Should I Use Consultants in my Startup?

Posted on:July 13, 2017

Author:Broderick Smith

Category:Consulting, Fund-raising, Startups

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Should I Use Consultants for my Startup

 

It’s a question i get asked frequently – when should I use consultants to help build my startup?

 

Long ago, before I started charging startups for consultation, I had one preconceived notion – startups have no capital to pay for assistance. This turned out to be false – startups do pay.

Recently in Sydney, ghacklabs a service built for startups, launched a $1 startup consultation service. Luke Fitzpatrick, Founder of ghacklabs gained traction from his service by featuring Australian startups on his Medium list.

Interestingly enough, if more people are entering the startup consultation space – indeed there must be a strong demand for these services.

 

Consultation statistics and trends

With the ever-increasing trend of people moving from the corporate scene to the startup world, startup consultation is on the rise. Some may need help with marketing, others’ legal issues or just the basics of running your own business and structuring teams.

From doing close to one hundred startup consultations over the past decade – I have seen three trends: 1) needing help with creating a strong value proposition 2) getting ideas into a document that developers can understand and code up, and 3) raising funds. All of these trends share an interesting connection.

If a startup is struggling to gain interest in fund raising, its highly likely the execution plan has not been thought-out clearly enough or the value proposition for both consumer and/or investor is lacking. Your execution plan must seem both ‘reasonable’ and ‘realistic’ to investors. Once you have satisfied investors with key foundation concepts, only then you might be in a position to talk investors.

According to research conducted by Gartner’s, the global consulting market is valued close to $120B. It’s not just big corporates seeking help – startups and small businesses are as well.

 

Why startups need help?

  1. Lack of capital: When you are first building out your startup, often you have little-to-no capital. However, you have many tasks ahead – put a complimentary team together, launch your minimum viable product (MVP), gain traction through paying clients and prove your concept. In Australia, investors are less risk-adverse than the USA. Above all other things, Australian investors want proof that you know what you’re talking about in the industry your wanting to play and most importantly that you already have ‘skin in the game’ – your own money on the line. The double-edged sword that comes with with lack of capital, is often the bootstrapping stage is where startups need the most resources.
  2. Lack of experience: Imagine starting a totally new company. In the early stages, you and your co-founder are likely doing everything. From developing the platform, running the customer support, developing marketing, building the sales pipeline, talking to investors, dealing with the media, accounting, legal, recruitment… this list is endless. Certainly, a younger starter can learn all of this over time. However, if you seek consulting on specific areas of your business that you need help with – it will pay dividends in the long run. This will minimize your early mistakes and put you on the right track with less cost ongoing and allow you to get on with what you do best. In addition, not all consultants’ motivation to assist you will be a financial one;
  3. Lack of access to mentors: It’s actually really hard for startups to find true mentors or advisors. Imagine you are new and likely nobody knows anything about you. Why should they help you or trust you?

To make matters worse, most mentors and advisors are unwilling to commit their ‘name’ to your startup pre-MVP. It’s a tough road, and you’re all alone at the very start. This creates a ‘need’ for startup consultation.

All of this said, there are certain stages of the business model and areas of business development that consultants should not be used for. More on that in a future blog post!

 

There are people that can help

Whether startups are in their early stage, or growth stage. One thing remains certain – startups need help. The earlier those startups seek help; the better off they will be in the future.

This trend will continue to increase out of necessity due to the lack of capital that startups have at the start, lack of business experience in specific areas – and lack of access to experienced people to guide them.

 

Broderick Smith is Principal of Bromily and Founder of Onetick. Broderick specializes in digital transformation, business process re-engineering and systems thinking to make business mroe efficient and increase productivity and profitability.

 

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