Feasibility study of an SME focused consulting firm

Abstract

With a vibrant and rapidly growing economy that is spawning growth of many rapidly small and medium sized businesses in India today, I was keen to understand the market space for an SME focused consulting organization. The initial trigger point was when a SME that I am familiar with (which has grown from a revenue of several lakhs to a company with over 170 Crores of revenue 10 years later) started engaging with external consultants to advise them on their growth strategy, internal organization redesign and advise on a merger/acquisition. The comment of the owner was that these were very expensive services and he would have been happy to look at slightly less expensive options. I was privy to some of these reports and based on my experience, these were not very different from reports that could be produced by typical MBA students from good Business Schools. With the knowledge that the SME sector was booming and that there could possibly be several such instances of rapidly growing SME organizations, I believe that there could be market space for consulting at an affordable rate for these organizations. The intent was therefore to examine the possibility of creating a consulting organization. As we went through our class on entrepreneurship, I was able to use more tools to evaluate the viability of this perceived idea. Was this idea really convertible into an opportunity and subsequently into a Venture? I did experiment by trying to conduct a pilot consulting assignment for an SME organization. I also drilled down into the core of consulting what are the primary drivers of consulting firm, what is the competitive landscape , and in what form could one establish a consulting organization. The industry analysis showed that the consulting industry is largely fragmented industry with a variety of firms participating in it. The key drivers for success in the industry were the perceived expertise and knowledge of the consultants, network of potential customers and the reputational capital of the consultant firm. There is also a perception that consultants can be expensive, hence may be a deterrent for value conscious SMEs in using consulting services. This was also reflected by the consulting assignment that I completed where I realized that I had been invited on the basis of the personal connect I had with the owner, and his knowledge of me being an expert in an area for a long time. My attempt to try and broaden the scope into more areas of consulting, especially those which I had recently learnt from the EPGP program somehow did not seem to make a large impression on him. Establishing a successful consulting firm would take a lot of time and would need to be considered in light of the opportunity loss that a typical EPGP graduate would face i.e. the loss significant income that he/she could otherwise earn. My experience leads me to conclude that it may not necessarily be a wise idea for a fresh EPGP student to aspire to start a consulting firm straight out of an EPGP program.