We all know that entrepreneurship is on the rise in the UK. What we might not know, however, is the types of businesses these entrepreneurs are starting up, and how this affects Britain’s start up scene in general. Especially if you’re a management consultant.
Statistics on which types of businesses are being formed in the UK can tell us a lot about the current business landscape, and give us an idea of the growth rate of different industries. Company formation rates both reflect, and shape current industry growth: showing where the most profitable businesses are, and the industries which are most successful. In a time of slow economic growth, many industries’ business formation rates are stalling, but there is one which is continuing to expand: management consultancy. With the UK consulting industry estimated to be worth £9 billion, and employing more than 80,000 consultants, management consultancy is continuing to be big business.
Our latest statistics show that 395 new management consultancy firms were formed between March 2014 and August 2015: accounting for a significant amount of new UK businesses, and making it the most popular type of new business. We can then take a deeper look into why this industry is continuing to grow, especially in a harsh business climate where other industries are struggling. We can also highlight which areas of the UK are becoming the hubs of management consultancy firms, and shed some light on how to get into this profitable industry.
Why is management consultancy such a big deal?
Management consultancy is effectively an umbrella term for a vast array of services that aim to improve business performance, and give advice on how a company can move forward. When we consider how tough plenty of industries have got it at the moment, it’s no wonder that management consultancy firms are growing in numbers. From offering advice on company structure, business strategy, marketing strategy, financial and management controls, and ebusiness, management consultants are the driving force behind many changes in powerful business sectors.
Management consultancy cannot be pinpointed down to one ‘role’ or business size: ranging from larger firms, which offer generalised business management advice, to smaller niche firms that have skills in certain industry areas, to independent freelancers. Management consultants give an outsider's perspective of how well businesses are faring in their sector, and give advice on how they can move up in their industry. However, they also work on a wider economic basis, and offer external guidance not only how to cope with shifts in their industry, but with major changes in international business.
One such change which has brought on increased demand for management consultancy services is the ‘digital revolution’. With the development of the digital world collapsing sector boundaries, changing the way we shop, and revolutionizing how data is stored and accessed, every industry has been affected. And so, more businesses are seeking advice on how to keep up with and capitalise on these changes. Despite the challenges they present, they offer endless opportunities for businesses in all sectors.
Take the retail industry for example. Gone are the days when shopping was a weekend task in your local shopping centre. With online shopping being fast, convenient, and efficient, retailers are faced with significant changes to customer expectations, and increased competition internationally. Management consultant firms have been bought in to respond to these challenges, aiding digital and business model transformation while retaining company's core values and customer service. Deloitte’s work at John Lewis is a prime example of a management consultancy success in the retail sector. Taking lead on a £40 million project to select a new ecommerce platform, Deloitte helped implement an omni-channel online shop with personalised touches, which launched John Lewis into the digital world whilst still keeping in touch with their brand image.
What’s next for management consultancy?
A key factor in the growth of management consultancies’ success has been its ability to not only initiate business development in other industries, but also adapt to change itself. But although management consultancy thus far has bright and profitable business prospects, keeping up with this rapidly changing industry is only going to become harder. With the digital revolution changing the business landscape for their clients, so too have the priorities clients require from their consultants. Businesses in the industry have therefore had to creatively respond, or risk getting left behind.
Traditionally, management consultancy often worked with the long term in sight: making thorough plans and extensive implementation strategies. But when working for clients in rapidly paced industries where business conditions change daily, flexibility is key. Businesses are now looking for management consultancy agencies that can react quickly to key changes in the industry, and make plans which can be revisited or revised. Advising businesses to follow non-traditional business models is now the norm for management consultancy agencies: moving away from routine redesigns every 4-6 years. As a result of this need to flexible, businesses are increasingly integrating management consultants into their companies. Rather than being outsiders to the companies they work for, agencies are making more permanent, long term ties with clients. Management consultants are becoming part of the team: bought in to constantly monitor changes, and make small regular changes.
Famously, management consultancy agencies have been extremely competitive: fighting for access to big business to improve their reputation. However, organisations are increasingly collaborating on projects with businesses — bringing together expertise from different sources, and capitalising on other management consultancy agencies’ specialities. With all parties reaping the benefits, it seems that there is a premium on networking, again reflecting the fluidity of current market changes.
Finally, despite large firms having huge amounts of general management experience, clients now want specialism. A one-size-fits-all consultancy agency which can offer tried and tested strategies is no longer the way forward. Increasingly specialised and smaller niche agencies are in demand. Clients want consultants that know their business inside out, and have a clear idea of the direction in which it is developing. In response to this, larger agencies are looking to outsource. Firms of the future will not only put a paramount on business specialism, but will also focus on creating an extended network of partnerships to call upon when needed.
How do you get into management consultancy?
There is no doubt that management consultancy will continue to grow. In a business climate that is constantly evolving, management consultants are becoming a guiding light, and driving force behind the digital revolution. But where in the UK are the most businesses being created, and where may be best for you to start a business up?
Unsurprisingly, London is the central hub of management consultancy at the moment. With 100 new management consultancy businesses being set up in the capital, it seems London is the place where demand is highest. Also having the highest rate of new business formations (7,731), newcomers will be seeking advice on how to stay afloat in the most competitive business area in the UK. If the big city is not for you, the surrounding areas of Middlesex and Essex have also seen a substantial amount of new management consultant business, catering for smaller and medium size businesses.
If you want to start a management consultancy firm, you need to be able to respond to demand. Whether that be in terms of where demand is coming from, or the different type of service clients want, flexibility is not only preferable, but is now essential. Management consultancies have to be jacks of all trades, but also have the potential to provide specialised advice, or expert contacts to outsource to. Despite the industry being highly competitive, there is plenty of potential for growth and upward mobility, against the ever-improving economy. Management consultancy businesses are the most highly formed in the UK for a reason: they are the businesses on which the success of other industries depends.