An advisor and a consultant are two different roles in business. They both help clients with their challenges, but the type of service each performs is quite different. An advisor typically works with the clients on a long-term basis, providing advice for ongoing business challenges. A consultant, on the other hand, solves narrow, well-defined problems on a project basis.
Although they may use similar approaches to problem solving, they approach different services with different professional mindsets. Yet the difference between an advisory service and a consulting service can be subtle. Here, we'll outline the major differences and explain where they intersect.
As stated above, the ultimate goal of both types of service is to help clients tackle their business challenges. The difference between advisors and consultants is that advisors work with your business at the macro level; they seek to help solve a business' overarching challenges, which span the years. Consultants focus solely on the task at hand, and they are able to provide a much-needed business facelift. For example, if your business is struggling to get clients, a consultant might focus his or her time on specific company measures, while an advisor would aim to create a blueprint for your future success.
As you can imagine, the best advisors and consultants are usually pretty good at the "art of the possible". When it comes to problem solving, neither can cut any corners. This means they carefully examine your business, taking into account its industry and your business's current needs. While it may seem straightforward, advisory services go above and beyond when it comes to due diligence; a good advisor will make sure the work they do isn't just skimming the surface.
A good advisor can present a variety of solutions to various challenges. There's no standard answer to everything, as they see many solutions to problems. The solution to a problem, however, is never determined solely by their service, but by the product or service their client is providing. This will also help differentiate advisors from consultants.
Consultants, on the other hand, are more concerned with the solution itself, and they can be a bit more creative. These days, many consultants can adapt business processes in a big way – they may make themselves indispensable for businesses that want a streamlined process but don't have the expertise to do so themselves. The key difference between advisors and consultants is the level of autonomy they provide to the client.
Advisors have more autonomy in the way they manage their time. While consultants are responsible for timely completion of tasks, an advisor is available to listen to and respond to clients' business challenges as they come up. For an advisor, a project typically lasts long-term, and the client is very involved in the whole process, which allows the advisor to develop a relationship with their clients that is closer than most consulting jobs.
Advisors are usually experts in a particular discipline. If you've ever hired a consultant, it's most likely they work in an area that they're particularly knowledgeable about; an advisor might also hold a similar degree of expertise, but they specialize in a particular field. Examples of areas an advisor might work with include operations, marketing, sales, and finance.
Advisors are great with people, and can likely communicate effectively in a business context; that said, that's not enough for them to be truly effective. It's necessary for advisors to understand every facet of the business, from human resources to product strategy. Since they aren't solely experts in one aspect of your business, they will require constant mentorship and support from the people they work with.
By contrast, consultants are specialists in one aspect of the business. Consultants are great at translating general knowledge into a specific solution, whether that means creating a winning marketing campaign or finding a new vendor for your software systems.
If you have someone on your team who can perform those skills, you might want to consider them for the job. If not, you might be better off seeking out a consultant to perform the work.
Clients & outcomes
The most important thing to note between an advisor and consultant is their approach to clients and outcomes. While an advisor will likely seek to help clients solve their business challenges and the resulting outcome (i.e., growth), a consultant will typically focus on creating the desired outcome (i.e., their business goals). You should note that although an advisor might help clients focus on the end goal, he or she could also potentially help them realize and achieve the outcome. While an advisor might help clients create a roadmap, which becomes the primary framework for them to get to the desired outcome, the client will still need to apply the blueprint.
Client advisory services can be truly valuable to a business, but make sure that your advisor has a deep understanding of your business, and that they've built a skill set in that area. If they do, they can work with you to focus on achieving your growth objectives, and you'll be better off for it.
When to consult vs. advise
So, when should you consider a consultant vs. an advisor?
It depends. Consulting might be useful in determining if your company has the right needs in a particular area. If you are feeling unsure about your current processes and are looking for solutions that are unique to particular niche, start with a consultant.
An advisor, however, may provide some key insight into your company's long-term strategy. They may be able to tell you what problems you need to solve, and therefore what business solutions your company needs. They might also offer a wealth of knowledge regarding the latest trends in your industry, which is invaluable for maintaining competitive advantage.
With a fractional CFO approach, you can easily bring in an advisor to help you manage your balance sheet and get your books in order. The advisor can be assigned with a small, defined task, and, if needed, may work with you to accomplish your bigger goals. He or she can use a suite of tools to quickly understand and visualize the relationship between your accounts receivable and accounts payable, and identify any accounting anomalies. Then, they can go into greater detail with you on what a transaction or balance should look like in your business. It's a great, hands-on approach, and a solution that can help even the most junior accountant get up to speed with your business.
A consultant and an advisor are both individuals (or a business entity in the case of consulting firms) providing services to clients, who seek advice on problems or opportunities they face. The main difference between a consultant and an advisor is the nature of the services they provide.
In short, consultants focus on instant action, solving problems, and delivering results. Advisors help clients prepare for future uncertainties or meet growth goals. The overarching goal of the two, however, is to help clients make more informed decisions. By understanding the ways you're already getting your company's goals accomplished, you can improve your effectiveness and, consequently, the outcome of your company.
To learn more about how you can find and get a quality advisor to help you manage your finances, book a consultation with Dryrun today.
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