What Happened to the Bosses Who Spent 2 Million on Consultants? - Huxiu#
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Highlights#
He provided our company with a comprehensive marketing plan, coming to the office once a month for about a week each time, with all transportation, food, and accommodation covered, costing over 100,000 yuan a year. ⤴️ ^d98edbcb
The cost is quite low
, establishing our first standardized processes for bidding, recruitment, and daily management. ⤴️ ^96f11eda
I generally start by helping companies with a "diagnosis," determining whether something can be done. Next is execution; sometimes I need to directly adjust things, even lay off employees, to help the company implement my plan. My service period is usually around six months, and I can serve 3 to 4 companies simultaneously, charging 10,000 to 20,000 yuan per month. ⤴️ ^b9ff1a37
This person's working style is very similar to mine, but I am more rooted in a specific field and responsible for the final performance; however, his fees are quite low.
Some people are just out to swindle, basically only accompanying the boss for tea, alleviating their anxiety, while helping them network and meet people. ⤴️ ^2f04bb75
But overall, just because someone speaks well doesn't mean they can deliver well; often, the more professional the consultant, the harder it is to gain traction on short video platforms, and it's more challenging to build an IP. ⤴️ ^3a3d742b
Can both parties collaborate? Or can they work together to get things done well?
This article tells the stories and views of five business operators who have hired business consultants and practitioners in the consulting industry, exploring the role and impact of business consulting. They share their experiences with consultants, including the impact of consultants on companies, the core capabilities of consulting professionals, the effects of spending 2 million, and the fact that consultants cannot resurrect a company. Through these stories, one can understand the wide application of business consulting and the existing problems.
• Hiring consulting professionals can fill the gaps in a company and enhance its strategic and marketing strategies.
• The core capability of consulting professionals is a perspective that exceeds that of the company and the ability to solve problems.
• The effectiveness of spending 2 million on hiring consulting professionals varies due to various factors, requiring pragmatism and clear goals.
Recently, due to observing the annual speech of well-known business consultant Liu Run, many people have become curious about the profession of "business consultant."
Some bosses believe that business consultants have a higher perspective than the company and can help enhance company strategy and fill market gaps; however, there are also voices claiming that there are many "consultants" in the market with inadequate professional abilities.
In fact, business consulting is a very broad concept, and different consultants and companies have significant differences in their understanding and expectations of consulting. Many people even struggle to distinguish between consulting, advising, and training. This is one reason for the varied evaluations of business consultants from the outside world.
Another reason for the simultaneous popularity and controversy surrounding "business consultants" is the various IPs that have exploded on short video platforms. Among them are professional business consulting IPs, but there are also many "mentors" who present business concepts like stand-up comedy but cannot solve practical problems.
The discussion about "business consultants" continues. "Ding Focus" found five business operators who have hired business consultants and practitioners in the consulting industry to share their views on business consulting.
A "second-generation entrepreneur" believes that seeking "external help" is necessary but must be pragmatic. He hired a consultant who had previously served as a marketing director, finding it more practical than large consulting firms. An advertising industry business owner stated that the market's evaluation of consulting professionals is not very good; one cannot blame the "consultants" entirely but should also consider how much the company has executed. However, a fast-moving consumer goods industry practitioner mentioned that the company spent 2 million hiring a consultant, but the proposed plan was too idealistic, requiring high costs to implement, and ultimately the consulting suggestions were not adopted.
In response, two consulting industry practitioners stated that companies should not have unrealistic expectations of consulting professionals: consultants cannot resurrect a company; they can only solve specific problems. Especially for small and micro enterprises, the desire for quick results may lead them to be "harvested" by opportunistic institutions.
Here are their stories and views.
- The Impact of Consultants on Companies is a Subtle Process
Luo Hongfei | Furniture Industry, a City in Northern China
Our company chose to hire external consultants to fill our own gaps.
I am a second-generation entrepreneur. When I took over the business from my father, my understanding of business was not very deep. After exploring for several years, the company has achieved some success, but the pressure for development is also significant. On one hand, we face fierce market competition; on the other hand, the company needs to transform to better adapt to today's market environment.
Six years ago, the company encountered a bottleneck in development. At that time, I felt a strong need for someone to help me with certain tasks, especially in strategy and marketing. It is very difficult to make progress relying solely on my own insights.
The consultant we ultimately chose had previously served as a marketing director at a company and had extensive experience. He later started his own business, providing consulting for some small and medium-sized private enterprises. His expertise is in marketing, and he also has a good understanding of products, as marketing is always linked to products.
