Can Small Business Consulting Be Profitable

The answer is a resounding yes. Many CPA firms approach small company consulting projects using the traditional method of service delivery. The result is they frequently perform too much of the work and the client winds up with a steep bill. There are three choices at this point: The client pays and is upset, the client doesn't pay and the CPA firm is upset or a compromise is reached in which both parties are mutually dissatisfied. After a few of these episodes, firms conclude consulting services can't be delivered profitably to small businesses. The reality is that one delivery methodology just won't be able to satisfy all clients. How have CPAs historically delivered traditional services? A client who hires a CPA to prepare a tax return or financial statement or perform an audit believes he or she is paying for an end product. This perception has become so prevalent it's uncommon for CPAs to bill for services not associated with a paper report. As a result, most firms emulate a job-shop manufacturing environment. They take the raw materials - the client's records - and customize a product by sending them through the "manufacturing" process, during which the information is sorted, summarized, categorized, analyzed, extrapolated and so on. To arrive at a finished good and maintain client satisfaction, the CPA firm must correlate its available resources with the magnitude and complexity of the project and meet committed deadlines. What's the priority? In the small business arena, clients often can't afford to pay for the entire manufacturing process. But they can and will pay for some stages of the process or just for management skills and expertise. This could make small business consulting an attractive practice area for many firms, but the problem is that CPAs often use only one service delivery methodology. When a custom-produced finished good is ordered, many CPAs retreat to their own manufacturing plants where they can drive those products through the process most expeditiously. While there is nothing wrong with this approach, a problem arises when speed is less important to the client than, say, money. Therefore, CPAs must vary their delivery methodologies to reflect a client's specific situation. This may mean performing just one or some combination of the manufacturing stages instead of all of them, managing the process using client personnel instead of their own or providing only advice and assistance to the client management team. The point is that CPAs must separate the advisory service from the implementation service (both of which are defined in the American Institute of CPAs statement on standards for consulting services). Even within the implementation service, the CPA should be ready and willing to segregate the various tasks in a manner that recognizes a variety of skill levels. This allows the client to specify engagement areas that are the client's responsibility and those that are the CPA's. This way, the client has the option of using his or her own less expensive labor force for some tasks as well as the ability to control the degree of his or her involvement. To deliver consulting services successfully, the CPA firm has to be able to match the delivery methodology to client resources. The MTS technique. To facilitate this, my firm developed a technique called MTS, which categorizes client resources into three broad areas - money, time and skill - and sets priorities based on greatest scarcity. The process works by discretely determining the answers to questions such as: * Does the client have the discretionary funds to hire outside assistance for this project? * What is the client's time frame for project completion? * Does the client have the in-house expertise or skills to perform this project? * Is the completion time more or less urgent than the need to minimize project expense? * Does the client have people available to work on the project? …