Will Management Consulting Prepare You for Entrepreneurship

Will Management Consulting Prepare You for Entrepreneurship © Shutterstock.com | ImageFlowThe aim of this article is to analyze and to answer the question of whether management consulting would prepare you for entrepreneurship. In order to answer this question, I will go through the following sections: 1) an introduction to management consulting vs entrepreneurship; 2) whether management consulting is good preparation for entrepreneurship, 3) overall answer to the question, and 4) real life stories from several entrepreneurs utilizing consulting skills.CONSULTING VS ENTREPRENEURSHIP AN INTRODUCTIONWhat is entrepreneurship?An entrepreneur is a person who starts and manages his/her own business or enterprise and takes the onus of all risks and opportunities. An entrepreneur is wholly responsible for planning business strategies, acquiring human and other resources and deciding on budget allocations.To become a successful entrepreneur, youll need to get into the type of business that you know you will enjoy doing and are also qualified enough to handle. You should be an avid planner and a great money manager. Also, sales and marketing should come naturally to you, and you should be able to forge strong relationships with your customers. You should be ready to update your business regularly with the latest technologies, and to craft your business to have that all-important competitive edge over your rivals and to create a positive business image. Lastly, you should be able to put together a great and highly-motivated team.What is management consulting?Management consulting is the branch of consulting that helps a business augment its performance by analyzing problems facing the business and providing solutions. Management consulting spans across most fields like human resources, marketing, technology, payroll, and finance.As a management consultant, there is a vast scope for gathering industry experience at both macro and micro levels, and this goes a long way toward personal development.In what ways do management consult ants differ from entrepreneurs?Although related to each other in several aspects, management consultants differ vastly from entrepreneurs.Doers vs. Advisers: First and foremost, entrepreneurs are the business owners, consultants are not. An entrepreneur takes ALL responsibilities for the business, whereas a management consultant only HELPS the business achieve its goals. Entrepreneurs are the DOERS while consultants are the advisers.Theory vs. Practice: Management consultants are more theory-oriented. They possess all the intricate knowledge necessary to run a business. Entrepreneurs are more street-smart. Entrepreneurs are typically a lot closer to the actual markets than consultants are.Risk taking: Entrepreneurs are much more likely to take risks on behalf of the business than consultants would be willing to. Entrepreneurs focus on the risk aspect of any new proposition. Entrepreneurs can be much more sceptical than consultants.Multitasking: Entrepreneurs inherently multitask af ter all they own the business. So its not unusual for entrepreneurs to have a hand in most of their companies tasks. The role of management consultants is much more specialized and restricted.IS MANAGEMENT CONSULTING GOOD PREPARATION FOR ENTREPRENEURSHIP?In order to answer this question, I would like to walk through several areas.SkillsSkills you can learn in Management ConsultingA management consultant has to hone a good number of specialized skills if he/she hopes to succeed as an entrepreneur. They are:Analytical skills: Analytical skills are the USP of any successful management consultant. A skilled consultant is able to analyze and solve problems that are outside the purview of even top-level management.Strategy and critical thinking: By way of management consulting, knowledge about how to analyze and structure a problem will be attained. A skilled consultant is able to break down a problem into its constituent elements and then compare it with existing case scenarios. He/she i s able to get to the core of the problem and represent it concisely. The consultant is then able to provide a viable solution to the problem, effectively taking care of all constrictions and compromises. These strategic skills will definitely help the consultant cultivate competence in problem-solving and help him/her apply these skills in the future as a possible entrepreneur.Networking skills: Understanding the customer and communicating effectively with him is one of the essential skills of a management consultant. A good consultant listens to his/her customers and makes sure that he/she is well understood as well. Networking skills help the consultant develop his/her capabilities to identify their audience, whether it is within the company or outside, and understand what drives or motivates them and what constrains them.Fast learning skills: A good consultant has to be a quick learner. A consultant should also be a continuous learner. He/she should be prepared to ask questions a nd seek clarifications. Asking questions is a great way to convey to your client or customer that you are getting involved.Presentation skills: Good presentation skills are a given for any management consultant. A good consultant is able to condense weeks of hard and fruitful work into concise, to-the-point presentations.Prioritizing skills (80/20 approach): A corollary of the Pareto Principle states that 80% of a companys profits comes from 20% of its customers. An efficient consultant is able to identify these high-priority customers and give them their deserved right of way.Skills you need to become an Entrepreneur and start your business, depending on the stage of the businessThere are generally three stages of a business. They are:1st Stage The Idea StageIn the idea stage, two abilities are tested:The ability to innovate, andThe ability to take initiatives.At this stage, an entrepreneur decides on the central idea of his startup company. He focuses on the three core innovation skills thinking, talking and doing. Thinking is research. Research and analysis done well will reveal the needs of the market and what kind of product or service it is ready for.But, of course, as a consultant, the ability to innovate is limited creativity cannot be acquired, nor