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Why do Business spend huge money as consulting fees

Prajwal Adhikari, FCA Business Management & Consulting

Still today, most of the business have the concept that, they do not require any consultant for their business. They perceive that, they can operate their business well by themselves.

Consultants are perceived as those persons who just join the business. Workout with non-regular stuffs and land on to the results that are not much of need.

However, that’s one side of the story. Despite the complaint of some of the business, there are business houses who spend huge sum on such consulting. Below here are some of the basic facts that are the base for having a business consultant.

1. Human Resource Management:
Entities often need staff for short and medium term. It is not prudent for them to collect a new set each time. Further, the requirement of fringe benefits, retirement payments, labor union, etc. is a pool of trouble.
So, consultant is thee best solution to these issues.

2.External Influence and control:
Entities cannot just decide on their own in various cases. Specially, in case of job layoff, salary and benefit changes/reduction, major operational and strategic drifts.
On hiring consultant, business entities will not have to worry on such issues.

3. Best practices across industries and functions:
Consultants keep visiting various business operating in various industries. Hence, they recognize the common attributes of effective solutions, applying lessons learned in applicable situations. They can suggest the best practices and also can blend out new practice or solution out of their multiple experiences.

4. Analytical Power
As a result of the three attributes mentioned above, a consultant can interpret the situation much better, can analyse it better and land to conclusion that will obviously be better. Consultants can be of great value given their training and capabilities.

5. Fresh perspective
Companies often need a fresh set of eyes – you’d be amazed at the amount of value consultants can add based on the most mundane observations and insights. Critics contend that this is an example of consultants selling “glorified common sense”, but for front-line client employees, it can be easy to fall into daily routines without a critical eye towards measurement, analysis, and improvement.

6. Training and skillset augmentation
We’d argue that every consulting project – particularly ones with heavy client interaction – incorporates client training as a major ingredient. The best recommendations are worthless if clients can’t implement and maintain suggested changes. Thus, a large part of what consultants do is educate client employees on necessary knowledge, skills, and mindsets.

7. Risk Minimization
Investors normally focus on higher profits and run behind anything to achieve it. They do not consider the underlying risk factors. Consultants can take view of larger time frame and can make decisions with lower risk factor.

Prajwal Adhikari, FCA (Managing Director of Mantu Sewa Pvt. Ltd. Birtamode-Associate member of Business Consulting Group Nepal)