Good Consultants Can Boost Efficiency of Businesses

Entrepreneur’s Notebook

by Janet Halbert

What does the parent of teenagers have in common with the business owner who needs to hire an outside consultant? They have no idea what the future holds, and the suspense is nerve-wracking.

But you can make things easier for yourself if you start by asking some key questions of your business peers and professional advisors. Two basic ones come to mind:

-What’s my problem?

-What skills must my consultant have to solve the problem?

The answers should help make it easier to find the right consultant. You will get some referrals, and when you review the ideas and qualifications of the people you meet, you will know at least what to look for.

The next job is to hunker down and look for opportunity in the bad news that the consultant will likely deliver sooner or later. Delivering bad news is what consultants do; what you must do is to look to the payoff because a good consultant can help you turn problems into opportunities.

Assume, for example, that you run a chain of fast-food restaurants and your inventory control systems are out of whack and may threaten the business. Poor inventory controls make it possible for employees to steal. It happens all the time in the food service industry. And since food is both inventory and product, you control it or you sink.

Expertise speeds results

A consultant with experience in the food service industry should make short work of such a problem, studying your cost of sales and comparing the numbers from outlet to outlet in a search for unusual bumps. If you sell a standard product that is, if you offer the same menu from location to location finding the problem shouldn’t take long, and you can act before it mushrooms, maybe by firing offenders, by installing a computer system to track inventory, by implementing new internal controls, or all three.

Another potential nightmare in running a chain of restaurants is keeping track of cash. Assuming the manager of each location deposits receipts into your business bank account once or twice a day, your bank statements could show scores, maybe hundreds, of deposits every month, making it difficult to reconcile the statements. Worse, if a manager makes a mistake, innocent or otherwise, it could take hours of your accounting staff’s time to track it down.

This is inefficient at best and an invitation to thievery at worst.

But the solutions are simple: Open separate bank accounts for each location and require your managers to make their deposits via night-drop bags, each with a specific number identifying the transaction so that your accounting staff can monitor deposits from each location separately. If you add a second simple layer of security to this procedure by penalizing your managers if they don’t follow the rules you’re in position to track every penny that passes through the till. A third layer of protection would be to have the bank provide weekly, not monthly, statements.

Simple steps

Note the many payoffs that come from making simple procedural changes:

-You get timely information about what happens in each of your locations. Information is received soon enough to allow you to resolve discrepancies and quickly rectify problems that arise. This enables you to manage your cash effectively, which can be key to the success of any business enterprise.

-Improving controls gives you a more accurate picture of the value of your inventory. Thus your accountant can produce financial statements reflecting the true profitability of the business. This can prove crucial when you go looking for a bank loan, and come tax time it will enable you to pay not a penny more or less than you actually owe.

Note also that strong cash and inventory controls can benefit businesses in many industries, from restaurants to property management companies, from manufacturers to service firms.

And if you think these aren’t new ideas, you’re right. But good consultants come with toolboxes full of ideas that have worked in other companies, and they will give you a greater sense of control.

Good consultants don’t come cheap, but they pay for themselves by enhancing productivity and by freeing you, the chief executive, to spend your own time doing the things that fatten your bottom line the true measure of a consultant’s worth.

Keep that in mind as you begin the process. If you are to make your own engagement with a consultant successful, speak openly, pay attention and turn the suspense to your own advantage.

Janet Halbert is president of JRH Consulting Group, Los Angeles, serving the accounting departments of mid-sized companies and non-profit organizations. She may be reached at

[email protected].