In a small business it’s not financially sustainable to pay for bad advice, nor is it advisable, of course, to act on free bad advice. So how do you know when you are getting good or bad advice.

Here are a few tips about sorting out the wheat from the chaff.

There is an old adage; “If it sounds too good to be true, then it probably is”. It applies to business advice. If someone tells you that buying or doing something will solve your issues or grow your business astronomically, it won’t. If life was like that, some of your competitors would already be doing it.

A common example is the over-exaggerated claims with underestimated effort of many software vendors. With one push of a button, customers will beat down our doors. Software is a means of automating manual processes that we cannot afford the time or money to do or that we do at a high cost.

Software can make a great change in our cost structure or in our reach and capability, but it does not replace thinking about desired business outcomes, required processes, performance measurement and a long list of other thoughts to get things right for our business.

Another sign of possible bad advice is whether the advice is based on fact or opinion.

Advice given as a slogan is a dead give away of advice based on opinion. Slogans ripped straight from a book or an MBA course or the latest “trends” in business need to be avoided.

Phrases which indicate business advice is actually a well camouflaged slogan include; “best practice”, “get it right the first time”, “continuous improvement”, any phrase with “excellence” or “vision” in it and “customer value proposition”. If people cannot give advice which is specific about your business and unequivocal in its meaning, then they are probably not providing you any value.

Questions, or the absence of them, are another giveaway for bad advice. When people do not ask questions about your business, your customers or the channels through which your customers buy or your employees or goal or strategy and proceed to offer advice, what can it be but a few generalisations about business.

Generalisations are generally bad when it comes to changing your business on two counts. One is that whilst the advice is generally relevant, specifically it may have little relevance at all as a specific issue may overshadow the general world of circumstances within which the generalisation holds true. Another is that I have never seen anyone implement a generalisation.

Even when advice is specific there is a test to indicate the probability of the advice being good or poor. The test is whether the advice is based on fact or opinion.

“My manager is great”, is an opinion; “I am wearing trousers” is a fact. Often when people give advice, they do it on the basis of a rationale apparently based on facts.

In businesses there are four levels of facts/opinion. There is internal opinion, for example two sales people chatting generally about the industry. External opinion is more valuable as this consists of the opinion of customers or distributors. Internal facts are based on items like sales reports and external facts are based on external reports such as bureau of statistics numbers or customs import/export numbers.

Take care to validate important advice to be sure that it is based on facts and what level of “facts”.

Given that picking good advice from bad is a task in itself that some small businesses need advice on, it is probably important to spend slim resources seeking advice on those things which really matter.

For example, if you own a retail shop with very small floor space, seeking advice on inventory control and merchandising might be a good idea. Or, if you were in control of a government department with a small budget, then seeking good advice on hard nosed planning and monitoring of outputs might deliver more results for your small budget.

Many people in small business tend to stick with their friends and acquaintances for advice. Whilst familiarity with your personality is good, an outside view is often what is required for critical areas of your business.

In seeking advice, be clear with yourself what advice you are seeking about said critical area. To know what advice you are seeking, “think through” the advice to the point that you know what you would do with the advice. Don’t just “think of” the advice you want.

Sometimes when you go through this process, the solutions become clear and the advice you seek is validation and identification of risks, how to recognise them and what to do.

When seeking advice, look for people who will ask questions, do not use slogans and will be specific. Now that’s good advice.