does it come from experience. Hence, skills learned from being a consultant helps only limited at this stage of starting your business.As an entrepreneur you must be able and willing to act proactively. You must display the three central qualities of a proactive actor self-discipline, optimism and competitiveness.2nd Stage The Prototyping and Development StageIn this stage, two more abilities are put to the test:The ability to plan and foresee, andThe ability to learn and network.As an entrepreneur you should be able to plan his resources, whether they are financial, personal or time-related. You should be able to set realistic deadlines and routinely meet them.Successful entrepreneurs are continuous l earners. They do not shy away from asking for advice from their mentors. They communicate frequently and clearly. They are endless networkers, always looking for opportunities to create new customer bases.3rd Stage The Growth StageHere, the following two qualities of an entrepreneur come into play during the growth stage of a startup:Analytical and decision-making abilities, andProfit-oriented focus.The analytical and problem-solving skills of a consultant do come in handy when transforming into an entrepreneur. As a consultant, one is exposed to  many different scenarios that are both unique and challenging. This vast  amount of experience gathered in diverse fields is priceless to the future  entrepreneur.Building a rock-solid reputation and competitive advantage will guarantee profits.This brings us back to the question: Does Management Consulting prepare you for Entrepreneurship?The answer is YES. A vast majority of the skills are pretty useful. BUT this depends on  the develop ment stage of the startup, the startup business model, and the market where it operates.Responsibility StressResponsibility you can expect in Management ConsultingResponsibility is typically restricted if you are a management consultant. You are only responsible to solve company problems analytically and using market and industry knowledge. But the responsibility for the success of the solution, when implemented, is not carried by a management consultant.Stress you can expect in Management Consulting The stress situation for a management consultant typically stems from client pressure and the urgency to meet deadlines. Getting random work assignments also lengthens the project and increases the stress level. Then there is the much-dreaded travel-related stress.Responsibility (but with Ability to take risks)  you can expect as an EntrepreneurThe scenario is vastly different when you assume the role of an entrepreneur. I have mentioned before that an entrepreneur is ENTIRELY responsi ble for the success of his startup. As an entrepreneur, you OWN your companys vision. Other people are there just to help. So, its paramount that you communicate your vision to your employees and associates in clear terms. You need to inculcate the sense of responsibility in them and help them embrace your values. From these values, you will be able to create a work culture that is unique and beneficial to your company.You are responsible for measuring the performance of your company and driving it. You need to plan your time slots and set priorities to your tasks.An entrepreneur is not only responsible to solve startup issues, but also to take and carry the risk of the decisions made during every stage of the startup development. Hence, an entrepreneur experiences rather often the so-called roller coaster.Lets face it the decision to abandon your paycheck as a consultant and take on the role of an entrepreneur is in itself a big risk.Secondly, as an entrepreneur, you are liable to use up your personal savings on your business. You should have the gumption and the moral fiber to put your hard-earned money on the line. And its not money alone. As an entrepreneur, you will be required to invest a lot of your personal time and, of course, your health in your business.You also must have the ability to cope with a less-than-steady cash flow. However, one of the biggest responsibility to take as an entrepreneur is to completely trust your employees. As a startup, you would not have the luxury of hiring a full-fledged team and will have to pass on a few important tasks to some key employees. Absolute trust is a must in this scenario.Stress you can expect as an EntrepreneurStress in the case of entrepreneurship is based mostly on the market. It also has a lot to do with your constant endeavor not to make a wrong decision and dent your business prospects.Does Management Consulting prepare you for Entrepreneurship?Mostly, No. But consulting has little to do with coachi ng you on your responsibilities. It teaches you great skills, no doubt, but skills alone are not enough to assume the role of a successful entrepreneur. Responsibilities can seldom be taught and are not acquired by experience. A sense of responsibility is inherent its all in the attitude and not in the aptitude.ExpertiseMarket and industry expertise in Management ConsultingExperience in the market and industry will impart a set of essential skills to the management consultant.Market knowledge domain expertise you need as an Entrepreneur A highly-educated and management trained consultant can ease his way into the market. The market, especially, provides a consultant ample opportunities to hone his domain expertise and make practical use of it. Management consulting prepares you to face the market by associating you with clients that have a strong market presence. Working with these clients in order to augment their operational efficiency and formulate business strategies helps you be at the top of things in your domain.Typical requirements of the market and industry knowledge for becoming an Entrepreneur and starting your business:The market and industry knowledge that you gather as a consultant will make you proficient in understanding your customers needs as an entrepreneur. This knowledge helps you understand the market your competitors, their pricing strategies, new entrants, new products, etc.Does Management Consulting prepare you for Entrepreneurship?As far as expertise is concerned, definitely. Aptitude is the biggest fringe benefit that you can hope to gain by being associated with major industry players as a consultant.Co-WorkingCo-working skills you