==He provided our company with a comprehensive marketing plan, coming to the office once a month for about a week each time, with all transportation, food, and accommodation covered, costing over 100,000 yuan a year.== Additionally, if the company's performance is good, there will be extra compensation. He also works as a consultant for other companies, and our company is one of his clients.
Our form of cooperation is quite flexible but very pragmatic. I require him to be deeply involved in the company's business, not just to provide plans and give lectures. I share the company's core data with him, and we organize our thoughts together, analyze problems, and determine the company's strategy and marketing strategy.
Previously, I had also interacted with large consulting firms. They seem very professional, with detailed plans and targeted courses and training, but I feel that many things do not land effectively. It feels like those consulting plans are templates that can be reused by just changing the company name. If the company were to follow the consulting plan completely, it would be doomed.
Our consultant follows the business closely. For example, in sales, he helped me reorganize the company's sales system, manage the sales team, and establish clear management systems. This has been very meaningful. We also adjusted the company's product structure, established new product lines, and opened up new growth spaces.
What impressed me the most was the impact of his influence on my way of thinking. Including how to formulate strategies, how to view the market, and how to manage; this influence will not manifest in business results in the short term, but qualitative changes arise from quantitative changes, which is a gradual process.
I believe that as the CEO of a startup company, the most important task is to determine the company's strategy, clarify thoughts, and manage well. This tests cognitive ability, and of course, experience is also very important. Every CEO inevitably has shortcomings; to fill these gaps, one must either find partners with complementary abilities or seek external help. Ultimately, the CEO's thinking must lead the company's development.
It is essential to be pragmatic and business-oriented. Those flashy training courses may indeed be based on profound industry insights, but if you want to use them to improve performance or achieve a complete transformation of the company, I think that is unrealistic.
- The Core Ability of Consulting Professionals is a Perspective Above the Company
Fang Jie | Advertising Industry, a City in Northern China
I previously hired a consulting professional when my company was a startup team of fewer than ten people, but we were doing quite well, landing many big clients, and many friends suggested that I consider expanding the company's scale.
With this idea in mind, during a chat with a friend, he mentioned that he happened to know someone in this field, who had a background as a manager at an investment company and had helped many large companies with planning.
After several meetings, we hit it off. Although the consultant was a post-90s individual, he was very mature and steady, so we smoothly reached a cooperation agreement for one year.
During this year, the consultant participated in various aspects of the company. For example, at a high level, he suggested establishing the company's brand and improving employee standards internally. He also attended our weekly, quarterly, and semi-annual meetings.
During this time, there were significant changes both internally and externally in the company, such as changing the company logo, but more importantly, the overall work approach shifted from being emotional and intuitive to being standardized.
Now we have a relatively complete set of working methods, one major reason being that ==we established our first version of standardized processes for bidding, recruitment, and daily management during this consulting period.==
I believe the core ability of consulting professionals is a perspective that exceeds that of the company and the ability to propose and advance solutions, including some working methods and investment perspectives of consulting professionals, which have also inspired me greatly.
Now, many people feel that consulting professionals are somewhat "vague," which may be due to four reasons.
- First, the industry indeed lacks clear evaluation standards; the success or failure of a company is the result of multiple factors, and one cannot determine a consultant's level based on some fixed criteria;
- Second, many times we use consulting incorrectly; consulting provides vision, methodology, and core points, but the actual core execution still relies on the company's management team;
- Third, there is the issue of execution; whether the company can execute the suggestions provided by the consultant and what percentage of execution can be achieved;
- Fourth, there is the issue of adaptability; the experiences and methods of consultants are generally industry-wide methods, but when applied to a specific company, adjustments based on the company's situation are still necessary.
Although I believe consulting professionals are not vague, I also advise everyone to differentiate by industry, company, and stage, analyzing specific problems to determine whether they need to seek help from a consultant at this stage.
For example, if the company is facing some internal issues, it may be more effective to consult a senior who has done well in the consulting industry than to seek specialized business consulting. However, if the company is about to undergo a change in stage, moving from one level of revenue to the next but encountering bottlenecks, it may require someone like a consultant.
However, hiring a consultant does not guarantee everything will be fine.
As a boss, one must also clarify several things. What are the goals the company wants to achieve in the next stage? What value do you need the consultant to add to the business? What type of consultant are you looking for, and to what extent can you trust them as a business owner? And regarding results verification, to what extent should the cooperation be stopped in a timely manner or deepened? Only then can the value of the consultant be realized.
- Spending 2 Million Was Not Worth It, But At Least I Tried for Peace of Mind
Lu Ping | Shanghai, Fast-Moving Consumer Goods Industry
Our company faced growth and transformation challenges during the pandemic, so with the mindset that "expensive means good" and "spending money buys experience," the boss spent 2 million hiring a well-known business consulting firm.
