Q & A: Why Hire a Consultant?
What is a Consultant?
A consultant is an independent contractor, hired to provide analysis, advice, insight, specialized knowledge, experience and perspective to help management make strategic, profitable decisions.
What Does a Consultant Do?
A consultant provides specialized skills, knowledge, experience, insight or advice, augmenting the resources of the business.
What Does a Consultant Cost?
This question prompts a series of questions:
How long is the engagement and how many hours does the project require?
What is the consultant’s hourly rate?
What service or product is the consultant being tasked to deliver?
How are the results to be measured, against the cost?
The consultant is engaged to spend one day reviewing a firm’s sales and marketing plan and writing a report to management with recommendations for increasing revenue and market share. The assignment calls for a total of 15 hours at a rate of $100. per hour, a total cost of $1,500. The consultant’s recommendations are implemented, resulting in a gross sales increase, of $20,000. over the next 6 months and an increase of $10,000. in Net Profit, a Return on Investment for the business of 660%. While the numbers in this example are modest, they are entirely realistic. Moreover the strategies recommended by a specialist can continue returning dividends, well into the future.
Why did the consultant produce such dramatic results?
Often, an outside advisor can provide insight and recommendations, uncovering opportunities that may have been overlooked. Every small business person is challenged with conflicting signals from the marketplace. An objective, experienced observer may not be distracted by the noise and see solutions more clearly. Most often, the best results are achieved when the combined talents of the entrepreneur and the consultant are focused on the task.
The Bottom Line:
An excellent consultant will produce measureable results which more than offset the fee.
Where do I find a consultant?
Fire up your favorite search engine and see what’s out there. Obviously, if you live in New Brunswick, a Vancouver-based consultant may not be the answer. Look for a local consultant where travel costs aren’t part of the cost structure. Look for expertise in your business vocation. If you’re a manufacturer, it helps if the consultant speaks your language. It may also be helpful if the consultant has actually operated a business – not everything is learned in the MBA program. If you are a small to medium-size enterprise, you may find the national or multi-national firms a little rich for your needs.
How do I select a consultant?
Most consultants offer a free introductory meeting to assess the client’s need. The consultant will want to understand the need for his/her services and get a sense of the chances for success. Every consultant wants to deliver results and please the client.
As a prospective client, you want to see what the consultant offers in the way of skills, experience and insight and whether he or she is compatible with you and your company culture. Naturally, you also want to get a good idea of cost and whether the consultant can conform to your timetable.
What about contract, billing and payment?
If you and the consultant agree to embark on a project, you or the consultant will draft a contract, setting out the terms of the engagement, which will include the scope of the work, the objectives, timetable, results and reports, how and when services will be billed and when payment is expected.
From your perspective, you want to see measureable results. The consultant wants to make sure that the terms and scope of work are clearly defined and that there are no expectations outside of the written agreement. If the engagement will last over a number of weeks or months, expect the consultant to bill for work in a series of progress payments, which usually coincide with milestones written into the terms of engagement. Most consultants will expect payment on presentation of an invoice.
If you are unsure whether the consultant can deliver the expected results, break the project into smaller segments, with a “deliverable”; a report or a measureable result at the end of the segment. At that point, you can assess the result and the relationship and proceed accordingly.
You want results. The consultant wants a happy client. Make sure you have an engagement agreement that clearly expresses your expectations. If you and the consultant can achieve this first step in defining your relationship and the results you expect, you’re off to a great start.