can potentially provide a means for
integrating external demands and pressures for responsible practice, calls for
accountability and transparency, the proliferation of codes of conduct, managing
supply chains responsibly and sustainably, and stakeholder engagement into a single
approach for responsibility practices within the business. The TRM approach builds on
well-known performance management systems such as total quality management.
TRM approach looks at (1) vision-setting and leadership systems, (2) integration of
responsibility into strategies and practices, and (3) assessment, improvement and
learning systems. The logic of the system is similar to that of strategic management
processes used for any function of the business. The difference is in the details of its
implementation. To use a TRM approach, consultants must understand the social
context in which their client operates which include
(1) Vision-setting and leadership systems
This is the first level were the consultants typically work with top management to
define a strategic agenda for corporate social responsibility and to drive a change
process from the top down. In particular, consultants should assist their clients in
implementing the following steps:
● Defining the integration between traditional business strategy and
corporate citizenship. This process should clarify and express a corporate
social business model that describes the interdependence between the company’s
social role and responsibility and its business success. Defining the link between
conventional business strategy and the social role of business is essential for
ensuring the long-term sustainability of corporate citizenship processes.
● Identifying priorities for corporate citizenship. After defining the integration
of business and citizenship strategies, decision-makers need to identify strategic
priorities that will drive resource allocation and management systems dedicated
to addressing specific issues such as labour practices, supply chain management,
environment, community and others. This process may involve selecting one or
more of the multilateral codes of conduct to endorse and implement.
● Leadership roles and commitment to strategic goals. The consultant should
work with senior executives to define specific strategic goals, corporate policies
and measurable objectives for their corporate citizenship strategy. In practice,
these goals should reflect an intersection of business outcomes and
social/environmental outcomes. Consultants should then work with senior man-
agers to define their specific roles in driving and communicating the strategy.
● Committing to core citizenship processes. As noted earlier, corporate
citizenship management frameworks commonly emphasize stakeholder
engagement, transparency, social reporting, and measurement. Many of these
tactics are unfamiliar to corporate managers. They represent new ways of doing
 business, and may conflict with conventional policies related to secrecy,
financial reporting, and tightly controlled communications practices. Consultants
should work to underscore that these tactics will be necessary to support
strategic goals, and to secure the commitment of senior executives to support
and lead the processes.
● Identifying key motivating drivers for corporate citizenship. It is vital for
consultants to understand the factors that motivate corporate citizenship within a
given organization, and to build the consciousness of key managers around these
motivating drivers include Values which are based on morals, and a desire to “give
back” to society. Compliance with government regulations and grassroots
activists which create pressures for compliance. This leads to corporate policies
and strategies that respond to legislation, criticism, inspection, pressure groups,
etc. Intangibles factors which include reputation, brand and relationships.
Intangible drivers often lead to responses that attempt to minimize the risks of
pressures for compliance and create savings for the business. Proactive corporate
citizenship becomes a tool to create trusting relationships with, for example,
governments or NGOs, and thus reduce the risk of activism and opposition.
Intangible drivers can also lead to responses that support value creation. For
example, developing the intangible asset of reputation can support sales and
employee recruitment and retention. Market: market drivers lead to the inclusion
of social, as well as market-based goals in projects and investments, such as
product launches, production, purchasing, or employee training. The projects may
also be carried out with non-traditional stakeholders. Examples are job training of
low-income individuals, clean production technologies, socially responsible
consumer products (e.g. clean-burning gas), employee stock ownership plans, etc.

Unfortunately, these motivating drivers often operate independently of one another,

