Coaching vs. Consulting for Small Businesses
The initial years of running a small business can be tough. Research suggests that almost half of all small businesses do not make it to their fifth year of operation. As someone who has worked with small businesses for many years, I know firsthand the challenges entrepreneurs face -even after their first five years. There are numerous hurdles to overcome, from reliance on few customers and financial struggles to the need for strong leadership.
But I also know that businesses can overcome these challenges and thrive with the right guidance and support. As a coach and consultant, I have seen how coaching and consulting services can be leveraged to address the unique challenges that small businesses face.
In this article, I’ll explore the differences between coaching and consulting and share insights on which approach best addresses common challenges that small businesses encounter.
What Are The Differences Between Coaching And Consulting?
Consulting involves solving business problems directly, while coaching involves enabling individual(s) to solve problems. In other words, coaching is focused on personal development, while consulting is more focused on business processes.
Coaching services are the best options for entrepreneurs that want to develop their skills and knowledge over the long term. A coach can help business owners improve their leadership, communication, or time management skills. With a coach’s assistance, entrepreneurs can maintain their drive and concentration through the ebbs and flows of business management.
Consulting services, on the other hand, are ideal for businesses that need specific expertise or advice for a particular problem or project. For example, I offer consulting services for women and minority-owned businesses to overcome their unique challenges. Through this service, they can get specialized knowledge and resources in areas such as strategy development and how to gain access to critical networks.
Unlike coaching, which focuses on developing the client’s capacity and building the right mindset, consulting is about providing an objective perspective on the business and offering recommendations for improvement.
Coaching, Consulting, or Both?
What are some common challenges that small businesses face, and which type of service (coaching or consulting) is better suited to address these challenges?
Well, to begin with, choosing between a coach and a consultant can be tricky because there are gray lines between the two. You’re lucky if you find someone or a firm that can combine the two services to solve problems.
For many small businesses, the typical challenges are best summed up in an Investopedia article I once encountered. These challenges confirm many of the experiences that I have witnessed (confirmation needed). They are client dependence, money management, fatigue, founder dependence, and balancing growth and quality.
Small businesses may work with either a coach or a consultant to address these challenges. As indicated earlier, coaching services can be beneficial for developing the skills, mindset, and strategies needed to navigate these challenges. However, consultants can provide expertise in a particular area for a business. In practice, small businesses may benefit from a combination of both services. Let’s see how it may work.
1. Client dependence: Small businesses that rely on a few large clients may struggle to maintain steady revenue streams and face significant risk if a client leaves. To attract more clients and diversify revenue streams, the service of a business coach can be beneficial. At the same time, consulting services can help identify growth opportunities and formulate new client acquisition strategies.
2. Money management: The service of a consultant can be valuable for accounting, tax planning, and regulatory issues, especially when things get complicated. Likewise, suppose a business experiences a sudden increase in revenue. In that case, a consultant can be hired to provide valuable advice on financial planning, investment strategies, and managing cash reserves to ensure the business can sustain growth over the long term.
3. Fatigue: Running a small business can be physically and emotionally exhausting. Many small business owners start by juggling their 9-5 work with their business. And even if they quit their job, they may still have to wear many hats for their business to thrive.
In this case, a coaching engagement can help the business owner develop strategies for managing stress and maintaining motivation. A coach can also help you to delegate responsibilities and prioritize time effectively.
Consulting services may be less helpful in addressing fatigue for the founder, as they focus more on specific projects and problems rather than well-being. However, if the issue is system- or team-level fatigue, a consultant can analyze processes and recommend improvements to gain efficiency and reduce burnout.
4. Founder dependence: Small businesses that rely heavily on the founder or a few key employees may struggle to scale and grow. Coaching services can help the founder to develop leadership skills and build a strong team.
Consulting services are a great option for your business if you’re looking to build a sustainable structure. Also, if you want expertise in areas like HR and organizational development, consulting services can help your business needs.
5. Balancing growth and quality: Hiring a consultant can be helpful whenever you need to navigate rough waters or decide how best to grow your product and service. At this stage, a good consultant can develop strategies for training and managing your staff. They will help ensure that everyone is aligned with your vision and committed to delivering the same level of quality that your customers expect.
Every business owner needs help from time to time. Outside help is particularly important when making difficult decisions like investing in new technology that may have a high upfront cost. Or it could even be needed when determining whether to expand the business into new markets or stick with the current customer base. Whatever the need is, consider tapping into the expertise of a coach or consultant to make the best decisions.