What Are Business Advisory Services?
Business advisory services refer to professional services that involve giving advice to a company’s decision-makers or owners, helping them formulate strategies that can unlock the business’s growth. Businesses, irrespective of their size, can avail of such services to make better decisions, manage potential risks, and achieve their goals.
These services necessitate the evaluation of the financial, tax, legal, market, and risk-related aspects that come into the picture when commencing business or making alterations to an existing organization. With the help of the services, companies can identify their strengths and overcome their weaknesses. There are different types of business advisory services, for example, business and management consulting.
Table of contents
- Business advisory services meaning refers to services offered by experts to help companies identify their strong areas, overcome weaknesses, and develop strategies that can boost growth.
- There are six types of business advisory services — management, financial, HR, information technology, strategy, and business consulting services.
- A company’s top decision-makers usually do not have adequate time to conduct thorough research regarding strategic decisions. Hence, they avail of advisory services.
- Two benefits of business advisory services are better cash flow management and increased profits.
Business Advisory Services Explained
Business advisory services meaning refers to services offered by entities whose aim is to help a company’s owner or decision-makers develop and implement strategies that promote sustainability, expansion, and stability. The providers of these services can handle different business-related aspects, for example, financial planning, innovation, etc.
Besides playing a vital role in improving an organization’s daily operations, these services provide support in various areas like accounting and tax filing. In addition, the entities offering such advisory services are usually independent experts and individuals using certain techniques or practices to support specific business verticals.
Let us look at two common reasons why companies avail of these services.
- Sometimes, business owners may not have an executive peer working in the organizations with whom they can develop strategies, discuss ideas, and make vital decisions.
- It is common for a company’s top decision-makers not to know everything. As a result, they often have questions regarding the competitive landscape, business strategies, personnel decisions, operational challenges, and market opportunities.
- Lastly, the top executives of a company have limited time. Therefore, they often do not have any time left to conduct research concerning strategic decisions diligently.
Some advisory services offered to businesses may include the following:
- Tax compliance and financial reporting
- Management reporting
- Virtual chief financial officer (CFO)
- Asset protection
- Structuring and management of advisory boards
- Financial modeling and forecasting
- Formulating exit strategies and succession planning
- Tax compliance and planning
The different types of business advisory services are as follows:
#1 – Strategy Consulting Service
In this case, a consultant provides advisory services to a business, helping it develop and execute a long-term strategic plan. Such a plan helps establish the business’s long-term direction and aids in producing a map that outlines the organization’s short-term direction to achieve every long-term objective.
Also, a key part of the process involves working with the provider of the strategy consulting service to ensure that all projects are successful and they can achieve their objectives with the resources available to them.
#2 – Business Consulting Services
In business consulting, a professional with vast business expertise assists with the internal workings of a company, for example, workflows, structure, organization, business environment, etc.
#3 – Information Technology Or IT Consulting Services
IT consultants refer to a group of experts working in different fields; they help companies better utilize their IT infrastructure. The consultants work in IT change management, which involves altering an organization’s IT systems to enhance its capabilities. Such capabilities include adopting blockchain technology and other innovative technical systems, data transfer, legacy system replacement, cloud migration, and more.
#4 – Human Resource Or HR Advisory Service
A company’s survival heavily relies on its employees. Hence, all businesses must manage them efficiently. Organizations can use human resources advisors’ services to implement prudent HR procedures and policies. The consultants also advise ensuring the policies align with the government’s rules and regulations.
#5 – Management Consulting Services
Management consulting refers to several methods to improve senior executives’ daily management of divisions, teams, and projects. Individuals offering such consulting services are generally individuals with vast management expertise. They work with a company’s internal strategists to prepare a blueprint that states the organization’s management objectives for the long term.
#6 – Financial Consulting Services
Financial consultants generally work with an organization’s chief financial officer or CFO to link the business’s financial goals related to spending, return on investment or ROI, profit margins, etc., with all tactical short-an-long-term objectives. Moreover, these consultants may offer assistance regarding duties and taxes, consultation plans, money-saving techniques, cost-cutting strategies, etc.
Let us look at a few business advisory services examples to understand the concept better.
On February 22, 2023, B. Riley Financial, Inc. announced that it acquired Toronto, Canada-based Farber Group’s corporate division. The latter will become a part of B. Riley Advisory Services, an organization offering business advisory services. This firm’s chief executive officer, Ian Ratner, said the acquisition would improve the business’s capabilities. Moreover, it will help expand the collective foothold across North America.
Suppose Panther Tyres, a tire manufacturer, had a very high attrition rate, which affected the organization’s growth for a long period. The business opted for HR consulting services to combat this issue. The consultant helped the organization formulate new organizational policies that significantly improved employee morale. Moreover, the changes led to a better work environment for employees. As a result, the attrition rate dropped, and productivity increased. This, in turn, improved the business’s earnings.
Let us look at some key benefits of business advisory services:
- First, they help organizations strategize plans at all levels.
- Second, businesses can better manage marketing, operational, and financial plans with the help of such services.
- Third, the advisory services help manage cash outflows and inflows.
- Fourth, such services can increase a business’s productivity and maximize profit.
- Finally, consultants can offer an organization’s top decision-makers a fresh perspective.
Frequently Asked Questions (FAQs)
These advisory services are a mix of business advice and strategic financial planning. The services offered are customized to suit a business’s position at a certain time.
Consultants offering such services offer reliable and impartial advice concerning risk management based on their vast expertise and financial knowledge. They provide dependable insight into reducing and preventing risks. Moreover, a provider of such services helps formulate strategies, sets objectives, and offers solutions to overcome various obstacles. The primary aim of such services is to offer guidance for development and growth.
Such advisory services include a wide range of solutions. That said, a few common ones are financial modeling, projections and budgeting, third-party controllership services, asset protection, financial reporting, tax compliance, virtual CFO, management reporting, and lender financing. The services offered depend on the type of advisory service a company chooses.
This article has been a guide to what are Business Advisory Services. Here, we explain the examples, types, and benefits of the topic in detail. You may also find some useful articles here –