and encourage divergent strategies that yield suboptimal outcomes for the business
and its stakeholders.
● Understanding and applying the business case. The leading models of
corporate social responsibility contend that there is no contradiction between
social responsibility and profitability. In fact, the argument goes, social
responsibility increasingly performs a high-value support role for the bottom line.
It is reported that social corporate responsibility adds value to traditional
business goals, such as consumer attraction and retention, employee
recruitment and retention, worker productivity and overall financial
performance. In addition, it supports such considerations as innovation,
reputation and “license to operate”.
Consultants must first present the business case and help clients to understand
how their own business and particular line functions will benefit from corporate
social responsibility. Consultants must also be prepared to help clients to build
creative strategies that use citizenship approaches to meet societal obligations
 while generating returns on investments. To succeed, citizenship consultants
need a broader perspective than most traditional management consultants.
● Organizational diagnosis. There are two dimensions of organizational
diagnosis. This include the marketplace and society where the marketplace is the
province of traditional management consultants, but it is essential that corporate
citizenship consultants possess an understanding of their client’s business
fundamentals. There are two reasons for this. First, consultants need to speak
their client’s language. Managers who are skeptical about corporate social
responsibility may perceive the consultant as an infiltrator representing forces
that are (in the extreme) conspiring to shut down operations. Second, consultants
need to be able to translate and integrate. Managers often have difficulty in
conceptually linking their day-to-day responsibilities with the requirements of
corporate citizenship. Consultants can provide a valuable service by helping to
build this conceptual bridge between the fundamentals of business and
citizenship.
The second dimension of organizational diagnosis is an understanding of the
relationship between the business and society, which is where the majority of
citizenship concerns are played out. Depending on the project, the consultant may need
technical expertise, such as in environmental analysis. However, the consultant should
also possess broader, strategic knowledge, including how to diagnose current practice
and performance around key dimensions of citizenship.
● Stakeholder identification. The dynamics of corporate citizenship operations
manifest themselves through the interplay between a company and its
stakeholders. The level of stakeholder satisfaction represents the principal form of
feedback on the strengths and weaknesses of corporate management. It is
therefore essential for corporations to identify and engage with key
stakeholders. However, transnational organizations face a vast array of
stakeholders. The challenge for consultants and their clients is to identify the key
stakeholder groups – and their representatives – that should be part of the
corporate responsibility strategy. One pitfall to avoid is assigning the main role to
stakeholders who appear to be most threatening and behave most
aggressively. Consultants should possess expertise in stakeholder analysis,
mapping and relationship-building.
● Issues identification and environmental scanning. The social, cultural,
institutional, legal, supervisory and political environment for corporate citizen-
ship is crucial. Consultants need to help their clients assess how current
corporate operations intersect with the environment to create either vulned-
abilities or opportunities for the client’s relationship and behaviour towards key
stakeholders. Strategic information is needed that helps a company to craft
policies and programmatic responses. The issues identification and scanning
process should also help a company select its top strategic priorities. A company in
a service industry, for example, may have few if any direct concerns
 regarding supply chain management and sourcing. However, it may have
significant concerns regarding the quality of education systems as it struggles to
find, recruit and retain adequately skilled employees.
● Strategy formulation. The consultant should work with the client to take the
outcomes of the above processes and formulate a strategic plan that is focused
and clear. The plan should help managers demarcate a path between goals and
concrete projects, owners, roles, measures and timelines. In citizenship
consulting, a strategic plan serves as the client’s touchstone. It not only specifies
purpose and activities it helps managers answer fundamental questions regarding
the relevance of corporate citizenship, its purpose, and fit within the organization.
(2) Integration of responsibility into strategy and practices
In the second level, consultants can work with both senior executives and mid-level
line managers. It is at this point that the company begins to implement its strategy,
design processes, systems, practices and programme based on the new goals and
priorities. Consultants may assist their clients in the following steps:
● Creating management performance systems. To implement a corporate
citizenship strategy successfully, goals and action plans have to be trans- formed
into an operational agenda and reflected in performance contracts of business
lines, departments and managers.
● Redesigning practices and creating programme. The company will need to
design new practices and systems to support the goals of corporate citizenship.
If, for instance, a goal is to avoid suppliers that violate the human rights of their
employees, then the company will need to create specific policies, strategies,
management systems, monitoring mechanisms and reporting systems.
Alternatively, if the company’s goal is to reduce greenhouse emissions, it will
need to modify its production model. Redesigning corporate practices and
policies will typically require specialized expertise.
● Process implementation. At this level, the company will form and
implement systems to engage stakeholders, monitor issues, and develop
mechanisms to increase transparency. These processes should not be formed and
managed in isolation, but integrated across business lines, and used as tools both
to implement strategy and to create feedback mechanisms to reformulate the
strategy. At this level of intervention, the consultants’ needs to expand their
toolkit to include content expertise for specific issues as well as knowledge of
organizational behaviour, change and strategy. Toolkit elements include the
following:
● Organizational change. Consultants will often find that there is much within
the client organization that resists the implementation of corporate citizenship
strategy, structures and programme. Resistance may be intentional or
