Consulting in a Nutshell
A consultant is a professional who provides expert knowledge (often involving specialties like information technology, strategic management, organizational change, engineering, turnaround or hundreds of other specialties) for fees that are usually based upon retainers; with hourly, flat rate or project-based fees; with or without contingency or bonus fees depending upon appropriateness.
General management consulting focuses on advising companies as to the best ways to manage and operate their business. The consulting firm will give advice on concepts like business strategy or operational techniques, and also skills like time management, organizational effectiveness, total quality management, lean operations/production, proprietary processes (six sigma, lean and kaizen as examples) and other issues depending upon the needs of the company.
Turnaround consulting is provided by Directive consultants that are experienced in most phases of managing businesses in various phases of business decline: crisis, financial or operational decline, organizational disorder, regulatory/legal actions, negative publicity, negative liquidity or cash flow events; the sum of which threatens the viability or “going concern” value of the enterprise. Practitioners generally achieve cash stability very rapidly sometimes using unorthodox approaches to reverse the burn of cash, and re-position the organization to stabilize and eventually change its direction.
The turnaround consultant works in an advisory capacity reporting to boards of directors, owners, lenders, trustees, assignees, or suppliers, and may or not be accountable for the outcome of a consulting assignment. In some cases, especially flat rate engagements in turnaround management, conditional or bonus fees for specific outcomes like successful financing, as one example, may apply. Consultants that are granted interim or temporary management roles like a chief executive or chief financial officer are a sub-set of turnaround management known chiefly as interim managers or chief restructuring officers. Normally, these management roles involve a displacement or replacement of existing management.
Consulting organizations are numerous, some granting certifications like the Turnaround Management Association offering the Certified Turnaround Professional (CTP) and the Institute of Management Consultants offering the Certified Management Consultant (CMC). Most consultants subscribe to similar codes of ethics or professional conduct. A chief reason for professional certification is to test basic concepts and subscribe the holders to strict codes of ethics and conduct.
Directive consulting is geared to delivering an integrated leadership approach that aligns the organization to a common goal of achieving stability in cash flow and operations. In many cases the consultant will need to also secure outside resources that may include appraisers, bankruptcy/debtor legal counsel, forensic accountants, public relations, alternative financing, including alternative debt and equity that may entail use of federal bankruptcy laws to facilitate formal reorganizations and rights of stakeholders.
In very small companies the turnaround consultant will focus on issues that immediately impact a company’s liquidity and ability to keep the doors open. This could include reaching a conclusion the business cannot survive in its own right and must sell or liquidate before the consequences directly negatively impact the owner, principal or executive that potentially create two insolvencies at once.
