Using business consultants

There are many good ways to ensure that a client gets his or her expectations met precisely but they all start with the client thinking through the problem they want solved. That's an essential ingredient to ensuring that the consultant engagement is a successful one and not just more fodder for bad consultant jokes :-)

Pluses and Minuses.

Like anything in business, there are advantages and disadvantages to using a consultant. Get familiar with both. The chief advantages tend to be that you can engage expertise and experience (not necessarily in that order) just when you need it without paying a large salary and related overhead. Other advantages include adding capacity to your ability to move forward on growth plans and, hopefully, achieving some kind of “transfer” of technology or experience from the consultant. In other words, the consultant teaches you something.

The disadvantages tend to be just the inverse. It’s sometimes hard to get just the mix of experience and expertise you need without hiring many consultants and this means fees can be disproportionately high. There’s an old saying that “being a judge is easier than being an attorney”. Having a consultant that just “judges” without contributing directly to the legwork may not provide the kind of added capacity that you want or need. And lastly, if the consultant wraps up the task and you’ve haven’t learned something substantial in the process then you haven’t gained anything at a strategic level (this is along the lines of the “teach a man to fish…” principle).

A business owner can't know everything.

And neither can a consultant. If you want to get good mileage from hiring a business consultant, then make sure you can spell out exactly what you want to know. Have his or her mission well articulated before you even think about selecting a consultant or engaging their services.

Prepare a “Brief”

Whatever the objective, before you select or engage a business consultant, prepare a “brief”. This is a simple document that outlines the scope of the task you want the consultant to tackle. The brief should provide any necessary background, a clear statement of your objectives, why those objectives are important to your business, and – always – a desired timeline and budget. Be sure to add to the brief exactly what skills or expertise you think is needed. If there’s more than one skill or type of experience you require, be sure to list them all. Lastly, write down the “deliverables” you expect. This means, detailing exactly what you expect to receive from the consultant in the form of services, documents, or summaries.

Note: The brief is less for the consultant than it is for you. If you don’t do this, the consultant will have to do it for you. Save your time and money.

Selecting a Consultant

When engaging a consultant it’s every bit as important to interview carefully as it is to hire a new employee. Identify prospective players using the web or word-of-mouth referral, and then contact them. If you like what you hear, set up an “interview”. Make sure you send out the brief before your meeting. If you don’t feel comfortable talking with them without a confidentiality agreement in place, send out a draft of that as well.

Interviewing

When you meet with the consultant, if you have required a confidentiality agreement, get it signed first thing. After that, stay focused on your brief. Discuss it, answer whatever questions may be raised, and identify – specifically - what the consultant brings to the table. During the meeting, you want to ask yourself questions like the following:

  • Can I work with this person/firm?
  • Are they credible? Do they engender confidence in what they are saying? What credentials do they have?
  • Have they done this type of gig before? Successfully? With whom?
  • How are their rates structured? How often do they bill? If by time, how do they account for their time utilization? What kind of time estimate would they make for your task?

As you might for any interview, take notes. You’ll want to compare your impressions with other consultants you may choose to consider. And once you’ve met two or three prospective counselors, the contrast between them, and your best choice, will become quite apparent. But before you act further, do check client references. Word of mouth still is the best source of credibility for any prospective consultant.

Paying a Consultant.

There are many ways a consultant can charge for their services. A fixed hourly or daily rate is typical. I recommend that you attempt to negotiate a fixed price agreement for the deliverables you’re looking for. Under this basis, it is not unusual to expect a modest upfront payment followed by progress payments as the consultant’s project unfolds. The primary benefit of this approach is that you know what you are buying and will not feel uncomfortable about taking the consultant’s time.

Whatever basis of payment you agree on, make very sure that you understand how travel time and expenses will be charged.

Do the paperwork.

When you engage your consultant, do the paperwork. Ensure that there is, at least, a basic agreement or letter covering their services and payment methods; attach your brief so that it becomes part of the agreement. Whether you use their agreement or prepare one of your own, ensure that their services are being engaged on a “work for hire” basis, that the agreement provides suitable confidentiality protections, and that it does not permit the consultant to make expenditures on your behalf without your direct consent.

Keep Yourself and the Consultant Focused.

When you get in the middle of a project with a consultant, it’s easy for both to become distracted by other related tasks or issues. Stay focused. It may be that you want to engage the consultant on additional tasks, but if you do, make sure that you treat the new task with the same discipline: prepare a brief, make sure your current consultant can do the task, and engage formally.

Get the Most For Your Effort.

Contract consultants can be a valuable resource to you and your business. Cultivate their relationships both formally and informally, but whenever you engage one on a task, set it up formally. This will keep your – and the consultant’s - expectations carefully set and will go a long way to ensure that your experience will be successful.