unintentional Consultants need to possess skills in change management and
strategic planning. It is advisable for consultants to work only with organizations
 in which senior executives have demonstrated their commitment, and it is often
useful to solidify this commitment by making the point of contact a senior-
level manager. When this is not possible, it is important to use formal
engagements to involve senior executives throughout the process. If the initiative
is being driven from the bottom (or middle) upwards, rather than top-down, it is
important for the consultant to assess realistically what can be achieved. A
consultant can provide a valuable service by coaching middle managers on
leadership and change initiatives, and by guiding the client through the change
process. Consultants are also advised to insist on a participatory methodology
that involves a variety of managers from important departments. They should
work with key client contacts to develop a map of key stakeholders within the
organization who should play an active and engaged role in the project.
● Management support and coaching. A significant barrier to the change process
is lack of expertise, experience and knowledge among managers on the social role
and responsibility of the business. Consultants can design and implement training
programme that are tied into corporate strategy, and that support the management
of corporate citizenship initiatives.
● Technical and policy expertise. Given the complex organizational dynamics of
corporate citizenship, it is easy to overlook that consulting initiatives require at
least a modest level of technical and content-specific knowledge. Corporate
citizenship engages the business in an array of policy issues and concerns that it
has probably previously ignored. Clients will look to consultants to provide
guidance and knowledge in these areas. The challenge for consultants is to help
the business understand how it can engage in social issues effectively, while
preserving its core business mission and functions.
(3) Assessment, improvement and learning systems
The third level is where a consultant will work with both senior executives and line
managers, and provide the company and its stakeholders with feedback about
performance, direction for improvement, and the information needed to revise and
improve the corporate citizenship strategy.
● Measurement systems. These include systems that measure the impact of the
strategy for the business and its stakeholders, as well as systems to determine
whether the operations are managed effectively and efficiently. Measurement of
corporate citizenship is at an early stage of evolution. At this level, consultants
will need to bring expertise, knowledge and creativity to the process of creating
measurement systems.
● Reporting, monitoring and verification systems. Related to measurement, these
systems function as the principal vehicle for increasing corporate transparency
and accountability to stakeholders. These systems are also at an early stage of
development. Consultants will need expertise in designing effective reporting,
monitoring and verification systems.
● Improvement and innovation. By tracking and measuring impacts and
 performance, consultants can work with clients to learn from measurement and
reporting systems, and help define plans to improve performance, drive
innovative practices, and enhance the existing strategy.
● Communication. Clients need help to spread information about corporate
citizenship to senior executives, their peers, employees and external stake-
holders. Each audience will require different messages and different
communication vehicles. Understanding and implementing communication
approaches is therefore a critical dimension of a consultant’s skill set.
1.8. Consulting in specific functions and areas of business
In practice, most questions of ethics and responsible behaviour are addressed in
connection with specific decisions. For example, company policy may well adhere
to the principle of ethical advertising in general terms, but applying that principle
consistently requires considerable understanding of consumer psychology. In
addition to the knowledge of general corporate policies and ethical advertising.
There are various elements and issues of ethics and social responsibility in product
liability and quality, intellectual property, productivity, supplier selection,
competition practice, recruitment and staffing, personnel management, staff
education and training, management of employee pension funds, safety and health
protection indeed in virtually everything that a business does or chooses not to do.
There is, however, a fundamental implication for consultants. Corporate
responsibility generalists will probably focus on broader, interdisciplinary and
strategic issues, especially when companies start taking their social responsibilities
seriously and need assistance with general orientation, concepts, assessment,
relationships, strategies and policies. Conversely, in specific technical fields and
functions, there is likely to be little scope for these generalist approaches. Some
consultants may find a niche for themselves by specializing, for example, in advice
on ethical advertising. However, all consultants intervening in special fields and
areas of business should be aware of the general framework and principles of
corporate responsibility, and versed in the social and ethical aspects of their special
fields of intervention. The same applies to managers. This is the only way to
implement corporate citizenship company-wide, beyond a simple declaration of
general business principles.
1.9. Future perspectives
Consultants are uniquely positioned to make an impact in the arena of social
corporate responsibility. Many of the most interesting developments, research and
thinking come from consultants or organizations that integrate theory and practice. At
the same time, the competitive landscape of consultants poses risks for managers.
There is anecdotal evidence of an apparent proliferation of consultancies, some of
which appear to be selling a new conception of the wheel. Corporate social
responsibility is an immature field, and consultants therefore have a unique
opportunity to come up with new approaches and services, and to influence
organizational development in profound ways, shaping strategies and structures and
 pointing the way ahead for the years to come. At its core, the social role, impact and
responsibility of business is about an expanded vision of business performance. In
this respect we have the experience of other concepts and movements to draw upon.
Quality, at one point, seemed alien and impossible to measure. Environmental
management once seemed out of place, but has made great strides. Human resource
and human capital development used to seem foreign but has become fundamental.
Corporate social responsibility looms on the horizon as one of the next
transformative management movements. Consultants have a unique opportunity to
drive and shape the agenda.

