Hiring a business consultant can be incredibly advantageous, because they can rapidly find new profits, sales and cash flow. They can manage accountability for a smooth transition to the next level of success. And they can “wake up” a company and its management to drive to levels that could take years to achieve without a consultant. Or, hiring a business consultant could be a costly, frustrating, time wasting process that might undermine the credibility of the business owner, and preclude the use of any other consultant for years to come.
When hiring a business consultant, follow these “Do’s and “Don’ts” to mitigate the “poor choice” cost, and reap a successful result.
DO
- Screen the consultant on the phone before meeting them. It doesn’t matter that the consultant may have been referred by someone else. Seek you own experience of the person. They should ask knowledgeable questions about your business, not tell you how great their firm is. You should leave the call with a sense of knowing that the consultant may be able to assist your needs.
- Meet the consultant at your business after the screening call and allow a minimum of two hours. Within that time, you should learn something new about your business issues that can immediately improve your revenue, profit, or cash flow. If it’s “just a lot of talk”, find someone else.
- Have the consultant meet privately with your key personnel/ management if there was a “good feeling” from your screening meeting. Get their feedback as a “sanity check”, as to whether or not the consultant understands the business from their perspective.
- Make sure you like the person. If there was demonstrated value in the meeting, you’ll be spending a great deal of time with that person, as will your key employees. If you or your key people are put off by his or her style, the resulting work will be harmed.
- Request an initial evaluation report of your company that will address your issues, the cost of inaction, the benefit of action, the underlying problems, and the practical implementation steps to achieve immediate greater success for your company. This “learning curve” process is critical for both the consulting firm and your company, as it establishes specific accountability. Request a fixed rate rather then an hourly rate for this process.
- Request either an estimate of hourly costs or a fixed price from the consulting firm. The cost estimate should include: time to complete, time required of you and your staff, and the specific measurable results that will be achieved.
- Request business references with issues similar to yours. Call the references.
- Request that the consulting firm’s invoices detail both dates and hours of each person working for the consulting firm and the process they are implementing.
- Formally measure and review the consulting firm and the results of their work each month. In advance of the review, ask for specific feedback from your key personnel/management.
- Request terms outside of the normal terms of the consulting firm “up front”, if cash flow is tight. Get the modified terms in writing.
- Ask specifically what the consulting firm’s billing policies are for travel, routine phone calls and work they perform off your business site.
- Define who the “client” really is. That person, whether the owner or key manager, has to be named to make decisions and have the final word on the results of the work. Dealing with the “wrong client” at your company can undermine the results you anticipate.
- Put all agreements and changes to agreements, as to scope of work and anticipated results, in writing. Your written agreement should reflect what is expected by both parties and is your contingency plan if what is agreed upon doesn’t happen.
DON’T
- Hire a relative or friend.
- Withhold information from the consultant.
- Pay an invoice from the consulting firm without reviewing the work performed. Some consulting firms demand payment on demand, and often weekly. If they can’t wait two weeks for a rational review of the work, find someone else.
- Allow billable work to be done away from your company location without establishing a written agreement of the project scope and timeline. Agree in advance of the consulting firm performing the work.
- Hire a consultant without completing 1through 5 under “Do”.
- Hire a consulting firm to implement or change your company without completing 5 through 7 under “Do”.
- Never miss completing 8 through13 under “Do” when actively engaging a consulting firm to “change” your company.