can learn in Management ConsultingPeople Skills: Management consultants may not be very well-received internally at the client company. As such, people skills are an absolute must. Every consultant is required to develop a relationship of trust and mutual goodwill with employees at short notice.Teamwor k: Consulting inherently provides a great environment for teamwork. Since, as a consultant, you work with other consultants as well as with employees of the client company, there is a lot of interaction and collaboration taking place.Skills you need to become a successful EntrepreneurAs an entrepreneur, the biggest challenge is to initiate co-working interaction. When you start your own business, it is highly probable that you are working with a few or no co-founders at all. The best thing to do in this situation is to communicate and associate with other similar entrepreneurs.But as your company gets bigger, you have to ensure a friendly and collaborative atmosphere in your company. Hence, co-working skills will be of use for every entrepreneur as well.Does Management Consulting prepare you for Entrepreneurship?Yes, co-working and people skills gained as a consultant should help you in forging new social and business relationships.Working HoursTypical working hours in Management Co nsultingWorking hours in management consulting are not predictable they vastly depend on the project you have at hand. Although you generally work fixed hours, it is often difficult or even impossible to predict possible overtime hours.Typical working hours if you are an EntrepreneurWorking hours in entrepreneurship can vary depending on your current projects and the development stage you are in. Overtime hours are very typical especially for young startups.Does Management Consulting prepare you for Entrepreneurship?Yes, management consulting does prepare you to take up ad hoc responsibilities as an entrepreneur. It also prepares you for those last-minute schedule changes as and when they come.TravelingAmount of traveling you should expect in Management ConsultingTraveling may be appealing to the new consultant, but with time, travel takes its toll, especially when the consultant has a family to care for. Management consulting will prepare you to schedule your travels and make last -minute travel arrangements.Amount of traveling you should expect as an EntrepreneurAs an entrepreneur, you are much less likely to travel unplanned. However, due to business constraints, you will most likely be obligated to travel when you want to communicate in person with your clients or look for investors in other cities or even countries.Does Management Consulting prepare you for Entrepreneurship?When you start as a business model which requires geographical flexibility, your traveling experience as a former consultant comes in handy. You are able to carry over your cultivated habits of flying to different locations and entertaining clients.OVERALL ANSWER TO THE QUESTIONPartly Yes, management consulting definitely would help you in some areas of entrepreneurship. It does so in the following ways:Application of best practices: As a consultant, you get to polish all your theoretical skills obtained during your management education. You are able to develop core competency skills l ike time management, people management, teamwork and change management.Knowledge of the market: Exposure to the market empowers you with that all-important market knowledge.Problem-solving skills come in handy: Dealing with a variety of clients with conflicting interests, handling projects with sharp deadlines and dealing with other stressful situations from time to time help you gain expertise as a problem solver.Wider network connections: Working in different teams helps you network with people around you better. You learn how to get involved and build your community.BUT this is not the full list of the skills required for entrepreneurship. This depends on the development stage of your startup, on the industry where the startup is working, etc.REAL LIFE STORIES OF ENTREPRENEURS UTILIZING THEIR MANAGEMENT CONSULTING EXPERIENCESHere are a few real life instances of successful entrepreneurs with previous experience in management consulting.The Story of Diana GoodwinA commerce graduat e from the University of Toronto, Diana had several years worth of experience as a swimming instructor under her belt. After graduating, she joined Bain Company as a management consultant.With a high-profile job in her hands, Diana still dreamt of starting a swimming school for children that would provide individualized training.Pretty soon, Diana realized her dreams in the form of AquaMobile Swim School a school providing premium coaching to children. A part-time business at first, the school soon developed into a full-time business once Diana realized its immense business potential.Diana quit her job and enrolled in an MBA program. By the time she graduated, Diana was armed with a strong business plan about how to push AquaMobile into the big league. Her management experience helped her bring in the money easily.Now a successful entrepreneur, Diana points out some things that helped in her transition to an entrepreneur starting early, focusing on the main business idea, and net working vigorously.The Story of Dan StreetDan Streets story began differently. Management consulting and private equity finance were not really useful, and actually even hurtful in an early stage, while growing his startup, Borrowed Sugar, a software company. However, it was pretty useful for his company in the later stages when his motive was to raise capital and scale up his business. Management consulting helped Dan grow his company with ease.The Story of Slava RubinMedia entrepreneur, Slava Rubin is a great example of how a university-based academic education, a stint abroad for global/international education, and management consulting for corporate education taught him how big companies operate and make decisions.Corporate education in a form of a management consultant taught Slava the ins and outs of how Fortune 500 companies operate. He obtained the essential skills of decision-making and varied exposure by working with different companies.According to Slava, management consu lting was nothing short of an extension of his education to reach his ultimate goal entrepreneurship.