2. CONSULTING IN SMALL-BUSINESS MANAGEMENT AND

DEVELOPMENT
2.1. Introduction
Small Business now often use consultant in different field like baking, legal sector,
financial and trade to guide them to remain competitive in the change business
environment. Consultant are important for small businesses that are just starting up but
also equally important for established business. They attempt to address the issues of
policy formulation and implementation managing projects developing and target by
interest group. These business provide employment opportunities directly in the
established enterprises or indirectly through other business in supply chain.
2.2. Definition of a small enterprise
Defining small enterprises tend to vary based on the nature of its activities, the purpose
of the definition and the level of development where the enterprise is located. An
enterprise can be describing as small based on the following criteria; the number of
employees, the money value of sales, capital investment, maximum energy requirements,
or various combinations of these and other factors. An enterprise whose administrative
and operational management is in the hands of one or two people who make the
important decision can also be called a small enterprise.
2.3. Characteristics of small enterprises
A consultant should be in position to establish and recognize factors that distinguish a
small business from larger enterprises.
I. Small business usual has single owner are usually known as sole proprietorship.
All management works are controlled by the owner.
ii. A small enterprise is primarily financed from personal or family savings with
limited option to outside finance during the formation stages and
iii. The manager in a small business has close personal contact with the whole
workplace and employs a smaller teams of employees. Such business depends majorly
on labour and manpower with very little dependency on technology
iv. A small business usually operates in a limited geographical area. There area of
operation is restricted in one area.
iv. Small business has high level of flexibility where they are open and easily adapt
to sudden changes
 2.4. Advantages of small business
i. In addition, small businesses possess distinct advantages which include the
ability to fill limited demands in specialized markets; a propensity for labour
intensity and low-to-medium-skill work; and the flexibility to adapt rapidly to
changing demands and conditions.
ii. Due to the personal attachments and dealings, owner who as managers are
usually more highly motivated than salaried managers. The motivation is
characterized by longer working hours and hard work, and they provide greater
motivation to workers by personal example.
iii. Small business has a simple organizational structure with a more direct and less
complicated lines of communication inside and outside the business.
iv. In small business, identification of workers’ capabilities and developing these
capabilities can be done more quickly than in larger firms.
v. Small businesses can also experiment with or enter new markets without
attracting unwanted attention from large firms.
2.5. Special problems of small enterprises
Small business usual face either general or specific or sometimes both. General problems
are usual legal in nature, access credit, raw materials access to markets, lack of
appropriate technical and managerial support and weakness in identifying or grasping
new business opportunities.
A management consultant should be aware of problems at the level of the enterprise, as
well as at the level of the individual entrepreneur in order to establish ways of addressing
them in the case of small business. Difficulties that may be encountered by a small
business which calls for the awareness of a consultant includes:
● Small business managers are usually isolated when faced with problems therefore
the have to deal with policy, administration and operational problems
simultaneously whatever his or her personal biases and limitations are.
● Small Business managers often operate with inadequate or, at best, minimum
quantitative data since they tend to save cost of operation by opting out of using
information management systems, a weakness that can become conspicuously
apparent when the enterprise starts to grow.
● Some small businesses may pay only minimum wages, have few fringe benefits,
and offer low job security and few promotional opportunities, and may therefore
have difficulties recruiting high-talent employees.
● Big Investors are rarely get attracted to the new small business and managers of
such business are severely limited in their ability to raise start capital. This problem
is compounded when an enterprise runs into growth problems, or experiences
operating difficulties, and the manager or owner attempts to raise additional finance
in order to cope.
 ● Small business is often vulnerable to negative economic factors and inflation. This
arises due to the problem of limited reserves, coupled with low capacity to borrow.
● Although ability to change and adapt rapidly is regarded as a natural strength of a
small enterprise, this quality may be nullified when an opportunity requiring rapid
change suddenly appears. The manager may be too occupied with ongoing
operational problems to be able to think clearly about the future of the business.
● The hand-to-mouth financial existence of small business does not allow many
opportunities for staff training and development, with consequent loss in realizing
the full potential of the human resources within the enterprise.
● High productivity is difficult to achieve since the small business does not enjoy the
low costs of the large firm, such as, buying at a discount, achieve economies of
scale, call on its sophisticated marketing and distribution system, and engage its
own research and development and systems design teams.
● A small business is usually limited to one or a few products or services, with the
result that in times of trouble it cannot diversify activities as can large- scale
enterprises.
● The manager is often not able to understand and interpret government regulations,
actions, concessions, and so on, to best advantage.
Overall, a small business is a relatively fragile structure with limited resources to
overcome its problems and even minor problems can be threatening its existence.
2.6. Reasons why small business reluctant to use consultants
A number of small business are reluctant to use outside consultants for the following
reasons:
● They believe that only their business cannot afford the consulting fees charged.
● In many instances, consultants will not have practical experience in the type of
business needing assistance.
● Managers are reluctant to provide outsiders with facts and figures relating to the
business due to the nature of the business and the fear of their information being
used to knock them out of existence.
● Identification of a competent consultant is difficult and time-consuming, because
most managers have little previous contact with consultants.
● Using a consultant may be viewed by the manager as an admission of lack of
competence.

2.7. Benefits of using a consultant for a small business

There is need for consultants to create awareness to small business owners by providing
information and data that demonstrate the value of their services and benefit other small
business owner who have received so that they can overcome the preconceptions.
Amidst all the doubts, small business that have used consultants have obtained the
following benefits:
● An independent professional viewpoint which enhances performance and ways of
 conducting business
● An overall company check-up and expert evaluation of processes and procedure,
● A consultant provides a fresh perspective on marketing and market development for
a small business thereby provide added advantage and competitive edge,
● A consult proposes the ideas for coping with growth and prepares a small business
to adopt to expansion in the future,
● A consultant provides training for manager and staff which otherwise would not
have taken place,
● A small business benefits from consultancy by developing a strategic approach to
their enterprise.
2.8. Consulting assignments in the life-cycle of an enterprise
The changing business environment requires for small-business consultants to change in
line with the new activities. There is need for these consultants to be aware of
information and how to gain access to it. It is also important for consultants to
understand the uses of software packages and computers beneficial to small-enterprise
operations and decision making for managers. The rise in information and
communication technologies is an emerging areas of concern for small business.
Furthermore, consultancy need to gain vital communication skills so that they can
convince managers of small businesses to implement identified and proposed solutions.
Due to the number of problems faced by small business and their owners, a consultant
should be prepared to provide support and meet various needs for the enterprise.
The stages outlined below serve to illustrate the range of problems faced by consultants
when dealing with a manager whose enterprise is passing through a typical life-cycle.

