III. Industry Analysis
Last year, according to IBISworld.com,management consulting services in general brought in revenues of $156 billion and employed 876,000 people in the United States. There were 371,000 businesses in this market, for an average of $178,000 of revenue per employee, industry-wide. The average salary paid to a management consulting industry employee was $68,845.
These figures do include a wide range of large-scale businesses, such as industry leaders like Deloitte Touche Tohmatsu, Accenture Ltd., Marsh and McLennan Companies, Inc, Booz Allen Hamilton Inc., and McKinsey & Company. Small business consulting firms are smaller than the average consulting firm,and the average salary paid is lower.
Small business consulting firms generally operate on a local-level, with single offices serving businesses in a 20 mile radius. The founders of these firms are generally business consultants from the larger firms or experienced business owners and entrepreneurs.
A number of free services are offered for small businesses in the United States, creating downward pressure on prices for small business consultants. These include SCORE (the Service Corps of Retired Executives) recruits experienced business executives to act as consultants to small businesses in need. SCORE’s services are primarily mentoring, either in-person or online, and do not include in-depth projects, research, or analysis. Basic free consulting is also provided at Small Business Development Centers (SBDCs) throughout the country. SBDCs are established by the US Small Business Administration, and organized at the state level. SBDCs attempt to provide free, one-on-one business advisement and information to both existing and potential entrepreneurs.
The following are industry trends identified through research:
- Small businesses, loosely defined as businesses with up to 99 employees, are further divided into categories such as pre-launch start-ups, “Sohos” (small office or home office businesses), “mom and pops” (small businesses with few or no employees), and more.
- While many small businesses are small by design, others plan to be larger and consider that they are passing through the small stage.
- According to SCORE survival rates are lower than most popular belief: “Two-thirds of new employer firms survive at least two years, 44 percent survive at least four years, and 31 percent survive at least seven years.”
- There are 27.2 million small businesses in the US and they employ about half of the American private sector workforce, according to SCORE
- 52% of small businesses are home businesses and 2% are franchises, according to SCORE
- SCORE writes: “Where do small business owners go for advice? 52 percent from individual mentors; 51 percent from social networks; 44 percent from trade associations; 36 percent from business advisors; 31 percent from the Internet and 27 percent from Chambers of Commerce (Source: American Express)”.