The days of starting a business venture on a whim and becoming a success overnight are arguably quickly diminishing. Luck, business instinct and a trial-and-error business approach, while still important ingredients to business success, are no longer enough especially over the medium-to-long-term.
I know of several entrepreneurs who made a success of their business in the last 15 years, and this despite their lack of a formal education, but once they reached a certain size or critical mass they all seem to need professional business advice.
Granted, Maltese entrepreneurs have up until recently relied upon the professional (though not necessarily competent) business advice of their accountant, banker or even lawyer but the market is becoming so fiercely competitive and complex that this is proving not to be adequate anymore and we are effectively witnessing the coming of age of the professional business advisor.
True, the origins of the local management consultancy / business advisory industry can arguably be traced back to the late eighties and early 1990s but the industry has now started to segment in such a way that some entrepreneurs are opting for the less formal, less costly and certainly more personal option of engaging on a one-to-one basis a business advisor. The relationship in this case is based on the principles of strict confidentiality, a long-term client-consultant relationship and devoid of any conflict of interest(s) as might be the case, for instance, in an audit firm cross-selling consulting services when it already performs financial audits.
The Maltese economy is fast-changing, open to global trends / fluctuations and undoubtedly maturing. This means that for a business to defend, improve or even acquire competitive advantage it is becoming an increasingly complex and sophisticated competition game. To remain competitive in today's business world entrepreneurs clearly need to adopt strategies and tactics across multiple competition boundaries (price competition being just one of many).
This they can only do if they have by their side a (long-term) business advisor to guide and cajole them as they craft and execute their strategy tactics. I think, for example, that Remax (Malta) entered the fiercely competitive estate agent industry a few years ago with a well-thought out and innovative value proposition and business model and their current market standing, obtained in a short space of time is testament to this. My point is that there is no industry or market that is too competitive or over crowded for any business so long as their business advisor conducts the necessary strategic and business analysis.
How many restaurants or bars in the hospitality industry continually set-up year-in-year-out, copying their competitors' value proposition, thereby intensifying the competition game without adding any real value? Or how many property developers do we have trying to build / sell the same type of residential or commercial units to a limited pool of potential customers? Some might answer (and rightly so): too many! But how can so many similar businesses survive with such fierce competition and in the midst of a recession? This is where your business advisor will prove his/her worth and help you navigate out of a fiercely competitive market space to uncontested/un-crowded market space by recommending the appropriate strategy.
This reminds me of the classic business advice that one normally finds three types of businesses: The ones that try to lead their customers to somewhere they don't want to go (e.g. Kodak's APS technology in the 1990s), the ones that listen to their customers and respond to their articulated needs (e.g. Microsoft Internet Explorer) and the special few who lead their customers to where they want to go but don't just know it yet (e.g. Apple's IPod).
The business advisor can, with a strong input from his client and by using appropriate tool-kits, best-practice and models, lead a business into this new, uncontested market space (the Holy Grail for any business) enabling it to make above average profits over the long term.
As a side point, the management consultancy / business advisory industry in Malta - currently worth (and this a guesstimate) circa €40 million - is after all very relevant to the government's master plan of turning Malta into a centre of excellence in the provision of professional services (such as financial, legal, accounting, business advisory, tax, et al).
But individual efforts need to be consolidated by local business advisors so as to ensure that (a) high professional standards are maintained and improved for the benefit of clients (b) that the key players organise themselves professionally as an industry and (c) that there are synergies with "complementors" (i.e. players and forces in adjacent and related markets whose services increase the attractiveness of or compliment our own service).
The truth is that the competition game for business in general has upped a notch in recent years (especially since 2004) becoming much more competitive and sophisticated. Thus no businessman can afford to launch a new product / service or carry-out a significant investment programme without first seeking professional business advice. The stakes are much larger nowadays. It therefore really pays to first seek professional business advice before taking important business decisions and not just relying on luck, human instinct or a trial-and-error business approach.
Mr Fenech is a partner at Fenci Consulting Ltd.