Stage 1: The very beginning

Biographical evidence suggests that successful small-enterprise owners and managers
commonly possess particular qualities which include often being the first-born of a
family, inclined to being optimistic and moderate risk- takers, have control over their
own destiny rather. Such owners and managers are usually married, but with minimum
distractions caused by family life often because understanding spouse who appreciates
the demands from the business and a lot of family support.
A key characteristic is that successful entrepreneurs are mentally and physically very
active. They are usually well organized and manage time efficiently. Success may result
not so much from quality, but from the quantity of schemes prepared and developed. In
short, the greater the effort, the greater the chances of success.
When dealing with a beginner, the consultant should take stock of the client’s
background, interests, and family situation and support, to judge whether the client is a
probable or a possible entrepreneur, and develop the assignment accordingly. The project
should be closely examined, taking into account the strengths and weaknesses commonly
found in small enterprises, and the strengths and weaknesses of the individual
entrepreneur. A checklist of items to be reviewed should be worked out.
Stage 2: Starting up
During startup, there are three possibilities that will require free interaction between
client and consultant. The consultant should let the client know the best thing that might
happen, what is likely to happen and the worst that might happen. There is need to
encourage the client to pursue ideas and proposal to full attainment and support in draft a
contingency plan for the three possibilities. A consultant should assist a small business
owner to obtain and record all relevant quantitative data about idea generated and use it
to make rational decision and as evidence in case of uncomfortable afterthoughts about a
scheme once started.
A consultant should encourage a small business owner to seek the services of competent
and qualified professionals from the legal, financial, insurance, IT and marketing
background. The startup phase will need a consultant to establish potential areas of
weakness for the small business which include, managerial, monetary, material,
machines, mental and motivation
Stage 3: Getting bigger
Usually when a small business maneuvers through the beginning and startup phase with
the help of a consultant, the maturing phase poses another challenge. The task at this
point will require the consultant to use a Strength Weakness Opportunity and Treat
analysis help managers apportion cost, resources and revenue streams by percentages.
Managers have to be encourage and supported to reflect and plan about the future of the
small business. There is need to consolidated the current gain while developing
succession plans since the growth in business comes with ageing of the owners and
consideration of sons and daughters to take up the business
Stage 4: Exit from the enterprise
Eventually when the small business grows to a size where it can no longer be considered
small, and issues pertaining to growth, finance, corporate structure, delegation and the
like will arise. This will require small business consultant to refer the manager to
specialists capable of assisting in the new situation. Alternatively, the manager may
decide to forego the routine running of the enterprise and start something new, revert to
becoming an employee, or retire. When an exit decision is made as result of growth or
demise of the owner, the business is assessed and subjected to
(1) Liquidation or forced sale value, where the enterprise is put up for auction and
sold to the highest bidder (if any).
(2) Book value, where items are assessed at cost less depreciation and sold
piecemeal to selected markets.
(3) Market value, where the entity is sold as a going concern and items such as
goodwill are included in the price.

