Happy New Year! Let us hope that this is the year we find a way to live with the coronavirus without too much disruption to our daily lives.

In the early days of my consulting career, I was asked by one of the (then) big-five auditors to review the internal controls of a public company and determine whether or not the control environment was sufficiently robust for the auditors to rely on the revenues as reported by the company.

There had been some fraud in the food and beverage area of one of their casinos, but management had assured its auditor that the gaming area was well controlled and they need not worry about that.

Until that point, the auditors had believed that as long as what was reported as revenue could be accounted for by what had been banked, what was in the cash desk, and what remained outstanding, then all was well. (I kid you not!) Then a fraud in the gaming area surfaced. The auditors lost confidence and called in external support.

My investigation showed that what appeared on the surface to be a sensible set of internal controls was entirely flawed. I could give you chapter and verse, but it would fill up a book. Needless to say, the auditors went on to qualify the half-year accounts.

That launched a squabble between the company and the auditors as to whose fault it was. If the auditors were unable to sign off on the current half-year accounts, how had they managed to do so in the prior years when the internal controls were the same? In the end, they came up with a fudge that satisfied both parties.

I remember presenting my findings to the board, having sent them a copy previously. Before I could begin, one of the non-executive directors stood up and said, “I do not like consultants. I never have. They are an indication of management failure.” In this instance, management’s failure was all too clear!

My view, and of course I would say this, is that consultants can provide a valuable service, bringing wide-ranging experience and knowledge of best practise, and can improve management’s or the board’s ability to make the right decisions.

Quite often, I am asked, “But what do you do?”

The answer, in its broadest sense, is that I help people understand markets and how to access those markets and, if required, I help them manage the process into those markets. This can be operators, suppliers, and investors.

The bread and butter of the business consists of market surveys and feasibility studies for casinos and casino-resorts around the world. Some of my work involves commercial reviews, looking at a business and understanding why it is in the condition it is and what the future might have in store (competitive pressures, regulatory changes, etc.).

Related to this is reviewing business plans for potential buyers, sellers (to make sure they are not embarrassed, and the sales process goes smoothly), and/or debt providers, red-flagging the areas of risk, and pointing out any missed opportunities.

The most enjoyable part of my work is assisting management with developing a future growth strategy. This involves assessing the strengths and weaknesses of the business, where the market is today, where it is likely to be in five or more years’ time, what the competitive pressures will look like, and how competitors might react. From this, we hope to find the sweet spot where we can leverage the strengths of the business and develop a strategic plan to enable the company to exploit that sweet spot.

Some consulting firms prefer to throw large numbers of highly educated juniors at the task. They beaver away in back rooms and produce vast PowerPoint decks whose worth seems to be measured in weight, not content. The client is taken on a gallop with weekly updates and explanations of conclusions drawn to date.

Generally, management do not like having consultants thrust upon them by their board or an owner and can become resistant. I find the best approach is to explain to the managers that I am not there to impose my ideas on their business, nor will I go away and return a couple of months later unveiling my report in a “ta-da” moment as some consulting companies do. That way lies failure. After all, management has to execute the strategic plan. If they do not believe in it, the probability of it failing is vastly increased.

In my experience, it is better to work with management, get access to and review the data, and ask lots of questions to get a thorough understanding of the business and the challenges it faces.

This can be compared to some forms of therapy where, in order for the therapy to work, the client has to come to his or her own conclusions. The therapist’s role is to structure the questions so that the client realises whatever the trouble might be and how to resolve it. I follow a similar strategy.

Using a breadth of knowledge and experience to present the data in a different way and through asking more questions, it forces management to really think about their business and based on the answers they have given, enables them to come to their own conclusions. The key here is to know what questions to ask and to ask them in a structured way that will direct them to the answers.

In a small number of cases, this does not always work. Management can have fixed ideas and become uncooperative. It has also happened that, for whatever reason, they see that they have no role, or do not want a role in the future of the business, and resign.

Hiring an external consultant is not about incompetence. Rather, it adds an expert to the team for a specific purpose. Management cannot hope to have knowledge of best practise and sometimes are too wrapped up in the day-to-day operations to have time to think about the future. Bringing an expert to the team can be the catalyst to a successful outcome.