At that time, the entire company was facing dual challenges from external and internal environments. Our brand's sales channels had previously focused on traditional e-commerce platforms, which shrank during the pandemic, necessitating the exploration of new channels. Meanwhile, the internal talent structure was too mature and could no longer adapt to the current market situation.
To seek some new voices and fresh blood from outside, we made this decision with a trial-and-error mindset, hoping to connect with the consulting firm's client and industry resources.
This matter took over half a year to work through. In the first month or two, the consulting team communicated with every department leader and core employee to comprehensively understand the company's information. Based on this information, they identified some of the company's issues and began working on overall strategic positioning. In the third month, we collaborated with the consulting team to conduct user research, engaging with suppliers, major clients, stores, and outsourcing teams, which took nearly two more months.
After all the basic information was collected, the next step was to hold numerous meetings to determine the direction and PPT content. After several revisions, we felt that it still lacked something and was not what we wanted.
Objectively speaking, their professional consulting capabilities were indeed present; the key was that this consulting firm had some understanding of our industry, but it was not as deep as our own insights, and they could not fully see some internal issues within the company.
The dual impact led them to provide overly idealistic proposals after their research, which could not meet our goals for breaking through in the next three years. According to their ideas, implementation would require high costs, and we ultimately did not adopt their consulting suggestions.
This engagement cost us nearly 2 million yuan; the company not only spent money but also invested time and energy, and we felt it was somewhat not worth it in the end. Moreover, we did not fully utilize the resources they provided.
However, upon reflection, I can understand. Generally, when doing strategic consulting, one of the main methodologies is benchmarking analysis. Small companies and individual businesses can easily identify the strengths of leading enterprises and make decisions based on their resources and goals, yielding significant benefits. However, for large enterprises like ours, it may be more challenging to position ourselves, and the returns are harder to predict.
Even so, we still have to strive to do it. For the future of the business, bosses are always willing to invest, and if they ultimately find it not worth it, they can stop losses in a timely manner.
However, there is also a new trend in the consulting industry where consultants need to understand the specific things that clients do more and more, becoming increasingly specialized. In the past, during good times, even if they only spoke in generalities, they could still make money regardless of the implementation level. Now, during tough times, before hiring a consultant, internal discussions may have already taken place, and if no specific and impressive new proposals emerge, they are no longer willing to pay.
- Consultants Cannot Resurrect Companies; They Can Only Solve Specific Problems
Lao Jiang | Consulting Industry Practitioner, Shanghai
There are many forms of business consulting. Some consultants deliver complete solutions, while others mainly provide advice and help connect resources for the boss. I work as an operational management consultant and executor.
==I generally start by helping companies with a "diagnosis," determining whether something can be done. Next is execution; sometimes I need to directly adjust things, even lay off employees, to help the company implement my plan. My service period is usually around six months, and I can serve 3 to 4 companies simultaneously, charging 10,000 to 20,000 yuan per month.==
I once worked on an operational management project for a theater that was nearly paralyzed, with many employees leaving, and the remaining staff unsure of how to work, while recruitment was also challenging. The first thing I did was training, followed by optimizing processes. Originally, it took half an hour to queue when entering the theater, but after optimization, it only took five minutes. After optimization, we also didn't need to hire as many security guards, reducing costs by 20%.
Another memorable case was a factory where the boss was torn between development and layoffs. My first step was market analysis, and my advice was that due to high operating costs, half of the staff needed to be laid off, using the remaining employees for development. I also helped him design an incentive mechanism and encouraged the boss to consider other revenue points for the business.
There are many pitfalls in business consulting. For instance, some consultants add many titles to themselves, but their experiences cannot be verified from the side; often, they are just empty claims, like those from large companies at P9 or P10. Some consultants have previous experiences that do not align with the industries they serve, making overly broad business consulting of little value. There are also consultants who rigidly apply a single methodology to most models, while in reality, they should analyze the specific problems of the corresponding company to provide solutions.
==Some people are just out to swindle, basically only accompanying the boss for tea, alleviating their anxiety, while helping them network and meet people.== Of course, some pitfalls may also arise from the boss being overly unrealistic, seeking a miracle cure and resorting to hasty measures.
Many bosses place their hopes on business consultants because they blindly trust so-called external resources and external forces. In reality, promoting vision and perspective ultimately only leads to meeting some resourceful people, but if one does not possess the strength to create transactional value for them, knowing high-end resources will not retain them.