Varying conditions (such as the death of the owner) may determine which of these
assessment methods will be used. Generally speaking, the market value provides the best
return to the seller and the consultant is tasked to deliver on the best value through
mutual agreement on terms and conditions.
2.9. Areas of special concern
Usually small business come with a host of concerns which calls for special attention.
a) Counselling the start-up entrepreneur
Counselling and consultancy are necessary for small business owners. This takes the
direction of personal and intense relationship which transcends management issues that
led to the consultancy assignment. Decision to start a business is most time stressful,
mentally draining and involves trades for family time, finances and economic security. It
arises due to a number of issues which could be of negative impact say job loss,
bereavement and relocation to another geographical area. Such people face challenges
which rather isolate them from interacting with people who would provide support and
improve their confidence. Counselling empowers such individuals to make important
decision and usually goes beyond business issues. The counsellor should neither
encourage nor discourage clients, but should help them to look at the situation from
every angle and to make their own decisions.
Some people may be overconfident and blind to possible difficulties, while others may
lack the confidence to think clearly about the options facing them. The counsellor must
judge whether the client needs a “wet blanket” of realism, or a “firecracker” of
enthusiasm. The client should not be pushed in any
particular direction but should be helped to be in the proper frame of mind to make the
right decision.
Potential entrepreneurs often expect counsellors not only to be sympathetic listeners but
also to provide them with useful contacts, particularly with bankers and other sources of
finance, or potential customers. Successful entrepreneurs are, above all, good networkers
and the counsellor should be happy to play this role. However, there should be no
recommendation of a particular contact or collaborator to the client. Names can be
provided and introductions made, but the counsellor should not play the role of a
marriage broker, since this could seriously prejudice his or her effectiveness as a
counsellor. This is even more important when the counsellor is not being paid by the
client but by a third party, such as a business support agency or even a bank. The
counsellor must be scrupulously neutral in every respect.
Entrepreneurs often have to produce business plans, either as part of a course or in
submitting an application for funding to a bank. While preparing these plans can be a
somewhat barren and automatic exercise, an effective counsellor can help clients to
produce plans that not only satisfy external requirements but also make a valuable
contribution to the decision on whether to start at all. The various components of the
business plan can be used as assignments to structure the counselling process.
Counselling people starting new businesses can be an extremely demanding task,
because the whole future of the client and his or her family may be involved. It can also
be most rewarding. The contribution of a genuinely effective counsellor may well be
forgotten or even denied by the client, particularly if the business becomes successful,
but the counsellor can take satisfaction in assisting someone through a critical stage of
life.
b) Consulting for family enterprises
The use of consultants by small family enterprises or co-entrepreneurs is not a common
thing. Even though there is an initial contact, few formal consulting assignments are ever
achieved, problems in such businesses are intertwined and mostly difficult for
consultants to identify. To get try and understand such problems, it is would be good for
the consultant to meet each family member to understand the dynamics and issues and
then gain trust their trust before discussing the identified issues as a group. Families with
stronger ties have a faster and better known ways of resolving family business issues
unlike in those that have weaker family ties.
Succession issues usually form part of the major issues in addition to topics like
taxation, wills and other issues were family member want to avoid and yet important.
These issues require for a consultant to remain professional and evaluate the family
business using SWOT analysis in order to recommend and provide concrete guidance on
such issues.
c) Extension services
Businesses in a number of countries don’t engage private consultants for their services
but some provide state sponsored extension services. These extension agents provide on
the spot services to small businesses which include; advice on management,
Organisation work, financial and legal issues guiding operations. The support further
extends to support in technology choices, quality control, identification and development
of training and skills development plans. Most times, the extension agents adopt a
phased approach to such support and target groups with similar need which are important
to their business based on their specific needs. The worth of the extension services is
weighed against the ability to perceive the business owners need, issues and provide a
formidable solution.

2.10. An enabling environment

One of the most effective ways to support small business is to build positive policy, legal
and regulatory environment. The policy and regulatory frameworks have two broad
functions: (1) they allow government to manage the macro- economy coherently and
predictably, to achieve sustainable social and economic objectives, and (2) they level the
playing field for small enterprises, which are key elements of the micro economy. Small
businesses require a legal framework that improves the business environment for ethical
commercial transactions for example protection against unfair competition, provision of
incentives for more business start-ups and expansion.
In some cases, small-business consultants may assist in analyzing and improving the
environment for business creation and promotion and requires for the consultant to know
the institutions, policies and regulations in the environment.
2.10.1.1. Characteristics of an enabling environment
When there is flexibility and a vibrant environment with a well-functioning market for
inputs and outs, small businesses tend to do well. There is need for a positive
environment characterized by network and institutions, clear reporting and control
procedure and political and policy which adds a voice to make their needs and
achievement to be attained.
A business environment can enable or constrain a small business based on several factors
but the state plays the following roles in shaping small business: (1) to establish policies
and laws; (2) to execute programme, regulations and procedures; and (3) to carry out
administrative tasks. While each field is important individually, the connections among
them are of special interest.

