Business mentor: Expect more from a paid adviser than from a free opinion

How can I tell if the business advice I am getting is up to scratch?

Ralph Penning, of the Independent Business Foundation, replies: There is strong evidence that the majority of owners and managers of small to medium businesses do not know where to draw the line between mentoring and advising.

The most noticeable difference is the cost factor. Mentoring is voluntary and free of charge. Advisers charge for their opinion. But there are other distinguishing features.

Usually a mentor is an experienced person who donates knowledge and time to assist others to form an opinion and/or reach a decision.

The mentor is supposed to give advice that can be relied on as authoritative and will assist the protege to weigh up the options and leave the final decision to the business owner.

It follows that the mentor cannot be held responsible for the outcome of the action resulting from the deliberation.

Advice given for reward in the course of a consultative process is a different matter. Invariably the person giving the advice is considered to be an expert whose opinion can be assumed to achieve envisaged outcomes.

In the light of due financial consideration, the client has a right to expect that the assignment be carried out according to a specified plan with measurable timeframes and results. Provided the client closely follows the advice given, he or she is entitled to expect fair value for the investment in the consultant's reputation and competence.

Failure to deliver should give cause for redress either in the form of remedial action or a reduced fee, depending on the severity of the shortfall.

These principles also apply to a new breed of advisers who call themselves business coaches or pilots. If they offer services for reward they cannot hide behind the defence of having acted merely as mentors, and not as consultants.

The cost of advice is a common excuse of business people who get themselves into some form of financial distress, lack of progress or performance problems.

It very often amounts to a regrettable error of judgment in having relied on cheap or free advice when professional integrity backed by relevant experience was called for.

There should be no doubt that experts in their respective fields charge proportionally more than generalists who may have to resort to learning at their clients' expense to reach a conclusion that the specialist will achieve in a fraction of time.

The Independent Business Foundation has laid down criteria that require accredited small enterprise consultants to be formally qualified, and with a track record of successfully completed assignments supported by appropriate hands-on experience in small and medium-sized enterprises.

It is not uncommon these days to find such professionals prepared to work on a contingency basis that entails payment on results or, in lieu of cash, a minority shareholding with income prospects.

As can be seen, there is a definite role both for professional advice and free mentoring as provided by Business in the Community.

Enterprise

* Send your Mentor questions to: Ellen_Read@nzherald.co.nz.

Answers will be provided by Business in the Community's Business Mentor Programme.