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Free VC Directory

With any B-Plan Purchase
425 Page Capital Directory
Through Apr. 30


Custom Business Plan
$425 Flat Rate
No Templates Used
7 Day Turnaround

All Purchased Plans
Are Updated for 2017

Consulting Firm SWOT Analysis

 

Strengths

 

As the economy has become highly specialized, the demand for unique expertise in a specific market has increased substantially. As such, provided that an individual consultant has a specific skill that can be marketed - a consulting firm can remain profitable and cash flow positive at all times. The startup costs for a consulting firm range from $1,000 to $50,000 depending on the skill of the consultant. If someone in a field has extensive contacts and can immediate generate a client base then the startup costs will be much lower. The gross margins of a consulting firm are extremely high given that it is a service oriented business. Once a stream of consulting contracts starts to generate revenue, most financial institutions will provide capital support for these businesses.

 

Weaknesses

 

There are more than 600,000 people that consider themselves as independently contracted consultants within the United States. Given the very low barriers to entry, anyone can establish a consulting firm very quickly. As such, a consulting firm needs to proper position itself within any given market in order to ensure that they can receive engagements from clients. Another weakness for a consulting firm is that banks and financing companies are generally reluctant to provide ongoing capital to the businesses. As such, a consultant must have a substantial amount of cash on hand at all times especially at the onset of operations. 

 

Opportunities

 

Unlike most other businesses, consulting firms can rapidly expand its operations by hiring individuals that have extensive experience or educational credentials in any specific discipline. Although it is somewhat uncommon, some consulting firm entrepreneurs will acquire the client base of an existing and profitable firm. For established companies, many financial institutions will provide the capital necessary to make these acquisitions. However, an extensive operating history is usually a necessity.

 

Threats

 

The economy is constantly changing, and this requires that the managing directors of consulting firms hire the proper staff in order to deal with these issues. Currently, there are no legislative issues that would impact how these businesses operate. The other prominent issue faced by these businesses are the ongoing competitive issues. This is the biggest threat faced by consulting firms.


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