i. Policies and laws

The policy and legal framework sets the directions and intentions of government,
reinforces development efforts and influences the role that the small enterprise sector
performs in the national and local economy. An enabling environment for small
enterprises requires a favorable overall policy framework, both for enterprises and
entrepreneurship. Such a framework needs to create confidence in the management and
evolution of the economy. This requires stable, well-designed policy instruments and
mechanisms. Several policy areas affect small-enterprise operations and combine to
create the overall policy environment. These include monetary and credit policies,
taxation, regulatory and control policies, trade and export policies, labour market
policies, planning and zoning, sector policies, regional policies, education policies, and
policies targeted at specific groups.
Policy generally reflects government positions but where this not the case, differences
may be ascribed to outdated policy, poorly defined policy, excessively complex policy
and policy to guide small enterprises.
An absence of clear policies creates problems for small enterprises and for any
assessment of the legal and regulatory framework, since there is no benchmark against
which proposals for reform and change can be considered. Policies are required to
streamline existence, interaction with consumers and the environment.
ii. Programmed, regulations and procedures
Good policies provide a basis for an enabling environment but the procedural and
regulatory mechanisms through which policy is implemented must also be considered.
At the national level, central government provides overall policy direction and the
legislative basis for development. Such policies include those on monetary, tax, trade,
education, labour and other policies which are usually implemented by central
government, but in many cases other levels of government for example local also have
an important role to play. There is a risk that regulatory functions at the local level will
constrain growth of small enterprises. Government decentralization can mean that local
governments are required to deal with many regulatory and administrative functions
affecting small enterprises and may not have the capacity to do so. Small enterprises
often face legal and regulatory problems caused by Excess of regulation, inadequate
regulation, poor administration of regulation, lack of clarity and transparency,
duplication, frequent changes, lack of awareness and regional disparities
iii. Administrative procedures
Administrative procedures require careful attention when assessing the environment for
small enterprises to ensure that they are consistent with their policy, legislative and
regulatory base. They are the point of interface between government and the small-
enterprise owner or manager and can greatly affect the small-enterprise environment.
Administrative burdens on small enterprises should be kept to a minimum because they
hinder development and growth. An unsupportive administrative environment can be
particularly damaging because small businesses do not usually have resources to fall
back on, or the managerial and technical capacity to deal with changing economic and
business policies, complex licensing and authorizations procedures, and fluctuating fiscal
and monetary regulations. In the process of assessing the legal, regulatory and
administrative requirements, one needs to ask question of whether it can be eliminated,
can be simplified or When assessing the legal, regulatory and administrative
requirements asking question of; can it be combined with other requirements, can it be
better communicated and can it be decentralized?
iv. A process for policy reform
It is not possible to propose universal actions for policy, legal and regulatory reform.
What works in one country may not work as effectively in others. Reforms should target
specific areas where changes can promote small enterprises. Alternatively, especially
where a high degree of structural change is needed, they may entail a complete
realignment of the policy, legal and regulatory environment. In the former Soviet Union,
for example, the transition from a centrally planned to a free-market economy required
the transformation of the entire legal and regulatory framework. A four-step approach
can be applied when advising policy-makers on policy reform:
a. Allow key stakeholders to identify how a country’s current policy and regulatory
environment affect small enterprises.
b. Provide inspiring examples of how other national, provincial and local
governments have removed barriers to small-enterprise growth.
c. Support formulation of an action plan for reform and provide technical advice on
its implementation.
d. Measure the effects of the reform process.