I believe there are situations where companies can seek business consultants: first, when the founder's personal understanding needs to break through and they need to broaden their horizons, but there are many alternative ways to achieve this, such as pursuing an EMBA; second, when the company's main business is stable but has reached a plateau and wants to break through bottlenecks or explore new businesses.
If a company is still losing money, expecting a business consultant to resurrect it is unlikely to succeed. For example, if a company's product is poor, marketing is ineffective, or the market environment is unfavorable, and they have no advantages, it is also challenging for business consultants to resolve these issues. In fact, spending this money may even accelerate the company's demise.
I generally do not take on projects that immediately demand sales increases or performance boosts. Some companies have been losing money for a long time and are on the brink of collapse, flailing around like headless flies; most of these cannot be saved.
I believe when companies seek consultants, they should first clarify what they want this person to do: is it diagnosis or execution? These two tasks do not necessarily have to be completed by one person. First, diagnose the problem clearly, then address it specifically. For example, if sales are poor, hire a professional for sales training; if management is lacking, it may be necessary to introduce an ERP system.
Before entrepreneurs seek consultants, they can also learn some knowledge in management, marketing, and other areas to have a basic understanding of the methodologies in these fields, which will enhance their judgment when hiring consultants.
Additionally, it is best not to set operational KPIs and corresponding rewards for business consultants, as this can easily lead to KPI distortion and fraud; simply purchasing their time and resources is sufficient.
- The More Companies Want Quick Results, the More Likely They Are to Be Exploited by Unprofessional Consultants
Hu Shiming | Founder of Hechu Consulting
Business consulting is a very broad concept, generally referring to consulting services provided to companies in China, while one-on-one consulting for individuals is not mainstream. Different consultants and companies have significant differences in their understanding and expectations of consulting.
A typical example is that many people equate consulting with training; some companies called "consulting" excel in training. In reality, while consulting and training overlap, they are two different service models.
Some people also confuse consulting with advising. Our team often deals with both services, and there is a significant difference in the initial investment costs and required fees.
Generally, the consulting process involves initiating a project after initial business discussions, conducting in-depth research and analysis of the industry, the company itself, and its competitors, producing a series of reports, and providing guidance on the implementation of those reports.
The advising format is much lighter; after the project starts, I also conduct research interviews with the company, ultimately providing conclusions and discussing them with the client.
The consulting company I work for focuses on the entire industry, while I and my team pay more attention to agriculture. Our clients include state-owned enterprises, foreign enterprises, and group companies of domestic private enterprises, as well as small businesses.
In recent years, the industry environment has undergone some changes. The budgets of private enterprises for consulting have significantly decreased, redirecting funds to more urgent areas, such as directly driving performance or capital operations for planning an IPO.
We have also seen many institutions or investors that previously focused on main business investments now crossing over into consulting. This is a normal phenomenon of cross-industry movement. However, it does not exclude the possibility that some institutions or individual consultants may lean towards opportunism, which, in the long run, could harm the industry ecosystem. The ones being exploited are generally small and micro enterprises, as well as slightly larger individual businesses.
As the popular saying goes, you will never earn money beyond your understanding. The more small and micro enterprises want to see quick results, the more likely they are to lower their judgment ability. Many times, in specific scenarios, driven by marketing efforts from practitioners, they end up making purchases due to unrealistic expectations.
For example, a few years ago, a popular form of "training" involved getting business owners to pay for small introductory courses, followed by training sessions in closed venues that excited everyone, pushing them to buy more expensive courses, sometimes reaching the price of our shared consulting services, costing hundreds of thousands or even millions.
Spending this money has led to significant problems in many business owners' operations. However, many small and micro enterprises still eagerly participate, even believing that it is not that the other party's offerings are useless, but rather that they are unlucky or did not grasp the concepts.
For some more rational business owners, my advice is to first understand the clients of consulting professionals, as this may yield a more objective evaluation. Secondly, assess their professional capabilities, the backgrounds of the consultants and institutions, and whether their operational processes are scientific. Of course, one can also judge based on their brand influence, but this dimension may lead to pitfalls.
Since the rise of short video platforms, many consultants and consulting IPs have emerged, but it must be said that the proportion of professional IPs is relatively small; most rapidly successful IPs often gain traction because they can present business concepts like stand-up comedy or anecdotes, catering to the interests of the majority.
In our industry, the professionalism of consulting and advising is distinct from creating IP; many individuals do not possess both abilities simultaneously. Of course, there are exceptions where some individuals excel at creating IP while also being excellent consultants.
==But overall, just because someone speaks well does not mean they can deliver well; in fact, the more professional the consultant, the harder it is to gain traction on short video platforms, and building an IP becomes more challenging.==
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