What is business, and how do consultants help them? These sound like simple inquiries, but we can assure you that there is a lot packed into these short questions. In this article, we’ll be going over some of the basic, albeit common questions asked about the business world.
What is Business?
Depending on who you ask, you’re likely to get various different responses. For our answer, we’ll stick to the fundamentals:
“A business is an organization of people whose goal is to make an economic profit by delivering value to customers.”
Of course, it’s a lot more complicated than that. Some businesses make social impact or their missions a key objective and revolve their decisions around them. There are also several layers and components of a business that must work in harmony in order for it to thrive. In the end, the common thread amongst all businesses, however, is that it must turn profits and deliver something of value to the world in order to survive.
What is a Business Model?
A business model consists of the strategic methodology through which businesses plan to operate in order to grow and make profits. This usually involves the following components:
- Products or services that will bring in the most revenue
- Key customer segments
- Main distribution channels
- Marketing methods
- Financing details
A business is able to succeed when all of these different elements work in harmony and create competitive advantages.
Examples of popular business models include:
- Bricks and clicks – having both an offline and online presence.
- Collective – consisting of a relatively large number of businesses or professionals in the same or related fields to share information and resources.
- Cutting out the middleman – removing intermediaries in a supply chain.
- Direct sales model – selling to customers directly.
- Franchise – using a successful business and creating copies of that business in exchange for royalty fees.
- Freemium – offering a limited number of services for free while charging for premium services.
For more business models & frameworks see our article here.
What is the Business Cycle?
The business cycle refers to the ups and downs an economy experiences over a period of time. It’s best described through a picture from Business Insider:
Though there many more bumps and volatility in real life, the general trend of peaks, recessions, troughs, recovery, and expansion can be followed in the vast majority of economies. Businesses must adapt and strategize for all phases of the business cycle in order to survive in the long run.
How Do Consultants Help Businesses?
Now that we’ve properly defined business, we can now focus on exactly what a business consultant, or management consultant does.
As discussed, businesses are complicated organizations that can face challenges and problems from multiple fronts simultaneously. These issues could involve maintaining growth during an economic recession, cutting costs to increase profitability, or developing a new business plan to adapt to changes in an industry.
Business consultants provide an outside, third-party perspective to these companies. This external perspective, combined with data, frameworks, and industry insight help consultants provide strategic recommendations that clients may not be able to come up with themselves. Clients are often into the weeds of their problems so much that it’s difficult to truly take a step back with an unbiased perspective to properly fix their own challenges. As a result, consultants who have solved similar problems for previous clients can step in, recognize patterns, and offer valuable advice.
Great business consultants are valued, trusted advisors. Because so many things can go wrong when operating a company, it can be extremely helpful to have an experienced group of professionals whose jobs are to fix big, challenging problems. If this sort of career sounds interesting to you at all, we definitely recommend looking into management consulting. It’s one of the best ways to learn more about how businesses operate in the shortest amount of time!
For more on an introduction to business, check out our Business Basics course: