Accounting, Clutch Report

Hiring a Consultant: 5 Types of Consulting for Small Businesses

January 12, 2021

by Kelsey McKeon

Senior Content Writer

Consultants provide much-needed expertise and external perspective for small businesses.  Leaders should budget for consulting fees in 2021 in case they need to hire an outside resource for a specific business challenge. Our latest survey of 500 small businesses in the U.S. finds IT and financial consultants are the most in-demand in 2021.

It can be hard to know when to ask for help, and even harder when you know that help comes with a price tag.

That’s the decision many small business leaders and decision-makers face this year as they establish a budget for 2021: Is it time to hire a consultant?

Business consulting encompasses a range of specialties and organizations, from large consulting firms to individuals with knowledge and experience to share.

Despite the economic hardships brought on by the COVID-19 pandemic, consultants remain a worthwhile investment for small businesses seeking expertise in an array of industries.

We surveyed 500 small businesses about their experiences with consultants. We found that almost half of small businesses (44%) have hired a consultant in the past. Of the small businesses that haven’t hired a consultant, 29% plan to hire one in 2021.

44% of small businesses have hired a consultant.

There are many different types of consultants small businesses can choose from. We examine the top 5 types of consultants small businesses plan to hire in 2021.

Our Findings

  • Almost half of small businesses (44%) have hired a consultant in the past. Consultants provide valuable third-party insights and perspectives for busy founders.
  • More than one in three small businesses (39%) have hired an IT consultant, making it the most popular type of consultant small businesses hire. Nearly one-third of small businesses (30%) plan to hire an IT consultant in 2021. 
  • One-quarter of small businesses (25%) plan to hire a financial consultant in 2021. Financial consultants can help small businesses navigate through difficult financial times.
  • One in four small businesses (25%) say they will hire a marketing consultant in 2021. Marketing consultants are popular alternatives to hiring and training in-house marketing employees.
  • Almost one-quarter of small businesses (23%) plan to hire a legal consultant in 2021 because of their expertise.
  • Less than one-fifth of small businesses (17%) will hire a strategy consultant in 2021. 

What Do Consultants Do?

A consultant is an experienced professional who helps businesses solve problems. Consultants can work for clients as part of a consulting firm or work individually.

Many consultants are self-employed or work for small businesses, giving them unique perspectives on small business needs and management.

Leaders at small and large businesses alike sometimes require practiced expertise that can’t be found in-house. In 2021, consultants can expect to solve problems related to securing networks, assisting with finances, and strategizing for the future.

The top 5 types of consultants small businesses plan to hire in 2021 are:

  1. Technology/IT consultants (30%)
  2. Marketing consultants (25%)
  3. Financial advisory consultants (24%)
  4. Legal consultants (23%)
  5. Strategy consultants (17%)

1. Technology and IT Consulting Provides Digital Solutions for Small Companies

When COVID-19 spread across the globe in 2020, many companies had to shift quickly to a fully remote environment.

As the pandemic continues, startups and small businesses must be equipped with the digital tools to keep their companies running efficiently and securely in 2021 and beyond.

More than one-third of small businesses (39%) already have hired a tech or IT consultant. About one-third (30%) plan to hire an IT consultant in 2021, the top choice among small businesses seeking out consultants in 2021.

30% of small businesses plan to hire an IT consultant in 2021.

Startups and small businesses are often small and agile enterprises quick to adopt new technology. Still, as business needs grow and change, IT consultants can help small businesses through:

  • Business process automation
  • Digital transformation
  • Cybersecurity implementation

Like other types of consultants, IT consultants can work independently or under a larger corporation to provide custom solutions on the ground for small businesses.

Big consulting firms have teams of experts that businesses hire to help migrate their websites or systems or install important software and train employees to manage it.

Smaller IT firms or even individual IT professionals can be just as effective at providing high-quality technology solutions. Small business leaders may have an easier time working with an individual IT expert with whom they can build a working relationship and assess their specific IT needs.

Dan Bailey is president of WikiLawn, a lawn care business in Los Angeles. His business hired an IT expert to help the company resolve a security breach issue.

“The consultants were able to address our backdoor security issues, recover data lost in the breach, and give us resources to help make sure we don't make the same mistakes twice,” Bailey said. “For that, I'd say they were invaluable.”

“The consultants were able to address our backdoor security issues, recover data lost in the breach, and give us resources to help make sure we don't make the same mistakes twice. For that, I'd say they were invaluable.”

WikiLawn hired a small firm that focused on network security. The consultants not only secured the network but equipped the team to tackle network security on their own, demonstrating the value of IT consulting for this small business.

2. Marketing Consultants Bring Industry and Marketing Expertise

Even small businesses with the most robust operating strategies need help to brand, position, and promote their products or services.

Some marketing essentials, such as setting up a social media account for your small business, can be done by in-house employees. Others, such as creating a visual identity for your brand, may require expert consultation. 

One-quarter of small businesses (26%) have hired a marketing consultant, and 25% plan to hire a marketing consultant in 2021.

26% of small businesses have hired a marketing consultant

Marketing consulting is a broad field that encompasses work such as:

  • Social media marketing
  • Digital advertising
  • SEO and search engine marketing (SEM)
  • Print marketing
  • Public relations

Some small businesses will only hire a marketing consultant specializing in social media marketing, for example, to launch a new Facebook account or social media advertising campaign. 

Other small businesses, however, may need a marketing generalist to assist with establishing and promoting a brand, particularly if the company is very new.

Though many businesses prefer to hire in-house employees to perform marketing activities, consultants still provide a helpful perspective on the success of marketing campaigns and where the small business should invest their efforts. 

Some marketing consultants come from boutique agencies that can provide specialty services that in-house employees can't match.

"Many times, the need for an agency partner comes when needs become greater than the in-house team can accommodate," said Rob Nimmer, vice president of growth at Perfect Search Media. "Agencies often have partnerships that are invaluable to their clients. For example, our agency has a direct line to Google and Facebook based on the volume of advertising dollars our agency spends on each platform. This allows us to stay ahead of trends, get training directly from the platforms, and have access to VIP support to rectify issues much more quickly."

Marketing consultants may also have access to special tools such as photo editing software, keyword research tools, or email marketing platforms that can save a small business some recurring costs.

3. Financial Consulting Offers Solutions for Tough Economic Times

Small businesses were adversely affected by the pandemic economy. According to a September 2020 report from Yelp, almost 100,000 small businesses closed in the first 6 months of the pandemic. 

Supply chain disruptions and federal loans also present new challenges to businesses balancing budgets for 2021. Small businesses without in-house financial and accounting expertise may have difficulty navigating the new economic landscape.

One-third of businesses (33%) hired a financial consultant in 2020, and one in four small businesses (25%) plan to hire a financial consultant in 2021. 

24% of small businesses plan to hire a financial consultant

Financial consultants help small businesses create sustainable financial plans for long-term success. They also help businesses solve specific financial and accounting challenges that founders and entrepreneurs may not have the expertise to solve on their own.

Some ways financial consultants can help small businesses and startups in 2021 include:

  • Finding opportunities for federal grants or financial assistance
  • Assisting with taxes or federal audits
  • Balancing budgets and identifying waste or other inefficiencies

Spending more money on consulting fees in order to save money may sound counterintuitive, but small businesses have much to gain by investing in a financial consulting professional.

Many small businesses and startups have small teams with little in-house financial training and expertise. Businesses with few employees may not need or want to take on a formal CFO. 

Additionally, basic business accounting may work in normal economic times, but pandemic uncertainty may complicate finances.

Samuel Hurley is co-founder of NOVOS, a digital agency in London. Despite being a former accounting student, he faced challenges when forecasting the company’s growth and performance.

“Before we hired a finance consultant, we had three teams operating within the business and it made perfect sense logistically,” Hurley said. “However, once we hired our consultant, he was able to offer us the raw numbers of each team's performance. We saw one of the teams was underperforming and not making us money so we merged that team into another to streamline and make our future more profitable.”

Hurley’s financial advisor gained expertise at a larger firm before becoming an independent consultant on behalf of a smaller consulting company.

Small businesses can bring in financial consultants to improve profit margins and make accounting processes more efficient. 

4. Legal Consultants Make Sense of Complex Laws

Busy entrepreneurs and small business decision-makers don’t need to add a legal degree to their to-do list.

Legal consultants, or legal advisors, are lawyers who help businesses understand the nuances of the law and how it applies to their operations. Working as an independent consultant or with a firm, they help businesses ensure their practice follows the law.

About one in four small businesses (23%) plans to hire a legal consultant in 2021.

23% of small businesses plan to hire a legal consultant in 2021.

Hiring full-time legal counsel is often well out of the budget for small businesses. Salary.com estimates the median salary for in-house counsel in Washington D.C. is more than $250,000 annually. Legal consultants offer advice on specific legal matters without the price tag of an attorney on retainer.

Larger law firms may provide small businesses with general advice about legal compliance over a longer period of time. For unique situations, however, a legal consultant with specific expertise or experience may be brought in to address issues such as:

  • Business incorporation
  • Wrongful termination lawsuits
  • Workplace harassment or misconduct

Legal consultants can also be particularly helpful for entrepreneurs navigating complex patent law, crafting nondisclosure agreements, or even just obtaining a business license.

The COVID-19 pandemic has raised questions about labor practices as businesses try to balance worker safety with increased demand.

Stephen Light is co-owner of mattress company Nolah Mattress. He hired a legal consultant to answer questions about the legality of employees returning to work at the beginning of the pandemic.

“The company only wanted to ensure that our actions are not jeopardizing our people’s rights while keeping the company operational,” Light said. “Our consultant suggested using a hybrid type of operation. Employees that can do their jobs remotely can continue to do so, but employees whose physical presence is necessary need to return. The scenario helps minimize the risk of viral transmission and keeps the business running.”

Light hired a legal consultant from a boutique firm to assist in navigating a minor workplace legal issue and helped keep his workplace safe and profitable during COVID-19.

Unprecedented times call for legal experts to understand and interpret employment laws for small businesses.

5. Strategy Consultants Help Plan for the Future

Sometimes when you’re deeply involved in the day-to-day activities of running a business, it can be challenging to see the forest through the trees.

Where should your business be in the next 5 or even 10 years? What do you need to do to get there? What competitors might emerge during that time?

Strategy consultants can help entrepreneurs and small business owners understand and achieve a vision for their businesses. 

One in five small businesses (20%) has hired a strategy consultant, and 17% of small businesses plan to hire a strategy consultant in 2021.

20% of small businesses plan to hire a strategy consultant in 2021.

Strategy consultants help business leaders make decisions using research and experience in the market. Their value is their ability to deliver an outside perspective on the high-level decisions small business owners make every day.

Strategy consulting is a broad industry, but most successful strategy consultants have experience:

  • Collaborating with a company board or executives
  • Working at a “pure-play firm” such as McKinsey & Company, Boston Consulting Group, or Bain & Company

Matt Bertram, CEO & SEO strategist at EWR Digital, hired a consultant to help reorient the business’s strategy due to challenges he experienced in 2020

“2020 was a tough year for us,” Bertram said. “We lost 77% of our business when the pandemic hit and we were struggling to cover our staff’s wages. A fresh perspective was needed, so we hired a strategy consultant to advise us.”

Facing significant business losses, EWR Digital hired a consultant, who came in and gathered knowledge about business operations and finances before making recommendations.

“He started by asking us to cut our salaries so we could afford to keep all members of our staff. Then, he helped us to draw up a marketing plan to regain our lost clients,” Bertram said. “This was very successful, 50% of our old clients came back and we were able to attract new clients to replace the ones we lost.”

Small businesses can hire a strategy consultant to find innovative ways to solve the challenges of 2021. 

Small Businesses Can Find Any Type of Consultant for Their Needs

Consultants provide vital expertise and external perspective for small business leaders facing the challenges of 2021.

Technology and IT consultants are the most popular choice for small businesses planning to hire a firm in 2021. IT experts will be able to help businesses secure their operations and implement essential digital solutions.

Financial consultants can help businesses maximize their bottom line during times of economic hardship.

Marketing consultants are a popular alternative to hiring full-time marketing staff. Marketing consultants bring targeted experience and expert tools to the table.

Legal consultants are a worthwhile investment for small businesses facing legal challenges. They are often less expensive than in-house counsel and can ensure a small business’s operation is fully compliant with the law.

Finally, strategy consultants can help small businesses adjust their strategies to meet any future uncertainties. Hiring a consultant is a worthy investment for small businesses in 2021.

About The Survey

Clutch surveyed 500 small business owners and managers at companies in the U.S. with fewer than 500 employees. We define small businesses as having limited revenue and between 1 and 500 employees, which corresponds to the Small Business Administration's definition of small business. The survey ran in December 2020.

Seven percent (7%) of respondents’ businesses have 1 employee; 36% have 2 to 10 employees; 25% have 11 to 50 employees; 18% have 51 to 250 employees; 15% have 251 to 500 employees.

Fifty-three percent (53%) of respondents are female; 47% are male.

Four percent (4%) of respondents are Generation Z (born after 1996); 23% are millennials (1981-1996); 50% are Generation X (1965-1980); and 23% are baby boomers or older (before 1965).

More than one-third (35%) of small businesses are located in the South; 23% are in the Northeast, 22% are in the West, and 20% are in the Midwest.

Respondents are from the South (35%), Northeast (23%), West (22%), and Midwest (20%).

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