2.11. Subsidised small business consulting schemes

Some countries subsidies consulting schemes which are characterized by;
● The consultant provides assistance in certain priority areas, such as business policy
and planning, export development, job creation or quality improvement;
● In some schemes, the small-business client chooses from a roster of consult- ants
who have provided extensive information on their qualifications and experience,
and who have been approved by the agency responsible for the scheme;
● The client co-finances the project (say 40–60 per cent of the cost), and the total cost
or the fee rate charged is within set limits;
● The sponsoring agency has the right to review the work performed before
authorizing payment.
2.12. Innovations in small-business consulting
Assumption is that subsidizing consultancy services for small business can support to
their development in disadvantage regions. However, they don’t provide a solution to
encourage use of consultancy services by small businesses. There are several factors that
don’t favour small business from ripping the benefits of consultancy. This include the
desire by consultants to seek for more lucrative and highly paying consultancy or taking
consultancy for small business and treating them in the same way as large firms. But the
changes being witnessed in business environment calls consultants to use innovative
approaches to small business. These approaches can include,
i. One-stop shop and integrated assistance
This is a case where a consultant provides a comprehensive and complete advices advice
to clients. The consultant can provide small business client with information services on
various aspects of the business. The clients will not have to make separate sourcing for
different specialist in order to resolve their issue.
ii. Standard instruments and checklists
Cheaper and more user-friendly consultancy services can be provided by combining
various standard self-diagnostic, business-planning and other instruments and checklists
with personalized advice introducing and supplementing these instruments. If the
procedure is simple and clearly described, a short briefing or even written instructions
can enable a number of clients to prepare the same data and undertake the same
diagnostic or planning exercise. The consultant’s personal intervention can then be
limited to reviewing the results with the client, and suggesting appropriate action.
Standard instruments can be used by junior (and less costly) consultants (or even
business students), who would ask a more senior colleague for advice, or suggest that the
client ask for such advice, only if this is warranted by the client’s specific situation and
needs.
iii. Self-development and training packages
In helping small-business people to understand fully their business and its potential, and
to improve their management skills and business results, consultants can suggest various
learning packages. The consultant can guide the client through the learning material and
supplement it by more specific information and advice, or direct the client to training
events based on the published package.
iv. Working with groups of entrepreneurs
A consultant can choose to provide advice through use a group approaches were more
clients are served simultaneously and the cost per client spreads to all members in a
group making it lower. A group approach is the clients have some common problems
and interests and if they are prepared to work together. This may require sharing some
business information and experience with competitors of other. Such an approach can be
of a great deal to some clients as it allows them to learn from fellow entrepreneurs and
managers working in seemingly completely different sectors.
Benchmarking. This technique is based on comparison of detailed and specific
information on selected processes, services, and so on, followed by an analysis of the
differences between firms and a study of approaches that have helped certain participants
to achieve better results. In facilitating such an exercise, the consultant can provide data
for comparison, ask the right questions, make the participants aware of common issues,
stimulate the discussion, and help to identify best practices and introduce improvements.
Action-learning workshops. This can be organized where participants in such
workshops get together in order to work collectively, and to learn from other
participants’ experience in solving problems faced by their organizations. As a rule, in
the first phase, the workshop focuses on identifying problems and designating the
problems that are of interest to most participants and should be examined collectively.
The problems selected are then analyzed in greater depth by the whole group or by
subgroups, to come up with one or more possible solutions. This can be done over some
period and if the group’s knowledge and experience are not enough, the group may
define information and training requirements that can be met by the consultant acting as
facilitator or another expert invited for the purpose.
Business clinics. This is an arrangement whereby a group of small-enterprise
owners/managers meets to get advice and exchange experience on how to deal with the
problems faced by all of them. It can be a one-off exercise or a set of four to eight
meetings similar to those run in action learning. A business clinic can be combined with
an inter firm comparison when the members of the group compare their results and
exchange experiences. In other cases, a business clinic may be organized to deal
collectively with problems identified by extension officers or other small-business
advisers, or chosen by the small-business owners themselves.
Self-help and solidarity groups. In several developing countries, such groups have been
established by small-scale entrepreneurs with the support of technical assistance
agencies, including voluntary non-governmental organizations. The groups are
concerned with training, sharing experience and, in some cases, obtaining small-scale
credit. A great deal of this work has been done in the microenterprise sector.
v. IT and e-business services
Existence and ease access of information technology applications can support small
business to gain competitive advantage. This is possible is a consultant who knows and
understands the value of IT for small business encourages the managers to adopt
technology not only for enhance operations and reduce cost but also to expand reach in
terms of market. This can be done through;
Outsourcing which free personnel from restrictive administrative and bookkeeping duties
and allows for efforts to be channeled to core business and technical issues efforts.
E-business were a consultant helps small businesses realize e-commerce and e-business
transcends technology and encompass business and market strategies aid by technology.
And small business can embrace the following approaches to doing business;
● Minimalistic where a small business sets up a low-end Web site essentially a
brochure on the net describing your product and service offering. It utilized basic
email communications systems for correspondence with key suppliers and clients,
or for internal use.
● Inside first where which drives internal operations online, with effective knowledge
 management, and an intranet to support staff, designed to improve operations and
cut costs. The conversion of the organization to an online way of thinking sets the
platform for extending communications systems beyond the enterprise.
● Clicks-and-mortar which uses online delivery as an additional sales and marketing
channel for broadening reach, cutting costs, improving client relations, or
occupying the digital space to guard against competitive activity.
● Buy-side and sell-side cooperation which set up interactive communications with
suppliers and/or customers to cement existing relationships and enhance service
delivery.
● Collaborative partnerships which seek online partners for increasing purchasing
power or establishing sales channels. Partnerships can be entered into at lower unit
cost to produce a collective effort that makes real impact. It can keep a small
company relevant in online terms where it would otherwise run the risk of being
marginalized by online initiatives of larger groups.
● Pure-play spin-off which separates the online and traditional businesses by
introducing a new and independent operation that can learn from the existing
business, but is not hampered by existing infrastructural overheads. The freedom
and agility of pure-play companies can result in a lower cost base, allowing
maneuverability into niche areas. A sound business model is required to ensure
sustainability and prevent conflicts between the two wings of the business.
● Online repositioning which allows for a small business to be the first in the digital
economy space. Redesign the product and service offering from first principles,
looking at cost, client servicing needs, etc. Discard outdated products and systems
that do not fit within your future vision. A totally new strategy for market entry is
required, which comes at a high cost and potential risk, but offers commensurate
rewards from dominating the market if successful.
● Online start-up can define a role that adds value or satisfies a market need that is not
(or cannot be) satisfied by traditional businesses. Look carefully at the cost of
attracting visitors and at the revenue models. Venture capital or corporate backing
may be required.

In the years to come, advice on effective approaches to e-business by small firms will be
an important area of consulting.
Business incubators
A consultant need to create awareness of existing new models of business incubators
lunch by a number of actors such as banks, information technology firms and even these
consultants who provide necessary facilities both physical and digital. They need to
guide start up and existing small business owners to embrace such platforms through
helping them to weigh the advantages and disadvantage.

3. Reference
Kubr, M. (ed. . (2002). Management consulting: A guide to the profession (fourth edi).
International Labour Organisation.
Waddock, S., & Bodwell, C. (2004). Managing responsibility: What can be learned from
the quality movement? California Management Review, 47(1), 25–37.
https://doi.org/10.2307/41166285