There are a massive range of complicated steps to take and factors to consider when it comes to launching a new startup in 2022. While not the most prominent element of consideration involved, a significant factor that startup developers need to carefully consider is whether or not the services of a startup consultant would be worth the cost and effort it takes to get them on board. In the article below, our team of business experts from TaxRobot will explore the key elements of startup consulting that new startup businesses should understand and whether or not their services are still worth consideration.
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Startup Consulting: What is It, and Why is It Important?
In short, a startup consultant is someone who is intentionally brought into a startup- usually at the beginning of business operations- on a short-term basis to help advance specific aspects of the company. Their general goal is to help keep things running smoothly so the startup can have the best possible chance at future success without immediately folding due to unforeseen circumstances or poorly planned outcomes. While not essential, startup consulting can benefit some small businesses and play a vital role in keeping them afloat, especially during their first few years of operation.
What Does a Startup Consultant Do?
Many people don’t fully understand what startup consultants are or what their work entails since they’re often confused with freelance contractors, startup mentors, and startup coaches. In short, startup consultants help provide critical outside perspectives and expertise that can be valuable to new startup businesses trying to establish themselves in a sea of competitive markets. For example, they can help startups assess aspects like hiring, finance, marketing efforts, and company procedures. Startups can then leverage these assessments to actively avoid potential mistakes that could lead to the eventual failure and closing of the business.
According to data recorded by the U.S. Bureau of Labor, up to 20% of small business startups close within their first year of operation, 33% fail in their second year, and 50% fail within their first five years. While these figures are harrowing and indisputable, that doesn’t mean they’re a death sentence for every new startup that emerges into the market. With proper planning, execution, and the help of an experienced startup consultant, small business startups can take steps to establish themselves within their respective industry and avoid initial obstacles that can stifle or slow down essential growth.
Put more precisely, startup consultants;
- Assist with business plan development
- Define a proper scope of business operations
- Assess a startup’s capabilities
- Provide an educated and independent perspective
- Map out a realistic budget
- Conduct detailed market research
- Help monitor and train teams
- Develop effective management frameworks
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When Should Your New Business Hire a Startup Consultant?
Not all new startups will need to hire a startup consultant, nor will they necessarily benefit from such services. That said, startups that are actively struggling with critical elements related to effective market research, business planning and strategy, company management project management, and financial modeling and forecasting can significantly benefit from the help of an experienced startup consultant. While they may charge a substantial amount for their services, their work is typically well worth the price, especially when you consider that their efforts can significantly improve your startup’s chances for long-term success.
What Are the Advantages of Hiring a Startup Consultant?
Aside from the factors already listed above, working with an experienced startup consultant also comes with many other critical benefits that newly developed small businesses should carefully consider. For example, they;
- Provide specialized insight and relevant industry expertise
- Prioritize results-oriented approaches tailored to specific business goals to promote success
- Can help startups implement long-term time-saving and cost-reduction strategies
- Provide startups with a wide range of valuable resources (including data analytics, in-depth market surveys, benchmarking, core compliance tools, white papers, and more)
- Offer unbiased feedback and an outside perspective
When Should You Avoid Hiring a Startup Consultant?
In some cases, hiring a startup consultant isn’t just unnecessary; it can be harmful to startup operations. For example, startups in their earliest stages of operation may not be able to get a decent return on investment (ROI) from a startup consultant, meaning the service is just a waste of valuable time and resources. A startup consultant’s services may also be redundant if the startup in question is run by individuals who have experience with launching successful startups in the past. If that’s the case, they likely don’t need any additional help to get things off the ground and headed in a promising direction.
Aside from these factors, startup business owners also need to watch out for some key red flags that indicate when specific startup consultants should be avoided at all costs. For example, if the consultant hasn’t run a startup themselves, hasn’t had much experience in the field, or hasn’t helped any startups within the same industry as your startup, they probably aren’t a good fit for your business.
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Final Factors to Consider for Your New Startup
Our team of passionate business experts at TaxRobot sincerely hopes that the above guide has helped you better determine whether or not your new startup would benefit from the help of an experienced startup consultant this year. To access other great informational resources for your startup, please consider browsing through our wide selection of expertly written articles. Also, please feel free to message us online to learn more about our range of services and how they might be able to help your business going forward.
Are you looking for a way to start earning bigger, better refunds on the taxes for your startup business? By working with our team at TaxRobot, we can help you begin getting the refunds you deserve while audit-proofing your paperwork and much more.